Articles

Common Scenarios of Breach of Fiduciary Duty by a Trustee of a Trust in Virginia

Date: June 24, 2026
Serving as a trustee is a fiduciary role. Trustees of trusts owe a variety of fiduciary duties to the trust and beneficiaries of the trust. We have previously discussed common breach of fiduciary duty scenarios in the context of an executor or administrator of an estate. In this post, we will discuss some common scenarios of breach of fiduciary duty with respect to trusts. When trustees breach their fiduciary duties, the consequences can be serious both for the trust and for the fiduciary personally.

Common Grounds for Breach of Fiduciary Duty
A trustee owes fiduciary duties to the trust and to the trust's beneficiaries, including, but not limited to:
  1. to act with loyalty and in good faith to reasonably and prudently effect the trust's purpose;
     
  2. to administer the trust in good faith, in accordance with the trust's terms and purposes, the provisions of Virginia law, and the interests of the beneficiaries;
     
  3. to administer the trust solely in the interests of the beneficiaries, without favoring one beneficiary to the detriment of any others, and to act impartially in investing, managing, and distributing the property of the trust, giving due regard to the beneficiaries' respective interests;
     
  4. to administer the trust without engaging in conflicts of interest;
     
  5. to keep the beneficiaries reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.
There are many ways that trustees can violate these duties, and the following are several common examples:
  1. Mismanagement of Trust Assets
    Trustees are charged with managing the assets of the trust consistent with the terms of the trust and Virginia law. While some trusts are simple with few assets, others are complicated, with many types of assets, financial accounts, personal property, and real property. Trustees must take care to correctly identify assets and handle them prudently during the course of the administration of the trust. Examples of missteps trustees can make include failing to secure and inventory trust assets, allowing property to fall into disrepair, imprudent investments, ignoring insurance or tax obligations, or commingling trust funds with personal funds.
     
  2. Failure to Follow the Trust's Terms or Applicable Law
    A trustee must adhere to the terms of the trust instrument and comply with Virginia law when administering a trust. While some trusts are straightforward, others include many instructions for specific distributions (e.g. gifts to particular people or entities), distributing real and personal property, handling debts, and other trust administration tasks. Disregarding the terms of the trust, changing distributions without authority, or distributing assets contrary to the terms of the trust can constitute breach of fiduciary duty.
     
  3. Conflicts of Interest and Self-Dealing
    Trustees are charged not to advantage themselves over the beneficiaries. This can be especially challenging when the trustee is also one of multiple beneficiaries of the trust. The trustee must separate their interest as a beneficiary of the trust from their role as fiduciary. Engaging in transactions that benefit the fiduciary at the trust's expense, such as selling trust property to themselves or a related party at below market value, making distributions to themselves before or without making distributions to other beneficiaries, or steering business opportunities away from the trust and toward themselves, can be considered a violation of the duty of loyalty.
     
  4. Lack of Communication and Failure to Account
    Trustees have duties to provide certain information to the beneficiaries. A trust instrument may modify the trustee's duties to account/provide information to the beneficiaries and may even include certain additional reporting duties.
    Reporting on even simple trusts can be a challenging process, and sometimes, trustees avoid reporting to hide their own mishandling of the trust or self-dealing. Trustees may face claims for breach of fiduciary duty if they refuse to provide reasonable information, ignore beneficiary inquiries, or fail to deliver required accountings.
     
  5. Failure to Pursue Claims or Pay Debts of the Trust
    The trustee is typically empowered under the trust instrument to pursue claims on behalf of the trust. The trust may have claims against third parties, for example delinquent rent, if the trust owns rental property. The trustee also is typically empowered under the trust instrument (and likely has a legal obligation) to pay bona fide debts of the trust. Unreasonable delays in administering the trust, missing key deadlines, or not pursuing valid trust claims against third parties may constitute a breach of the trustee's fiduciary duty.
     
  6. Improper Payment of Claims or Expenses
    Paying barred or unverified claims, overpaying expenses, or distributing trust assets improperly can expose the fiduciary to potential liability as well.


Legal Implications and Potential Consequences

Trustees that violate their fiduciary duty may be subject to harsh consequences for doing so. This may include:
  • Removal: Courts may remove a trustee and appoint a successor.
  • Surcharge: A breaching trustee can be ordered to repay losses, lost profits, or improper gains to the trust.
  • Disgorgement and Forfeiture of Fees: Compensation may be reduced or forfeited, and profits from self-dealing can be disgorged (i.e. ordered to be returned).
  • Equitable Relief: Courts may rescind improper transactions, impose constructive trusts, or enjoin (i.e. prohibit) further misconduct.
  • Personal Liability: Trustees may face personal liability for damages (including punitive damages) resulting from breach, including interest, attorney's fees, and costs.
  • Sanctions and Contempt: Failure to comply with court orders can result in sanctions being imposed.


Frequently Asked Questions about Trustee Breaches of Fiduciary Duty in Virginia

Can a trustee be removed in Virginia for misconduct?
Yes. Courts in Virginia can remove a trustee who fails to perform their duties, engages in misconduct, or creates risk to the trust. A successor trustee may then be appointed.

What are examples of trustee misconduct or self-dealing?
Examples of misconduct include:
  • Selling trust property to oneself or a related party below market value
  • Using trust funds for personal expenses
  • Prioritizing personal distributions over other beneficiaries
  • Failing to disclose conflicts of interest

These actions may violate the trustee's duty of loyalty and can expose them to personal liability.

Can a beneficiary sue a trustee for breach of fiduciary duty?
Yes. Beneficiaries may bring a claim against a trustee who has violated their fiduciary duties. Common remedies include removal of the fiduciary, monetary damages, repayment of financial losses (surcharge), forfeiture of compensation, injunctive relief, and an award of attorney's fees and costs. Because these cases are fact-specific and can involve court proceedings, beneficiaries should consult an experienced Virginia trust litigation attorney to evaluate their options.

Can a corporate or professional fiduciary company serve as a trustee, and can it be liable for breach?
Yes. Corporate fiduciaries, such as banks and trust companies, may serve as trustees in Virginia and are held to the same fiduciary duties as individual trustees. These entities are expected to exercise a high standard of care in managing trust assets, complying with the trust instrument, and communicating with beneficiaries. A fiduciary company can be held liable for breach of fiduciary duty if it engages in misconduct such as mismanaging investments, charging improper fees, failing to follow the terms of the trust, or not providing required disclosures or accountings. In some cases, institutional trustees may also face scrutiny over fee structures or delegation of responsibilities to third parties. Beneficiaries who believe a corporate trustee has breached its duties may pursue the same remedies available against an individual trustee, including removal, surcharge (repayment of losses), and other equitable relief, and should consult a Virginia trust litigation attorney to evaluate their options.

What is a discretionary trust, and can a trustee abuse their discretion?
A discretionary trust gives the trustee authority to decide when and how to make distributions to beneficiaries based on the terms of the trust, but that discretion is not unlimited. Even in a discretionary trust, the trustee must act in good faith, in accordance with the trust's terms and purposes, and in the best interests of the beneficiaries. A trustee may breach their fiduciary duty if they exercise discretion improperly, such as by acting arbitrarily, favoring certain beneficiaries without justification, ignoring the trust's purposes, or making decisions influenced by personal interests or conflicts. While Virginia courts generally will not second-guess a trustee's reasonable exercise of discretion, they may intervene where the trustee abuses that discretion or acts outside the bounds of fiduciary obligations, and beneficiaries who suspect misconduct should consult a Virginia trust litigation attorney to determine whether a claim may be appropriate.


Bottom Line

Fiduciary duties are serious legal obligations. Trustees who act prudently, transparently, and in strict compliance with the trust instrument and Virginia law can minimize risk. Beneficiaries who suspect misconduct should promptly consult a skilled trust dispute lawyer about available remedies and the most efficient path to protect the trust and the beneficiary's interest, including the process of suing for breach of fiduciary duty. Likewise, trustees who are accused of (or sued for) misconduct should promptly seek legal counsel.


ABOUT OUR TEAM

Whiteford offers sophisticated, experienced counsel on estate, trust, and fiduciary dispute matters, including breach of fiduciary matters, will contests, challenges to beneficiary designations, and pay-on-death and transfer-on-death designation disputes.

When an estate or trust dispute is on the horizon, the stakes are personal and the legal questions are complex. Whiteford's Estates, Trusts, & Fiduciary Litigation Practice Team in Richmond, Virginia, helps executors, trustees, heirs, and beneficiaries navigate these disputes, from early warning signs through trial. Our attorneys handle claims involving undue influence, fraud, lack of testamentary capacity, breach of fiduciary duty, and contested transfers of assets, as well as guardianship and conservatorship proceedings and trust and will interpretation.

Brett C. Herbert is a partner at Whiteford in Richmond, Virginia. Brett is a litigator and member of the Estates, Trusts, & Fiduciary Litigation Practice Team who represents clients in will contests, trust challenges, and breach of fiduciary duty claims involving executors and trustees, among other similar claims. He also handles guardianship and conservatorship proceedings, including both routine and contested matters. Brett has been recognized as a Virginia Super Lawyers "Rising Star" and named Best Lawyers in America® Ones to Watch in Trusts and Estates. Brett can be reached at BHerbert@whitefordlaw.com and (804) 977-1242.

Gregory S. Bean is a partner at Whiteford in Richmond, Virginia. Greg is a litigator and member of the Estates, Trusts, & Fiduciary Litigation Practice Team who represents clients in will contests, trust challenges, and breach of fiduciary duty claims involving executors and trustees, among other similar claims. His practice extends to will and trust interpretation, guardianship and conservatorship matters, and power of attorney disputes. Greg holds a Best Lawyers in America® distinction in Trusts and Estates. Greg can be reached at GBean@whitefordlaw.com and (804) 977-1241.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.