Losing someone you love is hard enough without having to worry about their estate being properly managed. As a beneficiary, you place tremendous trust in the executor, trustee, or other appointed fiduciary – but when communication breaks down or mismanagement is afoot, that trust can quickly erode.
You may feel powerless, but you’re not without options. With knowledge of your fiduciary relationship and the right fiduciary litigation attorney on your side, you can hold an unreliable or dishonest fiduciary accountable. At Gaslowitz Frankel, our sole focus is protecting your rights and ultimately recovering what’s yours.
Before consulting a law firm, it’s important to understand your particular fiduciary relationship. Let’s explore the common types of fiduciary relationships—and their most common breaches—so you know what to do if you’re a beneficiary who’s been wronged.
Related Article: Fiduciary Litigation: When It’s Time To Contact An Attorney
Common Fiduciary Relationships
A fiduciary relationship is a legal relationship in which the fiduciary party is obligated to act in the other’s best interests. Common examples of a fiduciary relationship include:
Trustee & Beneficiary
A trustee is responsible for managing trust assets and distributing them according to the trust’s terms. As a fiduciary, the trustee owes certain duties to the trust beneficiaries including prudent investing, transparent accounting, and impartiality toward beneficiaries. At Gaslowitz Frankel, we’ve noticed that trustee breaches of duty often arise as a result of asset mismanagement, or when favoritism is shown, either of which may warrant legal action.
Agent & Principal
In an agent-principal fiduciary relationship, the agent acts on the principal’s behalf. As fiduciaries, agents are obligated to avoid conflicts of interest and refrain from acts of self-dealing with their principal. Many breaches of fiduciary duty by an agent involve a misuse of their authority for personal gain.
Guardian/Conservator & Ward
A guardian and/or conservator makes decisions about the care and finances of a minor or incapacitated adult and is obligated to act in their ward’s best interest. Common breaches of duty in this type of relationship include neglect or financial exploitation for personal gain. A ward’s loved ones are encouraged to consult an attorney for guidance if they have concerns about a guardian or conservator.
Attorney & Client
Attorneys provide legal advice and representation to clients. As fiduciaries, they are bound by strict ethical and legal obligations to their clients. This fiduciary relationship encompasses several key responsibilities: competence, communication, confidentiality, and loyalty. Attorneys are required by law to provide honest legal advice that represents their clients’ best interests within the rule of law. Attorneys can’t take actions that compromise their clients – for example, they would be breaching their fiduciary relationship if they share confidential information without client consent, or prioritize someone else’s interests over those of their own client.
Board of Directors & Company
The Board of Directors plays an important role in shaping corporate strategy and overseeing business operations. Since they have a fiduciary relationship with their company, they owe duties of loyalty, care, and good faith, among others. Directors must act in the best interests of the company, avoiding conflicts of interest and self-dealing; and are required to make informed decisions that are enacted honestly and with integrity. Breaches of these duties commonly occur when directors fail to adequately research or consider relevant information before making decisions. Self-dealing, or engaging in transactions that benefit the director personally at the company’s expense, are also other common breaches of this fiduciary relationship.
What Counts as a Breach of Fiduciary Duties?
Generally speaking, a fiduciary breaches their duty when they harm the other party’s interests by acting negligently or unethically. Common examples across all fiduciary relationships include mismanaging assets, engaging in self-dealing, failing to communicate, and conflicts of interest. Any act or omission that violates the standard of care or loyalty attached to the fiduciary relationship can also qualify as a breach.
If your fiduciary has breached their duty in any of the following ways, it may be time to consult a trusted fiduciary litigation attorney:
Negligence
A breach of fiduciary duty due to negligence occurs when a fiduciary fails to provide the level of care that could reasonably be expected from another person under similar circumstances. Legally, negligence involves actions that fall short of the standard of care expected, leading to harm. Signs of this type of fiduciary breach include poor decision-making and ignoring important issues. If you think someone is being negligent, look for patterns of inaction, lack of due diligence, and oversight.
Self-Dealing
Self-dealing is also considered a breach of fiduciary duty. It happens when a fiduciary acts in their own interest rather than the best interest of the beneficiary. Any transactions where the fiduciary benefits personally from their position as a fiduciary can potentially be considered a breach of duty. If you suspect a fiduciary is self-dealing, look for undisclosed personal gains and decisions that benefit the fiduciary over others.
Mismanaging Assets
Mismanaging assets is also a common breach of fiduciary duty. If a fiduciary fails to manage prudently invest assets in a a trust, for example, it’s a sign that you may need to consult an attorney. Any actions or inactions that result in financial loss or diminished value of the assets should be monitored carefully. This includes poor investment decisions, lack of regular financial reviews, and high-risk transactions.
Failing to Communicate
Trustees and estate administrators are required to keep beneficiaries informed about important issues that affect their interests. This includes things like providing timely, accurate, and complete information. To avoid breaching this duty, fiduciaries should provide regular updates, timely answer questions from their beneficiaries, and generally be transparent about information important to the beneficiary’s interest.
Conflicts of Interest
If a fiduciary has personal interests that might cause them to act for their own benefit with the property or information with which they are entrusted, they have a conflict of interest. Some fiduciary relationships prohibit a fiduciary from even having a conflict of interest, while others simply prohibit the fiduciary from acting on the conflict. Factors such as undisclosed relationships, preferential treatment, and bias can all be seen as red flags.
What to Do If Your Fiduciary Has Breached Their Duties
If you suspect a fiduciary has breached their duties to you, don’t go it alone. A fiduciary litigation attorney can review your situation and advise you on steps you can take to protect rights and recover any damages. This may involve demanding a formal accounting or filing a lawsuit against your fiduciary – all of which we, at Gaslowitz Frankel LLC, can assist you with.
The attorneys at Gaslowitz Frankel LLC are leaders in estate litigation, especially when it comes to holding fiduciaries accountable. We guide estate beneficiaries like you toward optimal outcomes, enabling recovery and healing after the loss of a loved one. Opt for a firm that combines a compassionate approach with deep knowledge of fiduciary standards – serving you with both passion and expertise.
Related Article: Executors & Trustees: What to Know About the Fiduciary Duty of Loyalty
Consult Gaslowitz Frankel On Your Fiduciary Relationship
Here at Gaslowitz Frankel, our goal is always to advocate for the best outcome for our clients. The key to a successful outcome regardless of the path you choose to take is connecting with an attorney from the very beginning.
If you are seeking help finding a resolution for a dispute, we’re here to help. Contact us by filling out our contact form for a free consultation about your case.
