Losing a loved one can cause you and your family a lot of emotional turmoil. But navigating the complexities of their estate can be more challenging than you expected. Even when you think the estate’s administrator has figured out how to distribute assets in accordance with existing estate planning documents, issues can still come up. Sometimes, even years after you think all is said and done. This is often the case when an executor, administrator or trustee breaches their fiduciary duty.
What is the fiduciary duty?
The fiduciary duty requires an individual in a certain role to act in a way that puts the financial interests of someone else above their own interests. Fiduciaries include estate administrators, personal representatives, executors, trustees and others. So, when a trustee oversees a trust, they are required to act in a way that benefits the trust and its beneficiaries. If the trustee fails to do that and instead acts in a way that brings them financial gain at a cost to the estate and named beneficiaries, a breach of the fiduciary duty has occurred.
Why breach of the fiduciary duty is problematic
This seems obvious, but a breach of the fiduciary duty can leach money from the estate, meaning that you, as a beneficiary, may be left without the resources that your loved one intended you to have. The fiduciary’s breach of the duty can also cause you a significant amount of stress, time, and money as you try to correct the issue.
Signs that the fiduciary duty has been breached
In order to spot signs that the fiduciary duty has been breached, you have to stay alert. If you see any of the following, you should start asking questions and considering whether legal action is appropriate:
- Assets have gone missing: One of the biggest red flags that the fiduciary duty has been breached is that assets have gone missing from the estate, especially if the fiduciary can’t provide an explanation for their disappearance. If you discover that assets are missing, there’s a good chance that the trust in question has either been mismanaged or the fiduciary has misappropriated the assets in question.
- Bad accounting practices: The fiduciary is required to provide an accounting of the trust’s assets when requested. If, upon review of those records, it’s evident that the trustee hasn’t been keeping track of income and expenses, you need to investigate further to see if the gaps in accounting practices are significant enough to have caused you and the estate financial harm.
- Favoritism: The fiduciary should treat named heirs and beneficiaries as dictated in applicable estate planning documents. They should also pay creditors in accordance with state law. If the fiduciary strays from these requirements, you may want to start asking questions to better determine if favoritism has led to a breach of the fiduciary duty.
- Commingling assets: A fiduciary should always keep their personal assets separate from those of the estate. If they mix the two, the estate’s funds have been mismanaged and the fiduciary may have been trying to misappropriate the funds in question.
Finding accountability for a breached fiduciary duty
Your loved one’s vision of the future and your financial stability could be on the line when a fiduciary breaches their duty. That’s why it’s critically important to seek accountability if you think that something has gone wrong. To better ensure that your rights are protected, you may want to consider discussing your situation with an attorney experienced in probate litigation.