The purpose of an estate plan is to ensure the proper handling of a decedent’s or incapacitated person’s assets. When an appointed person does not fulfill relevant duties or, worse, mismanages the assets for personal gain, it is a breach of fiduciary duty.
Understanding the laws concerning a breach can help you determine if it applies to the estate management of a loved one so you can take corrective legal action against the violator.
Definition of fiduciary duty
Fiduciary duty entails a legal obligation to act in the best interest of another party. Failing to do so is a breach of this duty and can lead to penalties, including removal from duty. In estate planning, those with a fiduciary duty are the executor of the estate, guardian and trustee.
Mistakes vs. breach
Those involved in administering an estate may be new to the role. Inexperience and misunderstanding can lead to unintentional mistakes. Although they require remedy, they do not qualify as a breach of fiduciary duty. A breach entails criminal intent to defraud for the purpose of self-service. Examples include stealing money, lying about activity and hiding information.
Holding violators accountable
Although the law requires executors and guardians to report to the court for review, it is no guarantee a judge will catch the wrongdoing. If you suspect fraudulent behavior, speak to a probate lawyer to determine if there has been a breach of fiduciary duty and not an accidental error.
Upon clear evidence of a breach, beneficiaries can petition the court to remove the person. They also may pursue a civil lawsuit to hold the violator accountable. If the court finds the person guilty, penalties include removal from the role, fees and damages. For less severe cases and mistakes, you may be able to resolve the issue outside of court and receive compensation for lost benefits. This route can also prevent family disputes and lengthy litigation.