Fiduciary Duty Litigation

Protecting You After a Breach of Duty by a Fiduciary

Part of drafting a will or creating a trust is designating a trusted individual to manage the estate or trust property after a death. A personal representative is an individual who manages the administration of an estate while a trustee takes over management of a trust. Because mismanagement or misconduct of an estate or trust can cause significant financial harm to any or all beneficiaries, the law imposes the highest legal standard of care on these individuals-a fiduciary duty.

The law requires fiduciaries to act with care, loyalty, and in good faith to all beneficiaries. This means they must manage trusts or estates with the interests of the beneficiaries always in mind. Making an honest mistake will not constitute a breach of duty, but negligence or intentional misconduct that results in financial harm to beneficiaries is considered a breach of the fiduciary duty.

If you are a beneficiary of an estate or a trust, any misconduct by a fiduciary can make a seriously detrimental impact. If the estate or trust loses property or assets, so do you. The law gives you the right to take legal action against a fiduciary who breaches the duty to the estate or trust so you can obtain compensation for your losses.

Fiduciary duty litigation can involve extremely complex accounting and legal analysis. You need the assistance of a lawyer who has extensive experience representing beneficiaries against fiduciary mismanagement and wrongdoing. At Hackard Law, we regularly represent clients in this type of litigation and are here to assist you.

Types of Fiduciary Misconduct

As mentioned, not every action that results in losses to a trust or an estate constitutes fiduciary misconduct. Examples of actions that present strong cases for fiduciary misconduct include:

Self-dealing - This occurs when fiduciaries take action from which they stand to benefit. Fiduciaries should never put their own interests ahead of those of the beneficiaries of a trust or estate. Self-dealing can involve using assets for themselves, investing assets in their own businesses, and similar acts that reap personal benefits. Self-dealing can also rise to the level of embezzlement in some cases.

Conflicts of interest - Fiduciaries should protect one interest when it comes to managing a trust or an estate-the beneficiaries. Unfortunately, some fiduciaries use their positions of trust for the enrichment of themselves or others. If anyone else except the beneficiaries benefits from the management of a trust or estate, the fiduciary may have a conflict of interest. Conflicts of interest may also arise when fiduciaries accept bribes or other considerations to influence their conduct.

Beneficiary bias - The fiduciary duty is to all beneficiaries of a trust or estate and a fiduciary should never favor one beneficiary more than another. However, in some cases, a trustee or personal representative may enjoy a closer relationship to certain family members and may act to benefit them more. If one or two beneficiaries receive more profits than the rest, it is likely the result of beneficiary bias.

Lack of discretion - Beneficiaries have the right to know the details of all fiduciary acts, as well as the state of the trust or estate property. Acting in secrecy or not providing information to beneficiaries when requested can constitute a breach of duty.

Negligent mismanagement - Some personal representatives or trustees do not know how to properly manage estates or trusts or simply do not make the effort to do so. In such situations, a fiduciary is expected to seek help from a professional rather than let the assets go mismanaged. If they fail to seek help or to properly manage the accounts, beneficiaries can take action against them for negligence and breach of their fiduciary duties.

Fraud - Some fiduciaries engage in fraudulent activities that hurt the estate, trust, and all beneficiaries. Any type of fraud or misrepresentation regarding their actions or the state of the property can not only result in losses to beneficiaries but may also constitute criminal activity.

Fiduciaries must also defend estates against wrongful claims. For example, if a creditor makes a claim against an estate, the fiduciary should ensure the claim is legitimate and if it is not, they should defend against the claim instead of simply paying it.

Beneficiaries often have little idea that a breach of fiduciary duty occurred until the fidiciary has left the property of the estate or trust at risk for some time. For this reason, these claims often involve substantial losses. The law allows beneficiaries to bring a legal claim for breach of fiduciary duty to both remove the fiduciary from the position of trust and also recover compensation for their losses.

Legal Relief for Breach of a Fiduciary

There are two main goals in fiduciary duty litigation-to replace the fiduciary who engaged in misconduct and to restore the beneficiaries to the positions they held before the misconduct. Beneficiaries of an estate can petition the probate court to remove an appointed personal representative and beneficiaries of a trust can request that the civil court remove a trustee.

Fiduciaries can then face personal liability for all losses caused by the breach of their duties. A successful claim requires that you prove that a breach took place as well as the extent of your losses. Even a fairly obvious breach can turn into a complex claim. You need an attorney on your side who knows how to prove when misconduct rose to the level of a fiduciary breach of duty and who can fight to recover all of your losses.

Our California Fiduciary Duty Litigation Attorneys Can Help

When someone designates a personal representative or a trustee, that person is trusting that the fiduciary will abide by the assigned duty and act in the best interests of the estate or trust beneficiaries. Fiduciaries who fail to do so should face removal and liability for any harm they caused.

Hackard Law regularly handles fiduciary related claims in the Los Angeles and Santa Clara areas. We focus on estate litigation, so please call (213) 357-5200 in L.A. and (916) 313-3030 in Santa Clara, or contact us online to learn more today.