When a trustee breaches their fiduciary duties, the consequences for trust beneficiaries can be severe—diminished trust assets, unauthorized distributions, self-dealing transactions, and the erosion of the trust's intended purpose. Mississippi's Uniform Trust Code provides beneficiaries with a comprehensive set of remedies for breach of trust, but pursuing these remedies requires understanding the legal standards, the available relief, and the procedural requirements for holding a trustee accountable.

What Constitutes a Breach of Trust

A breach of trust occurs when a trustee violates any duty owed to the beneficiaries. Under the Mississippi UTC, trustees owe duties of loyalty (acting in the best interests of the beneficiaries), impartiality (treating beneficiaries fairly when there are multiple beneficiaries with different interests), prudent administration (administering the trust as a prudent person would), and prudent investment (investing trust assets in accordance with the prudent investor rule). A breach can be an affirmative act (such as a self-dealing transaction) or an omission (such as failing to diversify investments or failing to make required distributions).^[1]

Available Remedies

The Mississippi UTC provides several remedies for breach of trust. A beneficiary may petition the court to compel the trustee to perform their duties, enjoin the trustee from committing a breach, compel the trustee to redress a breach by paying money damages or restoring property, order the trustee to account for their administration, appoint a special fiduciary to take possession of trust property, suspend or remove the trustee, reduce or deny the trustee's compensation, void an act of the trustee or impose a lien or constructive trust on trust property, or order any other appropriate relief.^[2]

The Surcharge Remedy

Surcharge is the primary monetary remedy for breach of trust. A trustee who breaches a fiduciary duty is personally liable for the greater of the loss to the trust caused by the breach or the profit the trustee made from the breach. This means that if a trustee engaged in a self-dealing transaction that produced a profit for the trustee, the trustee must disgorge that profit to the trust even if the trust suffered no actual loss from the transaction.^[3]

Trustee Removal

Removal of the trustee is a drastic remedy that courts will order when the breach is serious, when there has been a pattern of breaches, or when the relationship between the trustee and beneficiaries has deteriorated to the point that effective administration is impossible. The court has broad discretion in determining whether removal is warranted and may consider whether the breach was willful, whether the trustee has taken corrective action, and whether removal would serve the best interests of the beneficiaries and the purposes of the trust.^[4]

Statute of Limitations

Beneficiaries must act promptly to pursue breach of trust claims. The Mississippi UTC provides that a beneficiary's claim against a trustee for breach of trust is barred if not commenced within the applicable limitations period—which may be shortened if the trustee provides adequate reports to the beneficiaries and the beneficiaries fail to object within a reasonable time. This underscores the importance of beneficiaries carefully reviewing all trustee reports and accountings and raising concerns promptly. Individuals who believe their trustee has breached their duties should consult with an estate and trust litigation attorney without delay.^[5]