fiduciary

Trusts have trustees.

Probate estates have personal representatives.

Those who are incapacitated or incapable of acting for themselves (like children) have a legal guardian or conservator.

What do all these roles (trustee, personal representative, guardian/conservator) have in common?

The persons performing them are all fiduciaries.

What is a Fiduciary and What is His/her Role?

A fiduciary is a person (or company) who acts on behalf of another (the principal).

A fiduciary relationship can arise in any number of situations, but in trust law, fiduciaries are most often trustees, guardians or conservators, or personal representatives.

The relationship between the principal and fiduciary is one of the utmost trust and confidence. Because fiduciaries have considerable discretionary power over the person or property of another (or both), fiduciaries are charged with acting in the highest and best interests of the principal.

In the context of probate administration, a personal representative is a fiduciary who is accountable to the courts and to the beneficiaries. He must perform his/her duties to administer a decedent’s estate to the best of his/her abilities and in the best interests of the estate and/or beneficiaries.

In the context of a trust, the trustee (or successor trustee) is a fiduciary with fiduciary duties. Among the trustee’s many duties is the overriding duty to properly administer the estate and the duty to “solely administer the trust in the interests of the beneficiaries” of the trust.

So now we know what a fiduciary is and a bit about how he/she is expected to carry out his/her duties to administer or oversee another’s property.

But what is fiduciary litigation? What might cause it and what types of situations might fall into fiduciary litigation?

Let’s see.

What is Fiduciary Litigation?

As you can see, the role of a fiduciary is a critically important one. And, because fiduciaries are given great authority and power over another’s person and/or property, they are not only held to the highest duty of care but can be personally liable for damages caused to the principal for the breach of those duties.

As you might expect, situations can arise in fiduciary relationships, such as trusts, guardianships, or probate administration, in which the fiduciary abuses his or her position. The person may simply not be qualified for the position. Or, he may breach his duties to the principal by engaging in some type of fraud or self-dealing. When such things occur, litigation often follows.

Fiduciary litigation encompasses any number of situations or claims involving a fiduciary or fiduciary relationship. Some examples of fiduciary litigation are:

  • Will contests
  • Actions to remove a trustee
  • Objections to personal representative
  • Breach of duty actions
  • Actions to reform a trust
  • Actions regarding trust accountings
  • Action to remove a guardian

There are of course, many other situations that can lead to fiduciary litigation. These cases are heavily fact-specific and can be costly, so it is always best to consult with an experienced estate and probate attorney to fully analyze your particular situation.

Can Fiduciary Litigation be Avoided?

The short answer to this question is: “it all depends, but in many cases, yes.”

How?

Well, one of the best things you can do to avoid fiduciary litigation is to ensure that you have estate planning documents that are clear and unambiguous. Clear, unambiguous documents are less likely to draw a Will contest from heirs or beneficiaries.

How can you do that?

By not trying to draft your own estate planning documents and instead working with an experienced estate and probate lawyer, of course.

If you have minor children, you will want to be proactive about getting your estate planning documents completed. Don’t wait. You don’t want to run the risk of dying without having chosen someone you trust to be the guardian of your children. Because if that happens, then it will be a total stranger —the probate judge —who will decide who should raise your kids.

Another thing you can do to avoid potential fiduciary litigation is to carefully choose your fiduciary. When planning your estate documents, you will need to choose someone to make health care decisions for you, someone to administer your estate when you’re gone, someone to be your trustee or substitute trustee, as well as someone who should have authority over your finances and property if you should become incapacitated.

Each one of these people are fiduciaries, so choose them carefully.

Don’t just nominate your eldest child because she’s the eldest or lives closest to you. Think about who you know who you trust implicitly with your money and your life. Choose someone who is honest, ethical, reliable, fair, and above-board in all their dealings.

Fiduciary litigation is costly, time-consuming, and complex. Do your best to avoid it by working with an experienced estate and probate attorney.

Creating More than Just Estate Plans: Creating Peace of Mind.

If you have estate planning needs, protecting your family is just one phone call away. At the Law Offices of Samantha J. Fitzgerald, we create estate plans as individualized as you are. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well.  Connect with us on Facebook or Instagram or call us at 954-580-3690.

 

 

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