Relief For Beneficiaries Suing for Breach Of Fiduciary Duty

When a fiduciary breaches their duty, the courts can order relief that restores the beneficiaries to whole, including property transfer, injunction, money damages, and removal of a trustee.

What is a Breach of Fiduciary Duty in California?

When individuals are appointed to be trustees and executors, they are responsible for fiduciary duties. Additionally, there are other roles in estate planning and other business pursuits where professionals, such as lawyers and certain types of accountants, must exercise their fiduciary duties to the best of their abilities. But what exactly are fiduciary duties?

Fiduciary obligations are a serious undertaking, and when someone violates them, damaging repercussions can follow. Whether an individual is the trustee of an estate or the executor of the will of a loved one, it is essential to understand the role of fiduciary duties.

What Does ‘Fiduciary’ Mean?

“Fiduciary” is a term that is synonymous with trust, especially in terms of unions between beneficiaries and trustees.

When an individual is considered a fiduciary, they agree to act for the sake of another person or entity. In doing this, they place the client’s interests and affairs in front of their own.

Fiduciaries must act in good faith. Accordingly, they are lawfully bound to be trustworthy and behave ethically in their client’s best interests.

Fiduciary affairs often involve finances, and executors, trustees, bankers, and money managers all possess fiduciary responsibility.

A fiduciary is legally bound to place their interests second to their clients; therefore, their clients rely heavily on them. Therefore, when fiduciaries do not fulfill their duties, their negligence or self-dealing creates significant problems.

Typically, a fiduciary is an individual who holds a position of trust imparted by law. Fiduciaries hold vital relationships with third parties and are required to place the interests of those parties first.

How Does a Fiduciary Help with Estate Planning?

Fiduciaries are an essential aspect of estate planning. Executors of wills are fiduciaries, and trustees are as well.

The duties of both executors and trustees rely on the fiduciary placing the other parties or entities’ interests first. In estate planning, these parties or entities may be:

The trust
The heirs of the estate
The estate itself
The beneficiaries of the trust

For example, when managing an estate, it is the executor’s fiduciary duty to act on behalf of the estate’s heirs and do so in a trustworthy and ethically sound manner.

When a trustee is also a beneficiary, the situation grows more complex since the trustee is both manager and benefactor of the trust. However, trustees who are also beneficiaries still must act by their fiduciary duty regarding the beneficiaries and the trust.

What is a Breach of Fiduciary Duty in California?

When a breach of fiduciary duty occurs in California, it is typically because the individual acted on behalf of their interests first. Sometimes, fiduciaries fail to fulfill their responsibilities or behave dishonestly. A violation occurs when a fiduciary does not behave ethically or does not remember to act following the duties they pledged to respect.

Some breaches of fiduciary duty are unlawful, but not always. Some violations are not illegal, but since they qualify as unethical choices, they are fiduciary breaches. Here are some examples of fiduciary violations:

Theft, conversion, embezzlement, and fraud
Self-dealing
Betrayal of beneficiaries
Favoritism of beneficiaries
Colluding with beneficiaries to deny other individuals the assets of the estate
Conflicts of interest
Poor ethical judgments, such as illogical or unresearched investment decisions
Stealing property that belongs to the estate or trust

When an individual violates their fiduciary duty, the beneficiaries can and should take legal action. The lawsuit’s goal should be to remove and replace the fiduciary with someone more trustworthy and competent.

A fiduciary can also be liable for damages if the court finds they breached their duties. Beneficiaries and heirs who have lost money or property, for example, based on the immoral behavior of the fiduciary, can seek to collect damages. These damages may come in the form of the following:

Property Transfer:

When violations occur based on a property dispute, the court can order the property transferred back to the original party. Some breaches occur when a fiduciary transfers the property of the heirs, or the trust, to themselves.

Injunction:

Heirs, beneficiaries, and their legal counsel typically pursue injunctions as provisional relief. Injunctions usually limit the executor’s or trustee’s unethical actions. Sometimes, injunctions require the individual to perform a duty, such as giving money back or returning property or assets. Injunctions are also mostly used when there is a high risk of significant financial loss.

Monetary damages:

When the court awards financial damages in these cases, the goal is usually to help the heir or beneficiary return to their financial position before the breach.

For example, if the beneficiary lost $500,000 based on a trustee’s misuse of funds and self-dealing, the court would give the $500,000 back to the beneficiary.

Removal of Trustee or Executor:

In more extreme cases, the court may remove the trustee or executor from overseeing and managing the estate or the trust.

While these are the most common damages that beneficiaries may seek, there are alternate ways to collect damages. The type of damages depends on the details of the fiduciary violation, and every situation is different. The wide range of ways that fiduciaries can breach their duties makes it vital for all impacted individuals to contact a qualified attorney when a violation occurs.

Contact Nakase Wade for a Free Consultation

No one wants to find out that a trustee or executor cannot be trusted or has made some unethical and potentially damaging choices.

While most trustees and executors obey their fiduciary responsibilities, some do not. Whether they are self-dealing or mistreating assets or property, someone must stop their behavior.

If you suspect misconduct regarding your estate or trust, contact Nakase Wade. Our experienced attorneys will ensure that you receive the damages you deserve.

If you are a trustee or executor and have been wrongfully accused of violating your fiduciary duty, we can also help. Our first goal is to defend our client’s rights and ensure that no party is mistreated or taken advantage of.

Estate planning can be complex, and so can suing an individual for a violation of fiduciary duty. At Nakase Wade, our skilled legal team can help make this difficult time easier. Contact us today for a free consultation.

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Relief For Beneficiaries Suing for Breach Of Fiduciary Duty

What is a Breach of Fiduciary Duty in California?

What is a Breach of Fiduciary Duty in California?

Property Transfer:

Injunction:

Monetary damages:

Removal of Trustee or Executor:

Contact Nakase Wade for a Free Consultation

Free Consultation

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Trustee Responsibilities

Trustee And Beneficiary Conflict of Interest

What is The Burden of Proof in Civil Case?

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Why are most civil cases settled before they go to trial?

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Motion for Remand

Motion to Quash Subpoena

Remedies for Adverse Orders

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CACI Prejudgment Interest

CACI Equitable Estoppel Statute of Limitation

Mediation vs Arbitration

Burden of Proof

What is compensatory damages?

Can a witness refuse to testify in a civil case?

Rights of Trust Beneficiary

When are attorneys’ fees recoverable in California?

California Prejudgment Interest

Duties of a Trustee of An Irrevocable Trust

Responsibility of a Trustee

Relief For Beneficiaries Suing for Breach Of Fiduciary Duty

Duties of a Trustee

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