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Breach of the Fiduciary Duty: What You Should Know

Posted by Dana Law Group on November 2, 2021

Whenever an individual or organization (the principal) appoints someone to make financial decisions with that principal’s best interest in mind, that responsibility counts as a fiduciary duty. In the world of estate planning, executors, guardians, and personal trustees commonly hold this duty.

Unfortunately, breaches of fiduciary duty can and do take place. If you need to collect debts related to an estate or you count as an heir or beneficiary to that estate, you need to understand what constitutes a breach of fiduciary duty, how to recognize this problem when it occurs, and what legal responses you might need to make.

Fiduciary Duty and Personal Estates

The holder of a fiduciary duty to an estate may have broad latitude to make a variety of critical financial decisions, from the funding of trusts to the payment of debts, distribution of inheritances, and other asset management tasks. If this person deviates from the stated wishes of the principal, either intentionally or unintentionally, a breach of the fiduciary duty has occurred.

Executors and other entrusted individuals can breach their fiduciary duty in many ways. They may act in their own self interest in a manner that diverts funds or properties to themselves instead of the designated beneficiaries, or inflate their own executor fees unreasonably. They may ignore probate laws, rules, or deadlines. They may also neglect to pay creditors to whom the estate owes debts.

How to Spot a Breach of the Fiduciary Duty

Unless you follow an executor’s day-to-day estate management closely, you may find it difficult to know whether, or to what extent, the executor breaches a fiduciary duty. However, you might take the following situations or issues as signs of trouble:

  • Diverted or misused assets – If you believe that the executor has mingled his own assets with the estate’s assets or used the estate’s assets for his own purposes, you may be looking at a clear breach of the fiduciary duty.
  • Confusing, inaccurate, or incomplete records – The executor must manage the estate correctly, which includes keeping thorough financial and asset records. If you see obvious gaps and inconsistencies in financial records, a breach of fiduciary duty may have occurred.
  • Inconsistent responses to creditors – If the executor appears to be playing favorites by paying some creditors more quickly or completely than others, that favoritism breaches the fiduciary duty.

How to Respond to a Breach of the Fiduciary Duty

A suspected breach of the fiduciary duty may call for legal action. Dana Law Group, LLC can help you sort out the confusion and get the estate administered according to the principal’s wishes.