A breach of fiduciary duty occurs when an individual who is in a fiduciary position acts in a way that violates their duty to act in the best interests of another party, usually a client or beneficiary. In the cases of a trustee managing a trust, or an executor managing an estate, these individuals have a fiduciary duty to the beneficiaries of the trust or estate. If a breach of this duty occurs, steps must be taken to remedy the breach that has taken place.
Steps To Remedy A Breach Of Fiduciary Duty
To remedy a breach of fiduciary duty in estate cases, several steps can be taken:
- Identification of the Breach: The first step involves identifying the specific breach of fiduciary duty. A breach might occur if they mismanage assets, act in their own self-interest and disregard the Trustor’s or the Settlor’s intent, favor certain beneficiaries over others without a valid reason, embezzle funds from the account, or any other type of misconduct by the executor or trustee.
- Gather Evidence: It is important to collect evidence that supports the claim of breach of fiduciary duty. This might include financial records, correspondence, and witness statements.
- Legal Consultation: Consult with an experienced trusts and estate planning attorney. They can provide guidance on the legal framework and options available if there has been a breach of fiduciary duty. In addition, it might be wise for fiduciaries to hire experienced estate planning attorneys from the outset for advice so that a breach never even occurs. In fact, fiduciaries themselves have the legal right to retain an attorney, whose fees are paid by the estate or trust, to ensure decisions are free of conflict and self-dealing.
- Demand for Accounting: If a beneficiary believes there has been a breach, they can hire an estate litigation attorney to obtain a court order for a full accounting from the executor, personal representative, administrator, or trustee. This accounting must detail every estate asset and justify every expense. If the fiduciary is found to have caused financial damage, they may be required to refund the estate from their own personal funds.
- Mediation or Settlement: Before proceeding to court, consider mediation or a settlement. This can be a less costly and quicker way to resolve disputes.
- Filing a Lawsuit: If other steps fail, filing a lawsuit might be necessary. The court can order various remedies like restitution, as well as damages for losses. If the breach is proven, the court can also order the removal of the fiduciary and appoint a new one.
- Implementation of Court Orders: Once a court has made a decision, ensure that its orders are implemented. This might involve the redistribution of assets, payment of damages, or other corrective actions.
- Monitoring the Estate’s Management: After resolving the breach, ongoing monitoring of the estate’s management can prevent future issues. Future prevention might involve drafting clearer estate documents or being more diligent when choosing fiduciaries.
In all cases, the involvement of legal professionals and possibly the court system is crucial to ensure that a breach of fiduciary duty is corrected and the interests of the beneficiaries are protected. Since each case is unique, the steps and their effectiveness can vary based on the specifics of the situation. The law firm of Jones, Gregg, Creehan and Gerace has experienced trusts and estate planning attorneys who can help you navigate your personal situation.