Executors and trustees hold positions of trust requiring them to act in beneficiaries' best interests. When they fail—through self-dealing, mismanagement, or dishonesty—they can be held personally liable for breach of fiduciary duty. Understanding these duties helps beneficiaries recognize when to take action.
What Is Fiduciary Duty?
A fiduciary is someone who must act in another's best interest, putting that person's interests above their own. Executors, administrators, and trustees are fiduciaries for estate beneficiaries. Their duty is the highest standard of care recognized in law.
Fiduciary duties include the duty of loyalty (putting beneficiaries first), duty of care (acting prudently), duty to account (keeping records and providing information), duty of impartiality (treating beneficiaries fairly), and duty to preserve assets.
Duty of Loyalty Violations
The duty of loyalty prohibits fiduciaries from putting their interests above beneficiaries'. Self-dealing is the most common breach—using estate assets for personal benefit. Examples include buying estate property at below-market prices, selling personal property to the estate at inflated prices, taking excessive compensation, lending estate funds to themselves, and diverting business opportunities.
Even transactions that seem fair can violate the duty of loyalty if done without proper disclosure and consent.
Duty of Care Violations
Fiduciaries must manage assets with reasonable prudence. Breaches include failing to collect debts owed to the estate, allowing assets to depreciate through neglect, making imprudent investments, missing tax deadlines resulting in penalties, and failing to diversify concentrated holdings.
The standard isn't perfection—but reasonable care under the circumstances. Fiduciaries are judged by what a prudent person would do, not by hindsight.
Failure to Account
Fiduciaries must keep accurate records and provide accountings to beneficiaries. Refusing to share information or provide financial statements is itself a breach. Beneficiaries have the right to know what assets exist, how they're managed, and how distributions will be made.
Failure to account often signals more serious problems—fiduciaries who won't provide information may be hiding misconduct.
Unreasonable Delay
Estates should be administered within a reasonable time. Unnecessary delay that harms beneficiaries—keeping them from inheritances they need—can constitute breach. Some executors delay to continue collecting fees or to benefit from ongoing control.
While complex estates take time, simple estates lingering for years without explanation raise concerns.
Discovering Breach
Signs of potential breach include lack of communication from the executor or trustee, accountings that don't add up or seem incomplete, unexplained delays in distribution, changes in estate value that don't match market conditions, and the fiduciary's lifestyle changes suggesting they're benefiting improperly.
Request formal accountings if you have concerns. If the fiduciary refuses or provides inadequate information, that itself may warrant legal action.
Remedies for Breach
Beneficiaries can seek removal of the executor or trustee, surcharge (requiring the fiduciary to repay losses from personal funds), disgorgement of improperly taken profits, denial of compensation, attorney's fees, and in extreme cases, punitive damages.
Fiduciaries who breach their duties can be held personally liable for all resulting harm—their personal assets are at risk.
Removal of Fiduciaries
Courts can remove executors or trustees who breach their duties. Grounds for removal include proven breach, conflict of interest, incapacity, conviction of crimes, or persistent failure to perform duties. A replacement fiduciary takes over administration.
Even threats of removal sometimes prompt fiduciaries to correct their behavior.
The Litigation Process
Beneficiaries typically begin by petitioning the probate court that supervises the estate. Courts can order accountings, freeze assets, and conduct evidentiary hearings. Discovery allows beneficiaries to examine records and question fiduciaries under oath.
Many disputes settle once evidence of breach becomes clear—fiduciaries often prefer to settle rather than face formal findings of misconduct.
Statute of Limitations
Claims for breach of fiduciary duty have time limits that vary by state and may depend on when you discovered or should have discovered the breach. Don't delay—delayed claims may be barred.
Getting Legal Help
Estate litigation attorneys specialize in holding fiduciaries accountable. They understand accounting requirements, can identify red flags, and know how to pursue claims effectively. Given the complexity of these cases and the resources often at stake, professional representation is strongly advisable.