A breach of fiduciary duty occurs when a “fiduciary,” such as the personal representative of an estate, a trustee, or a guardian, fails to comply with the duties created by the nature of their relationship with another person.
A fiduciary relationship exists whenever one person places confidence and trust in and is at some level dependent on another person for a particular transaction. As a result of this fiduciary relationship, the fiduciary must act in the best interest of the principal. So, for example, a personal representative of an estate must administer the estate according to the best interests of the beneficiaries.
In Florida, breach of fiduciary duty is a civil cause of action, not a criminal offense. This means that if a principal can show that a fiduciary relationship existed and the fiduciary caused them harm by breaching a fiduciary duty, they can file a civil lawsuit against the fiduciary to recover money damages. A civil lawsuit does not result in jail time or a criminal record for the fiduciary.
However, some breaches of fiduciary duties, like those involving embezzlement, theft, fraud, and exploitation or abuse of elderly or disabled persons are crimes. Unfortunately, many prosecuting agencies cannot always commit the time and resources to litigate these cases, and, except in the most egregious situations, they usually let civil courts handle such disputes.
How Do You Prove Breach of Fiduciary Duty?
If a fiduciary breaches one or more of their duties, the principal can file a civil lawsuit against them seeking equitable remedies (such as removal of the fiduciary) or monetary compensation for any losses they suffered because of the breach of fiduciary duty.
In a breach of fiduciary duty lawsuit, the principal must prove three elements:
- That a fiduciary relationship existed
- That the fiduciary breached a fiduciary duty
- That the breach caused the principal to suffer damage or harm
What Is an Example of Breach of Fiduciary Duty?
Florida law outlines specific fiduciary duties that apply to personal representatives and trustees.
For instance, the Florida Trust Code outlines the duties that a trustee owes to the trust beneficiaries, including:
- Administering the trust in good faith and according to its terms and purposes. (Florida Trust Code 736.0801)
- Administering the trust solely in the beneficiaries’ best interests. (Florida Trust Code 736.0802)
- Administering the trust impartially and giving due regard to each beneficiary’s interests. (Florida Trust Code 736.0803)
- Administering the trust prudently and exercising reasonable care, skill, and caution. (Florida Trust Code 736.0804)
- Incurring only those expenses that are necessary and reasonable. (Florida Trust Code 736.0805)
- Keeping trust beneficiaries reasonably informed about the administration of the trust. (Florida Trust Code 736.0813)
Additionally, Florida Probate Code 733.602 explains that “a personal representative is a fiduciary who shall observe the standards of care applicable to trustees.” The statute also says that personal representatives have a duty to act in the best interest of interested persons, including creditors, and settle and distribute the estate according to the terms of the will (if any) and as expeditiously and efficiently as is consistent with the best interests of the estate.
Some common examples of breaches of fiduciary duties are:
- Conflicts of interest
- Mismanaging estate or trust assets
- Failing to keep beneficiaries reasonably informed
- Failing to file required accountings
- Embezzling or misappropriating estate or trust property
- Paying excessive compensation
How Serious Is Breach of Fiduciary Duty?
A fiduciary who breaches a fiduciary duty can face serious consequences, including removal from their position and personal liability.
If a principal is successful in a breach of fiduciary duty lawsuit, the fiduciary can be removed and even held responsible for any monetary damages suffered as a result of the breach. The court may also assess punitive damages, which require the fiduciary to pay additional money as recompense for particularly objectionable behavior.
If you have been accused of breaching a fiduciary duty, you should discuss your situation with an estate and trust litigation lawyer as soon as possible. An experienced attorney can help you evaluate your defense to the claims against you, try to avoid personal liability, and try retain your fiduciary position.
Have questions? We’re happy to discuss.
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About RMO Lawyers, LLP
About RMO LLP serves clients in Los Angeles, Santa Monica, Ventura, Santa Barbara, San Francisco, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri, and Kansas. Our founder, Scott E. Rahn, has been named “Top 100 – Trust and Estate Litigation” by SuperLawyers, Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation – Trusts and Estates. For a free consultation, call (786) 761-8333 or visit: https://rmolawyers.com