I am not sure what you mean by "trust deed". I am assuming you mean the trust document. That being said, a trustee is generally obligated to follow the instructions in the Declaration of Trust. Sometimes the instruction are not clear, may be illegal, may create a conflict of interest, or may have been modified by state statutes.
All of that being said, bad things could happen if a trustee does not comply with their obligations if someone is damaged. You should review your specific situation with a lawyer who is licensed where the trust is being administered to determine what rights or obligations you have.
My comments are not intended to establish an attorney-client relationship, are not confidential, and are not intended to constitute legal advice. Proper legal advice can only be given by an attorney who agrees to represent you, who reviews the facts of your specific case, who does not have a conflict of interest preventing the representation, and who is licensed as an attorney in the state where the law applies.
Estate Planning Attorney
The trustee that does not follow the instructions in the trust could be liable for criminal actions if the actions benefit the trustee or related parties.
The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.
Elder Law Attorney
Q: Is it true that bad things happen when a trustee does not obey the trust deed?
A: Yes. Terrible things.
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I agree with Attorney Carrier, bad things happen when the Trustee does not do what he or she is supposed to. I also agree with Attorney Pippen that the Trustee may be charged with criminal acts. The real problem for the beneficiaries when a Trustee steals, is that the Trustee usually spends all the money and there is nothing left for the beneficiaries to receive.
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