When Trustees Steal: Lessons from Spalding v. Martin

On January 2, 2026, the Missouri Court of Appeals (Eastern District) issued its ruling in Spalding v. Martin (ED113426)—a case that offers a useful reminder about trust misappropriation, settlement enforcement, and the practical realities of family trust disputes.

The Facts

The defendants in this case admitted to misappropriating funds from a family trust. When confronted, they proposed reimbursing an amount they believed they owed to resolve the matter.

The parties reached a settlement—or so the plaintiffs thought.

When defendants later attempted to back out, the trial court was asked to enforce the settlement. The question: Was there sufficient evidence that the parties had actually reached an agreement?

The Ruling

The Missouri Court of Appeals affirmed the trial court’s decision to enforce the settlement. The court found sufficient evidence that the parties had reached an agreement, and defendants were held to their commitment to reimburse the misappropriated funds.

Practical Takeaways

1. Document settlements immediately and clearly.

Even when dealing with family members who “admit” wrongdoing, oral agreements can become disputed. Reduce settlements to writing as quickly as possible, with specific terms regarding amounts, timing, and consequences for non-compliance.

2. Trust misappropriation is more common than clients expect.

Studies consistently show that financial exploitation—often by family members—is among the most common forms of elder abuse. Trustees with access to funds face temptation, and not all resist it.

3. Beneficiaries need to monitor.

While beneficiaries shouldn’t micromanage trustees, they should request and review accountings. Early detection of problems limits losses.

4. Consider trust protectors and co-trustees.

For clients establishing trusts, building in oversight mechanisms—trust protectors with removal power, corporate co-trustees, or mandatory accounting requirements—can deter misappropriation and catch it early if it occurs.

5. Settlement can be faster than litigation, but enforce it if necessary.

The Spalding defendants learned that agreeing to settle, then reneging, simply added appellate litigation to their problems. Courts will enforce legitimate settlements.

The Bigger Picture

Trust litigation is emotionally and financially draining for all parties. Prevention through proper trust design, trustee selection, and ongoing oversight remains far preferable to after-the-fact recovery efforts.

But when misappropriation occurs, swift action—including settlement where appropriate—can recover assets and bring closure faster than protracted litigation.