Very good question and, unfortunately, this happens all too often. A couple of "first things first" before some bottom-line answers:
1. Trustees are appointed by the grantor (person(s) who set up the trust, so the trustee is suppose to be someone they knew well and trusted;
2. Trustees are required to ACCOUNT to the beneficiaries named in the trust for trust funds held/manged--if they don't, the trustee can be PERSONALLY LIABLE for lost or mismanaged funds--usually a federal tax return is also required--the IRS is a factor to be dealt with if a trustee loots the trust;
3. Beneficiaries of the trust (people who are named in the trust to receive funds) can FORCE an ACCOUNTING by filing with the probate court--you need to be "named" in the trust to receive money or other property in order to file. Nevada has an excellent new law on this--Senate Bill 221 passed during our 2011Legislature--lawyers in NV are still figuring it out.
4. Trustees can be "cited" or ORDERED into probate court quickly, if a beneficiary alleges in a credible court filing that theft is going on. The court can "freeze" assets or accounts and even put a trustee in JAIL for contempt, if the trustee willfully refuse to comply with a court's order.
5. Trustees can also be PROSECUTED CRIMINALLY for theft, fraud, etc. and can be criminally punished (jail time) if their mismanagement amounted to criminal fraud.
These are broad answers, but you asked a very broad question.
If you are a named beneficiary in the trust, I suggest you present your information to an attorney who practices trust law to learn more about your legal options. Some attorneys take these cases on regular hourly fees; some accept cases on a contingency (percentage of what they get for you, so you don't pay the attorney unless they recover funds for you. Totally depends on the facts and the case.
Good Luck, Greg J.
I agree with what Mr. Jensen says, however, one thing that was not mentioned was the amount of money that was taken and not accounted for to this date. How much punishment will depend in large part upon how much money was taken by the Trustee - if it was taken by the Trustee.
First thing to do is get an Estate lawyer like Mr. Jensen to demand a formal accounting and then, if the accounting is wanting or missing something, that's the time to consider going to the prosecutor's office to have them investigate and have the Trustee arrested. S/he will soon find out that it doesn't matter if they don't have the money to repay (if they've stolen it) because restitution will almost always be required of the Trustee by the criminal court judge to be paid to you if you're the beneficiary. Usually restitution must be paid before any plea bargain is struck by the prosecutor, so that will help them make the extra effort to raise the money - or they will often go to jail if they can't come up with the money.
This answer does not form an attorney/client relationship with anyone and any answers do not constitute direct legal advice and should not be followed unless and until you have spoken with an attorney of your choice.
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