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How do you breach your fiduciary duty?

On Behalf of | Apr 30, 2019 | estate administration & probate |

Should you become the executor of someone’s Indiana estate or the trustee of someone’s trust, you become a fiduciary at the same time. FindLaw explains that as a fiduciary, you must always act in the best interests of the heirs or beneficiaries rather than in your own best interests.

Acting in someone else’s best interests, however, does not mean that you must carry out your fiduciary duties perfectly. Should you inadvertently make a financial miscalculation or make an innocent investment mistake, things of this nature do not constitute fiduciary breaches. Rather, to breach your fiduciary duty, you must deliberately do something that negatively affects the heirs and/or beneficiaries.

Committing fiduciary breach

Generally, a true fiduciary breach includes one or more of the following:

  • Deliberately acting for your own personal benefit rather than for the benefit of the heirs or beneficiaries
  • Deliberately giving misleading, inadequate or false information to the heirs or beneficiaries
  • Deliberately doing something else that causes the heirs or beneficiaries to suffer a loss

Proving fiduciary breach

If the heirs or beneficiaries believe that you breached your fiduciary duties to them, they can sue you. But to win their lawsuit, they will have to prove the following:

  • That the testator’s last will and testament or the grantor’s trust named you as the executor or trustee respectively
  • That the will or trust document delineated your fiduciary duties
  • That you deliberately acted contrary to those duties
  • That the heirs or beneficiaries suffered monetary damages because of your breach

Should the plaintiffs win their lawsuit, the court will require you to pay restitution to them in the full amount of the loss they suffered as a result of your fiduciary breach. It may also require you to pay interest on the loss amount from the date of your breach. Furthermore, if the court finds that you deliberately defrauded the heirs or beneficiaries, it could require you to pay punitive damages on top of their actual damages.

This is general educational information and not intended to provide legal advice.