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Grant & Barrow, A Professional Law Corporation

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Four signs that a trustee is breaching the fiduciary duty

On Behalf of | May 9, 2023 | Probate And Estate Administration |

When someone leaves assets behind through their estate plan, they trusted that those assets would be properly managed and distributed in accordance with their wishes. In many instances, estate executors and trustees handle their duties without issue. In some cases, though, concerns about breach of the fiduciary duty arise, which can lead to highly contentious litigation.

If you want to avoid that happening to you, then you need to know how to avoid perceptions that you’ve breached that duty and what to do once those allegations have been made.

What is the fiduciary duty?

In short, a fiduciary duty arises when someone has a duty to put the interests of someone or something else ahead of their own. Therefore, in the estate planning and probate context, a trustee would put the interests of the estate and named beneficiaries first. As a result, all investment and disbursement decisions should be made in a way that further those interests.

What happens if the fiduciary duty is breached?

Not all estate executors and trustees are flawless. When they violate their fiduciary duty, though, an extensive amount of harm can be caused to the estate and its beneficiaries. Money can go missing from the estate or it can be lost through bad investments. Therefore, a breach of the fiduciary duty can leave beneficiaries without the financial resources that they expected to inherit through their loved one’s estate plan.

Has fiduciary duty been breached?

Those who remain observant and diligently analyze an executor or trustee’s handling of an estate may be able to spot red flags that the fiduciary duty has been breached. This may include any of the following:

  1. Lackluster accounting: Estate beneficiaries should be able to see an accounting of the estate’s assets upon request. If those accounting records are incomplete or missing, though, then it’s easy for estate assets to go missing without immediate proof of where they’ve gone. This is a sign that the fiduciary duty might’ve been breached.
  2. Missing assets: If upon inspection it’s discovered that assets are missing, then an appropriate justification is going to be sought. If one can’t be given, then suspicions are sure to arise, and allegations that the fiduciary duty has been breached may be warranted.
  3. Commingling of assets: A trustee or estate executor should never mix estate assets with their own assets and accounts. When they do combine them, it can be hard to tell where their assets end and the estate’s assets begin. This makes it easier for a trustee or executor to convert estate assets for their own use, which is why this is a big red flag that the fiduciary duty has been breached.
  4. Favoritism: The estate or trust in question may have multiple beneficiaries, and there may be creditors interested in the estate or trust’s assets, too. If the person responsible for managing those assets shows favoritism toward a certain beneficiary or a creditor, the fiduciary duty may be breached as to other beneficiaries. That’s why trustees and estate executors need to carefully think through each action they take to ensure that it won’t be perceived as favoring one beneficiary over the other.

Do you need help with your probate issues?

There are a lot of issues that you can run into when an estate is being managed and distributed. Any one of them can lead to contentious litigation that’s stressful and costly. If you wish to protect your interests in those matters, then it is important to know the most effective way to advocate for your position.

That will most likely mean educating yourself on the law and how it applies to your set of circumstances, so make sure that you’re taking the time necessary to adequately prepare your arguments.