Breach of Fiduciary Duty

What is Fiduciary Duty and Breach of Fiduciary Duty?

A fiduciary is a person or professional entity in a particular position of trust and responsibility to someone else. Their fiduciary duty is to act in the best interest of the other party. For example, an Executor has a fiduciary obligation to act in the estate beneficiaries’ best interest, and a Trustee has a fiduciary duty to act in the trust beneficiaries’ best interest. A Breach of Fiduciary Duty occurs when the fiduciary instead acts in the best interest of themselves or some other party.

Typical examples of a person with a fiduciary duty are Executors, Personal Representatives, Administrators, Trustees, Guardians and Agents under Powers of Attorney.

Advice for the Fiduciary.

The most experienced professional fiduciaries hire experienced Estate Planning Attorneys to advise them. Hiring an advisor is excellent advice because as a fiduciary, you have the legal right to retain an experienced Estate Planning Lawyer to assist and advise you. There is no personal cost to you. The estate or trust pays the fee because obtaining advice when the chance for personal liability exists is a reasonable expense. Going without sound advice provided at no personal cost is foolish.

Fiduciaries should not use estate or trust assets for personal gain. Your decisions need be free of conflict and self-dealing. Sometimes the lines of what is your personal gain and what is best for the beneficiary are gray. When the lines are unclear, seek the advice of a seasoned Estate Planning Lawyer. Your lawyer can be a sounding board (at no cost to you) to help ensure your actions do not create personal liability.

What are the Elements of a Successful Breach of Fiduciary Duty Case?

To successfully execute a Breach of Fiduciary Duty claim, you must prove to the judge:

• Existence: That a Fiduciary Relationship Existed.
• Breach: That there was a Breach of that Fiduciary Relationship.
• Damage: That the Breach caused financial damage that the court can rectify.

Breach of Fiduciary Duty and the Agent or Attorney-in-Fact.

A Power of Attorney gives authority to a person who is called the Agent or the Attorney-in-Fact. This person owes a fiduciary duty to the individual who signed the Power of Attorney, the “Principal.” The document itself defines the exact extent of responsibility and thus fiduciary duty owed. Therefore, Agent liability will result if the Attorney-in-Fact’s actions conform or exceed the powers granted in the Power of Attorney.

As an illustration, typical Breaches of Agent Fiduciary Duty include:

• Improper Gifts.
• Self-Dealing.
• Commingling.
• Losses created by the Agent’s wrongful act or omission.

If you are an interested party believing that an Agent has abused his position, you have the right to retain an Estate Litigation Attorney to force the Agent to provide a full accounting. This Agent Formal Accounting must include information on all assets and explain every action the Agent took. If the Agent committed a Breach of Fiduciary Duty, the judge could surcharge the Agent, forcing repayment out of the Agent’s personal funds. Further, the judge could Remove the Agent and appoint a Guardian of the Person and Guardian of the Estate.

Breach of Fiduciary Duty and the Executor.

An Executor has an obligation to expeditiously bring the estate to a conclusion maximizing the beneficiary’s inheritance. The Executor must gather the estate assets, settle the deceased’s debts and then distribute what remains according to the Will or the Rules of Intestacy.

If you are a beneficiary and believe that the Executor, Personal Representative or Administrator of the estate has committed a Breach of Fiduciary Duty you have the right to retain an Estate Litigation Attorney to obtain a court order forcing the fiduciary to provide a full accounting.

This Executor Formal Accounting must be in a particular format and provide detailed information on every estate asset. Further, the report must justify every expense. Equally important, if the judge finds the Breach of Fiduciary Duty caused financial damage, the judge can surcharge the fiduciary. Therefore, a judge ordered surcharge means the guilty party must refund the estate from the fiduciary’s personal funds. The judge may also Remove the Executor.

Typical Breaches of Executor Fiduciary Duty include:

• Embezzlement.
• Commingling of Estate Assets.
• Self-Dealing.
• Losses created by the Executor or Executor’s agent’s wrongful act or omission.

Breach of Fiduciary Duty and the Trustee, Breach of Trust.

If you are a trust’s beneficiary and believe that the Trustee has committed a Breach of Fiduciary Duty or Breach of Trust, you have the right to retain an Estate Litigation Attorney who will obtain a court order forcing the Trustee to file a full accounting. This Trustee Formal Accounting must explain every expense and every action taken from when the Trustee began. If the Trust has existed for decades, then the Trustee must account for decades of work. Equally important, if the judge finds the Breach of Fiduciary Duty caused harm, the judge may surcharge the Trustee. Therefore, ordering a surcharge means that if the Trustee cannot recover the funds, the Trustee must use his personal funds to repay the Trust. The judge also has the power to Remove the Trustee.

With this in mind, other Remedies for Breach of Trust include:

• Obtaining a judge’s order compelling the Trustee to perform duties.
• Obtaining an order enjoining the Trustee from acting in breach.
• Trustee removal.
• Removing specific assets into the hands of another Trustee.
• Reducing the Trustee’s compensation.

Breach of Fiduciary Duty and the Guardian.

A judge may appoint a Guardian of the Estate for minors and Guardians for incapacitated adults. The Guardian owes a duty to collect the person’s assets and then to manage and preserve them for the minor or incapacitated person’s best interests.

If a Guardian Breaches the Fiduciary Duty owed, they can be personally liable for the damages. An interested party can retain an experienced Estate Litigation Attorney to bring the matter before the court. The judge can order a Guardianship Formal Accounting, surcharge the Guardian or even Remove the Guardian.

Common Questions About Breach of Fiduciary Duty.

We Can Help!

Our attorneys, with vast experience in trust and estate matters, can help advise you and help you avoid traps and pitfalls. If you are currently serving as an agent, executor or trustee, or if you are considering taking on that fiduciary responsibility, contact one of our experienced estate litigation attorneys to represent you.

Reasonable Prices | Years of Experience | We Stand With You and We Fight For You.

If you are a fiduciary, you can use our advice to avoid personal liability and litigation. If you are a beneficiary, we can discuss the pros and cons of pursuing a Breach of Fiduciary Duty Claim. Both prosecuting and preventing estate litigation are a large part of our Estate Litigation Lawyer practice. Breaches of Fiduciary Duty actions are not a part-time job for us!

Feel free to Contact our office to set up a free consultation. We try to make the process as painless as possible!