Breach Of Fiduciary Duty
When a person has passed away, his or her property usually passes to loved ones by means of a will or trust or by intestacy. However, the process does not happen automatically. Someone must be in charge of making sure that things go smoothly. Most people appoint their children or other trusted individuals to the role. Others appoint institutions or neutral third parties. These representatives are “executors, administrators, or trustees.”
Representatives have legal duties of confidence or trust — fiduciary duties — to act in accordance with the deceased person’s wishes and State and Federal laws. While most estate representatives do so, that does not always happen. Representatives sometimes misbehave. On the other hand, they may face false allegations of breach of fiduciary duty.
At the Arlington Heights, Illinois, law office of Cary A. Lind, P.C., we represent many clients in matters related to breaches of fiduciary duty. Each situation is different. We tailor our approach to our clients’ situations, often to protect our clients’ rights as beneficiaries. We also represent fiduciaries when they are accused (often without good cause) of breaches of fiduciary duty.
What Is a Fiduciary Duty?
As more than one court has said, Trustees or other representatives owe fiduciary duties to a trust’s or estate’s beneficiaries and is obligated to carry out that duty according to the terms of the will or trust and to act with the highest degrees of fidelity and utmost good faith. The fiduciary also must manage the trust assets capably and address any issues that arise. Although not an exclusive list, the three traditional duties of a fiduciary are care, impartiality, and loyalty.
- Duty of care: This duty is considered to be the most basic duty. It requires a fiduciary to carefully manage trust or estate assets in accordance with the law and estate documents.
- Duty of impartiality: This duty requires a fiduciary to treat all beneficiaries equally, not favoring one over another.
- Duty of loyalty: This duty requires a fiduciary to act solely in the interest of the beneficiaries and not in the interest of the fiduciary.
Remedies: Compensation to Beneficiaries Affected By the Breach
We often seek compensation on behalf of estate and trust beneficiaries who have suffered losses or have been negatively affected by breaches of fiduciary duty. A court can impose several remedies for breach of fiduciary duty, depending on the nature of the conduct, the financial impact on a beneficiary, and other factors.
Monetary remedies include what is called a surcharge, which requires a fiduciary to pay money to the trust or estate. The court may also deny the fiduciary the right to receive fees or to pay attorney fees from estate assets. Where beneficiaries prove a breach of fiduciary duty, a court or jury is authorized to award punitive damages against a fiduciary. If punitive damages are awarded, a court or jury can take into consideration the amount of compensatory damages, fees, and costs incurred by beneficiaries along with the assets and income of the fiduciary. Beneficiaries may also seek removal of the fiduciary.
We have experience in the subject area and use that experience to streamline proceedings to the extent we can and to keep fees to as low an amount as feasible in doing so.