When you appoint someone as your attorney-in-fact, trustee, administrator, or executor, you trust them to act in your best interests. In fact, they have a legal obligation to do so. If they don’t, you or your estate can file a breach of fiduciary claim to recover any damages you might have suffered as a result of the breach.
When a trusted representative breaches their fiduciary duty, it can harm your estate and, ultimately, your family. Disregarding your wishes after you die or become incapacitated is deeply unfair and can leave your family struggling for answers. When you experience such a loss, you may wonder how to sue for breach of fiduciary duty in Texas. To succeed with your claim, you need a lawyer experienced with such cases. The estate-planning team at Robbins Estate Law, PLLC, is here to help. Contact us today.
What Is a Breach of Fiduciary Duty?
During estate planning, you will often appoint a fiduciary to manage your affairs if you become incapacitated, to administer your will after you die, or to hold your property in a trust. Once you appoint a fiduciary, they have a fiduciary duty to manage your finances or property for your benefit. If your fiduciary acts in a way that is contrary to your interests, you have a legal right to recovery. To establish a breach of fiduciary claim in Texas, you must prove four factors, including:
- The person owed you a fiduciary duty;
- The person breached their fiduciary duty;
- The breach caused you to experience a loss or provided the fiduciary with a wrongful benefit; and
- The amount of your loss or the fiduciary’s wrongful gain.
When you meet with one of our attorneys, we will explain how these factors apply to your situation. For now, we’ll walk through what you need to know to start collecting evidence to prove your claim.
The Fiduciary Relationship Creates A Legal Duty
Before a person can breach a fiduciary duty, a fiduciary relationship must exist. A fiduciary relationship means you place your trust and confidence in another person in exchange for their promise to act in your best interests.
Formal documents, such as a durable power of attorney, will, or trust, can create a fiduciary relationship. When you sign these documents, you give legal rights to the designated person to act on your behalf. Texas also acknowledges informal fiduciary relationships, like between doctors and patients. Thus, typical fiduciary relationships include the following:
- The trustee and the beneficiaries of a trust,
- The executor and beneficiaries of a will,
- A corporate officer and the company or shareholders,
- A lawyer and a client,
- A doctor and their patient, and
- Business partners.
Once the person agrees to act as a fiduciary, they must perform their fiduciary duties when making decisions regarding your property or be liable for damages.
Breach of Fiduciary Duty
When a person accepts the responsibility of being a fiduciary, that means they commit to adhering to a series of duties. These duties include the following:
- Duty of care—the fiduciary must act in your best interests when making decisions, including being reasonable and prudent;
- Duty of loyalty—the fiduciary must put your interests above their own, avoiding acting for self-gain or self-interest;
- Duty of good faith—the fiduciary must make decisions fairly and honestly;
- Duty of confidentiality—the fiduciary must keep your personal information confidential and not disclose it for their own benefit;
- Duty of prudence—the fiduciary must exercise care, diligence, and prudence when making decisions; and
- Duty of disclosure—the fiduciary must inform the beneficiaries of pertinent information and transactions.
Anything that goes against these duties signals a breach. Typical examples include embezzling trust funds, failing to notify beneficiaries or heirs, or making late distributions.
The Breach Caused You Harm
To succeed with your breach of fiduciary duty claim, you must show that:
- The fiduciary’s action caused you harm, or
- The action benefited the fiduciary.
Thus, you are entitled to recover damages if the fiduciary neglected your estate or used your funds to invest in their own interests.
Damages: The Amount You Lost
Finally, you must show what you lost due to the breach. Compensatory damages for a violation of fiduciary duty may include the following:
- Financial loss, including lost profits or unnecessary expenses;
- Emotional distress, like mental anguish from a physician breaking confidentiality; and
- Exemplary damages could be awarded to punish the breach rather than provide compensation for losses.
The court may also require the fiduciary to return any financial gain or grant other equitable relief.
Contact Robbins Estate Law
A breach of fiduciary duty in the estate planning context can be devastating. You appointed a fiduciary to care for your affairs because you could no longer do so. If a fiduciary harms your trust or estate, it inherently harms your family members, who have limited power to hold them accountable. A breach of fiduciary duty claim gives you back that power. Robbins Estate Law has been serving clients in Austin and Cedar Park since 2017. We are dedicated to providing professional legal services to help our clients and their families reach their goals. If you’ve encountered a breach of fiduciary duty, you can trust us to guide and support you throughout the process. Contact us today.