From Our “Ask a Question” Mailbag: Proving a Breach of Fiduciary Duty

Most Recently Updated August 9, 2018.

“My mother died in Montgomery County, PA, and set up a trust for me in her will.  The Trust pays out now that I am 40.  I recently found out the trustee failed to pay the Trust’s income taxes for ten years.  How do I prove a breach of fiduciary duty took place?  Can I make him pay the interest and penalty?”

Proving a Breach of Fiduciary Duty

First, don’t sign any releases.  There is little I can do if you release the Trustee from liability.

As a beneficiary, you have the legal right to have the Trustee provide you with a complete trust accounting.  This accounting should include an explanation of all investments and expenses.  By failing to file the trust’s income tax return, there are interest and penalty charges owed to both the IRS and the Pennsylvania Department of Revenue. His “informal” accounting will explain how to pay these costs.  If the trust’s assets pay the costs, the Trustee must explain why the Trustee is not using his funds.

Bring the issue of Breach of Fiduciary Duty to the Orphans’ Court.

If the Trustee fails to provide you with a satisfactory answer to your questions, then it is time for court.  You have the right to file a Petition with the Orphans’ Court to obtain an order to force a Formal Accounting.  A Formal Accounting will bring the matter before the judge.  You are then free to object to the Trustee’s position and explain to the judge why the trustee should pay the costs. The judge will consider all the evidence.  If the judge finds the trustee committed a breach of fiduciary duty, the judge can “surcharge” the trustee.  This court order forces the trustee to pay the cost. 

Visit my website for more information about a Formal Accounting and about Contesting and Objecting to a Formal Accounting.

Breach of Conduct is Grounds for A Trustee’s Removal.

Further, we can petition the Montgomery County Orphans’ Court to remove the trustee on your behalf.  With more information, I could better address the advisability of a removal action.  While Breach of Fiduciary Duty is grounds for removal, it might not work with these facts.  The judge might not remove this trustee as all that remains to do is distribute the funds. She would certainly entertain the trustee’s removal if this trust continues for some time.

Further Estate Litigation Questions?

Proving a Breach of Fiduciary Duty is only one of many Estate Litigation issues our firm addresses. Consequently, if you want to learn more, please read my more detailed article, Trust and Estate Litigation All You Need to Know.

In Conclusion: Proving a Breach of Fiduciary Duty

I hope that this article was helpful in explaining Proving a Breach of Fiduciary Duty. Further, I included links to even more detailed information on my website. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Litigation Lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced Litigation Attorneys.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to put our 25 years of estate litigation experience to work for you.

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Tags: Breach of Fiduciary Duty, Estate Litigation, Formal Accounting, Glen Ridenour, Informal Accounting, Litigation, Montgomery County, Pennsylvania, Surcharge, Trusts