What is a Breach of Fiduciary Duty?
A fiduciary is basically an individual, bank, or organization that takes on the role of a trustee, representing the beneficiary’s interest while managing assets on their behalf.
Additionally, Florida law describes fiduciary duty as financial or transactional decisions made under the full faith and confidence of another party. A breach of this duty is a violation of trust or intentional deception of some sort.
State laws add that a breach of fiduciary duty is a valid claim under the following conditions:
- The fiduciary relationship between the parties is evidenced,
- There is proof of the breach,
- The breach directly resulted in damage or harm to the plaintiff.
Red flags that may hint at a breach of fiduciary duty:
A breach of fiduciary duty is common in cases where there may be a lot of non-relatives making decisions on behalf of an estate. Wards, beneficiaries, or heirs should be concerned about a breach of duty in the following circumstances:
The trustee seems to be self-dealing.
This may happen in several ways. It could be that he or she is using boats, cars, and other assets for personal reasons. Alternatively, he or she may be leasing or selling properties to relatives for a questionable rate or price. These are both red flags because they signify that money is being laundered through real estate, etc.
The breach of fiduciary duty may also be in the form of excessive compensation.
If reimbursements and trust payments are unreasonably high, the trustee might be taking advantage.
Improper or bad investment decisions.
This can also be the cause for a breach of fiduciary duty lawsuit. If someone is making large, frivolous investments, they may be planning for a huge payday.
Suspicion of asset stealing or pilfering.
This goes without saying. If some assets are disappearing, or you can’t seem to get answers to important questions, contact an attorney immediately.
Legal remedies
The solution for a breach of fiduciary duty varies depending on several factors. These include the financial consequences on the plaintiff and the severity of the action, to name a couple. That said, the court can prescribe remedies in the following manner:
Surcharge action
With such a verdict, the trustee will have to offer monetary compensation, in line with a sum deemed appropriate by the court. This will help the estate and plaintiff (if still living) recover erroneous fees, and expenses.
That exact amount will depend on how much money is necessary to restore assets to their initial financial state prior to the fiduciary’s interference.
Additionally, dividends or interest that would have been earned – had the losses not occurred – may also factor into the payment equation where applicable. Consequently, the fiduciary may be required to pay over what was lost, solely from his or her own pocket.
Fees denial
It is customary that the trustee receives a stipend for his or her work.
The court can take away the fiduciary’s right to this payment if found guilty of a breach of duty. The denial of fees can be an alternative form of a surcharge. When this happens, the fiduciary will forgo part of, or the whole amount of, what’s due to him or her until the losses from a poor investment decision are recovered.
However, the fiduciary may not be independently wealthy, and so the case may settle once some portion of the matter is recovered in its entirety.
Removal
Trustee removal is the most severe form of punishment for a breach of fiduciary duty.
It typically accompanies one or both of the consequences mentioned above.
The court decides on such a remedy if it becomes clear that the trustee was intentionally acting to violate their duty with a goal to make money or for some kind of personal gain.
What to do if this happens to your family.
Start by getting in touch with a good lawyer! These cases can drag on for years, especially when large sums of money are at stake. It can also be hard to prove a breach of fiduciary duty, as the fiduciary is often close to the family.
They are given the role and paid a stipend, and thus, it can be challenging to prove a nefarious agenda if no overt action is taken.
Are you a beneficiary with suspicions of a breach of duty?
The best way to know for sure is to turn to a Florida attorney with experience in multiple practice areas. They will help with not only figuring that out but also initiating court proceedings toward rectifying any wrongdoing.
