A fiduciary duty is a legal obligation that one party has to another to act in their best interests. This duty is typically seen in relationships where there is a power imbalance, such as between the trustee and beneficiaries of a trust or an executor and the beneficiaries of an estate.
When acting as a fiduciary, an individual is expected to put aside their own interests and instead act in a way that benefits the other party. Fiduciaries must always act in good faith and exercise due care when making decisions on behalf of others. Violating these duties can result in legal liability.
What Happens When Fiduciary Duty Is Breached?
If the party who owes the fiduciary duty breaches this duty, the other party may have grounds for a lawsuit. In a breach of fiduciary duty lawsuit, the plaintiff will need to prove that the defendant owed them a fiduciary duty, breached this duty, and caused them damages as a result. If successful, the plaintiff may be able to recover compensation for their losses.
Additionally, if the fiduciary is a trustee, California Probate Code §15642 allows them to be removed from their position if they breach a fiduciary duty owed to the trust or its beneficiaries. In these situations, the breach is also known as a “breach of trust.”
Likewise, California Probate Code §8502 permits executors to be removed from office if they violate fiduciary duties through fraud, mismanagement, neglect, or otherwise endanger the beneficiaries’ interests.
What Is the Penalty For Breach of the Fiduciary Duty of an Agent?
A fiduciary duty is the highest standard of care at either equity or law. As such, when a fiduciary duty is breached, the penalties can be severe.
When it comes to executors and trustees, the most common penalties include suspension or removal from office and a “surcharge,” which is a court order requiring the payment of money damages, attorney fees, and/or court costs. In some cases, fiduciaries may also be ordered to pay punitive, double, or treble damages. And in the rarest and most severe cases, fiduciaries who commit serious breaches may face criminal charges.
While each case is unique, any breach of fiduciary duty should be taken seriously. Fiduciaries who violate their duties can expect to face significant consequences.
What Damages Are Recoverable For Breach of Fiduciary Duty?
In California, the law provides for a variety of damages that may be recoverable in a breach of fiduciary duty case. These damages include compensatory, punitive, double, or treble damages.
The most common type of money damages in a breach of fiduciary duty case is compensatory damages, which are intended to reimburse the victim for any losses suffered as a result of the breach. In some cases, fiduciaries may also be ordered to pay punitive damages, which are designed to punish the breaching party and deter future breaches.
Additionally, double and treble damages may be available as statutory remedies in certain situations. If awarded, the amount of compensatory damages the fiduciary must pay will be doubled or tripled.
On top of the payment of damages, the fiduciary may also be required to reimburse the principal for any fees and costs they incurred during the breach of fiduciary duty lawsuit. This may include fees paid to lawyers and expert witnesses, as well as filing fees and court costs.
The specific type of damages that can be recovered will depend on the facts of each case. Victims of breach of fiduciary duty should consult with an experienced attorney to learn more about their legal rights and options.
When Should I Contact a Probate Litigation Lawyer?
As fiduciaries, executors and trustees have a legal duty to handle the estate’s assets responsibly. While most faithfully carry out their duties, some breach their fiduciary duty to the estate/trust and its beneficiaries. Signs that an executor or trustee may be breaching their fiduciary duty include self-dealing, mismanaging estate assets, failing to provide accountings, and using estate funds for personal expenses.
If you suspect that an executor or trustee has breached their fiduciary duty, you should contact a probate litigation lawyer as soon as possible. Probate litigation attorneys specialize in handling disputes relating to wills and trusts, and they can help you determine whether there has been misconduct. A seasoned lawyer can review the facts of your case and determine whether there has been a breach of fiduciary duty. If there has been a breach, the lawyer can take legal action to hold the executor or trustee accountable and protect your interests.
Have questions? We’re happy to discuss.
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About RMO, LLP
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 (424) 320-9444 or visit: https://rmolawyers.com.