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What is a Fiduciary and what amounts to a breach of duty?

On Behalf of | Nov 28, 2018 | Estate Planning |

A testator is a person who signs a Will for the distribution of his or her property after death. Typically the testator will nominate someone to be the executor or personal representative of the estate.

This person is a “fiduciary” which means that person is handling the assets of the decedent on behalf of other persons. The executor is accountable to the person or persons for whom he or she is administering the funds or property.

The executor has many duties, all of which are fiduciary in nature. What this means is that he or she is a person the testator trusted enough to place his or estate into your hands for the purpose of collecting, managing, accounting for and ultimately distributing its assets to the heirs and beneficiaries as specified in the will. In other words, in all that the executor does, he or she has a fiduciary duty to the heirs and beneficiaries to keep their interests foremost and above the executor’s personal or financial interests.

No one expects the executor  to perform his or her duties flawlessly. He or she is, after all, a human being and human beings occasionally make mistakes. Therefore, should the executor inadvertently make a calculation error or some other unintended mistake, the executor will not usually be held accountable for it. Only if the executor deliberately does something against the best interests of the heirs and beneficiaries can one or more of them sue the executor for breach of their duty.

Common fiduciary breaches

While a fiduciary can breach his or her duties in a number of ways, some of the most common reasons why heirs sue for breach of fiduciary duty include the following:

  • The executor deliberately gave the heirs or beneficiaries insufficient or false information.
  • (S)he acted for his or her own personal benefit and/or gain rather than for that of the heirs and beneficiaries.
  • (S)he deliberately did something not in the best interests of the heirs and beneficiaries.

Elements of proof

Should one or more of the heirs or beneficiaries sue you for breach of your fiduciary duty, they will have to prove all four of the following things:

  1. That the testator named you as his or her executor in his Last Will and Testament
  2. That the will specified the fiduciary duties you were to perform
  3. That you breached these duties by acting contrary to the will’s provisions
  4. That because you breached your duties, the estate and/or its heirs and beneficiaries suffered economic damages

Should the jury determine that you did indeed breach your fiduciary duties, you could have to personally pay restitution to the estate and/or its heirs and beneficiaries in the full amount of whatever financial damages it or they suffered. In addition, the jury could also hold you liable for the payment of punitive damages over and above the plaintiffs’ actual damages if it finds that your actions were particularly egregious.