Can a spouse be held liable for a lying trustee?

Spouse Liability for Bad Trustees

Yes, a spouse can potentially be held liable for the actions of a lying or fraudulent trustee—but it depends on several legal factors, and liability is not automatic.

Here’s a breakdown:

🧑‍⚖️ When a Spouse Might Be Liable for a Trustee’s Misconduct

1. Joint Benefit from the Trust Misconduct

If the trustee’s spouse:

  • Received assets from the trust (e.g., real estate, cash, gifts), and

  • Knew or should have known those assets were misappropriated…

…they could be subject to civil liability under theories like:

  • Constructive trust (the court forces them to return the property)

  • Unjust enrichment

  • Fraudulent transfer

🔍 Example: If a trustee buys a house using trust funds and puts it in both spouses’ names, the spouse may be required to return the property or its value.

2. Spouse Actively Participated or Aided

If the spouse helped cover up the misconduct, pressured the trustee, or benefited knowingly, they could be seen as:

  • A co-conspirator

  • An aider and abettor

  • Or even a de facto fiduciary in some cases

That opens the door for the court to impose personal liability, especially if the trust suffered damages as a result.

3. Community Property Rules (in Some States)

In community property states like California, assets acquired during marriage are presumed to belong to both spouses. That means:

  • If the trustee misused trust money to buy things that now belong to the marital estate, courts may go after those assets.

The spouse might not owe a debt, but the assets can be clawed back to the trust.

🚫 When the Spouse Is Not Liable

The spouse is not automatically responsible just because:

  • They’re married to the trustee

  • They benefited unknowingly

  • They didn’t know about the trust

There must be some combination of:

  • Knowledge

  • Benefit

  • Participation

🛠️ What You Can Do

If you suspect the trustee’s spouse:

  • Helped hide assets

  • Received improper gifts

  • Lives in a house bought with trust funds

…you can ask the court to:

  • Include them as a third party in the petition

  • Impose a constructive trust

  • Freeze or recover misappropriated assets