Are Beneficiaries Entitled to Economic Damages When a Trustee Breaches an Obligation(s) of the Trust

Under N.J.S.A. 3B:31-72(a),

[a] trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of: (1) the amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred; or (2) the profit the trustee made by reason of the breach.

Consequential damages are damages that naturally flow as a result of the harm caused by the defendant’s wrongdoing.  For example, if the trustee’s wrongdoing caused economic harm to the beneficiaries that led to lost income and/or profits, those “[l]ost profits may be recoverable if they can be established with a ‘reasonable degree of certainty.'”  Nevertheless, “[a]nticipated profits that are too remote, uncertain, or speculative are not recoverable.”  Ibid.  For a plaintiff to recover lost profits, the amount lost must be certain, and based on “sound fact[s].”  Also, a trial court is within its discretion to award interest on trust funds lost because of a trustee’s neglect.

To discuss your NJ Trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Trust Attorney