A fiduciary duty is one of the highest legal responsibilities, requiring an individual to act in the best interests of another party. In the context of an estate, fiduciary duty typically applies to an executor, trustee or administrator who is responsible for managing the assets of the estate and ensuring that they are distributed according to the deceased’s wishes or applicable laws.
Breaching this duty means failing to fulfill these obligations, which can lead to significant legal and financial consequences. Those who maintain this kind of duty, as well as those who may suffer harm as a result of a breach, can benefit from understanding the basics of this legal concept.
Breaching fiduciary duties during estate administration
The fiduciary in charge of an estate must adhere to specific responsibilities, including:
- Acting in the Best Interest of Beneficiaries: A fiduciary is required to prioritize the interests of heirs and beneficiaries over their own personal interests. This includes avoiding conflicts of interest or using estate assets for personal gain.
- Managing Assets Prudently: A fiduciary must handle estate assets responsibly, which may involve maintaining and protecting their value. This may involve paying debts, managing investments and selling property, all while making decisions that align with beneficiaries’ best interests.
- Following the Terms of a Will and/or Trust (if applicable): A fiduciary must carry out the wishes of the deceased as outlined in their will or trust if one or both were created. This may involve distributing assets accurately and ensuring that all provisions are honored.
- Providing Transparency and Accountability: Fiduciaries are obligated to keep accurate records and provide beneficiaries with updates on the status of the estate. This includes a detailed accounting of income, expenses and distributions.
A breach of fiduciary duty occurs when the fiduciary fails to meet their legal responsibilities. Common examples of breach in this regard include:
- Misusing Estate Assets: Using estate funds for personal expenses or failing to invest assets prudently
- Failing to Communicate with Beneficiaries: Withholding information or providing inaccurate or incomplete accounting
- Neglecting Duties: Delaying the administration process, such as failing to pay taxes or distribute assets within a reasonable timeframe
- Acting in Self-Interest: Engaging in actions that prioritize personal gain over the estate’s interests, such as selling estate property to themselves at below-market value
When a fiduciary breaches their duty, beneficiaries have the right to take legal action. Seeking legal guidance is a great way to learn more.