Fiduciary Litigation

When someone is placed in charge of another person’s assets, the law expects them to act carefully and in the best interests of the beneficiaries. Everyone from executors to trustees holds positions of significant trust, and misusing their authority can quickly lead to a lawsuit.

These cases usually arise when beneficiaries believe that a fiduciary has mishandled assets or otherwise overstepped their bounds. If you are concerned about your rights as a beneficiary, now is the time to discuss your options with our Philadelphia fiduciary litigation attorney.

What Is Fiduciary Litigation?

When someone—a fiduciary—is tasked with overseeing someone else’s property but fails to care for it appropriately, a lawsuit can quickly follow. These lawsuits are commonly referred to as fiduciary litigation.
In estate and trust matters, this litigation typically arises when there are allegations that a fiduciary duty has been violated. Some of the most common issues include the following:

• Mismanagement of estate or trust assets
• Failure to follow the instructions in a will
• Self-dealing
• Conflicts of interest
• Failure to provide financial transparency
• Improper distributions to beneficiaries

When a beneficiary files one of these lawsuits, they are generally looking for court-ordered compensation or the removal of the fiduciary from their position of trust.

Fiduciary Duties Relating to Estates and Trusts

There are several key obligations that anyone holding a fiduciary duty must carry out. One key responsibility is the duty of loyalty, which requires fiduciaries to place beneficiaries’ interests ahead of their own. Fiduciaries can’t use estate property for their own benefit or enter into transactions that are not in the best interests of the beneficiaries.

Another obligation is the duty of care. Fiduciaries must manage assets responsibly and make reasonable financial decisions. They must safeguard property, keep accurate records, and avoid unnecessary risk.

Fiduciaries also have a duty of transparency. Beneficiaries have the right to understand how estate or trust assets are being managed. When these duties are violated, beneficiaries may pursue fiduciary litigation to correct the misconduct and recover damages.

Fiduciary Litigation Involving Executors

Executors are a major part of the estate administration process, and they are often held to the highest standard of fiduciary duty. After someone passes away, the executor is responsible for handling all assets in the estate, including paying any bills before distributing the property to the heirs.

Because executors control the estate’s finances during this process, misconduct can have serious consequences. Some of the issues that can lead to a lawsuit include the following:

• Using estate funds for personal expenses
• Selling estate property below market value
• Failing to distribute assets according to the will
• Unreasonable delays
• Refusing to provide financial records

It can be confusing to learn that the person entrusted with your inheritance has misused it, but thankfully, there are options. A Philadelphia fiduciary duty litigation attorney can help you plan your next steps.

Fiduciary Litigation Involving Trustees

Trustees often control assets for long periods. A trust may remain active for years or even decades, particularly when it benefits minor children or provides ongoing financial support.

Because trustees hold significant authority over trust property, disputes frequently arise when beneficiaries question how the trustee is managing those assets.

Fiduciary litigation involving trustees may involve allegations such as:

• Poor investment decisions that reduce the value of trust assets
• Self-dealing transactions that benefit the trustee personally
• Unequal treatment of beneficiaries
• Failure to distribute funds as required by the trust document
• Lack of transparency regarding financial activity

Trust disputes can become particularly complicated when large investment portfolios, real estate holdings, or business interests are involved.

Fiduciary Litigation Involving Agents Under Powers of Attorney

Many people grant trusted individuals the authority to manage financial matters through a power of attorney. These agents may pay bills on their behalf. Lawsuits involving a power of attorney could be appropriate when the agent does the following:

• Transfers assets into their own name
• Uses funds for personal expenses
• Makes unauthorized financial transactions
• Alters estate plans for personal gain

Conflict involving powers of attorney can be especially contentious, as they usually entail a family member who is older or incapacitated.

What Are Common Warning Signs of Fiduciary Misconduct?

Beneficiaries often notice warning signs long before they have concrete proof of wrongdoing. While this might not be the concrete evidence they need to win at trial, recognizing these signs early can help prevent additional losses and set the stage for litigation.

Common red flags include the following:

• Unexplained withdrawals from estate accounts
• Missing financial documents
• Sudden changes in asset ownership
• Prolonged delays in distributing estate property

Another warning sign is a fiduciary who refuses to communicate or provide financial information, even when required to do so. If you are concerned about transparency issues, now is the right time to talk to an attorney.

Possible Outcomes of Fiduciary Litigation

Courts handling fiduciary disputes have several tools available to resolve these cases and protect beneficiaries. One common remedy involves ordering the fiduciary to return improperly used funds or property. Courts may also require reimbursement of financial losses when they determine negligence or misuse.

In extreme cases, the court may remove the fiduciary from their position and appoint a new executor or trustee. This is done when there are real concerns that the risk of fraud or misuse is still high.

How a Philadelphia Fiduciary Litigation Attorney at Klenk Law Can Help

Fiduciary litigation plays an important role in protecting beneficiaries when someone entrusted with financial authority abuses that responsibility. At Klenk Law, we are prepared to pursue litigation when it is necessary to protect your rights. Reach out to a Philadelphia fiduciary litigation attorney right away to learn more.