What You Need to Know About Breach of Fiduciary Duty

A breach of fiduciary duty occurs when someone fails to act in the best interest of another party despite having a legal responsibility to do so. When you place your confidence in someone to protect your money or property in an official capacity, you should be able to trust they will fulfill their duty. Unfortunately, this doesn’t always happen.

If you believe that your fiduciary took advantage of you or failed to act according to their obligations, get legal advice from the estate administration attorneys at Brown and Hobkirk, PLLC right away. Call or contact us today for a free consultation.

What is Fiduciary Duty?

A fiduciary duty is a responsibility to act in the best interests of an individual (called the “principal”). The person entrusted to serve in that role is known as a “fiduciary.”

The fiduciary must act in the principal’s interests and ethically manage and safeguard the property or funds that the principal has entrusted to the fiduciary. Their actions must always intend to benefit the principal.

Fiduciary Duty Examples

There are a wide variety of fiduciary relationships. Some common examples include:

• Attorneys who owe a fiduciary duty to their clients
• Employers who owe a fiduciary duty to their employees
• Board directors who owe a fiduciary duty to their shareholders
• Trustees who owe a fiduciary duty to the beneficiaries of the trust
• Accountants who owe a fiduciary duty to their clients
• Estate administrators who owe a fiduciary duty to the estate’s heirs
• Guardians who owe a fiduciary duty to their wards

No matter the type of fiduciary relationship, a fiduciary is obligated to discreetly and responsibly manage the money and property of the principal. Failure to do so could constitute a breach of fiduciary duty.

How Fiduciary Duty May Be Breached

It is crucial to understand how to identify a breach of fiduciary duty. This will enable you to act quickly before the fiduciary’s action causes you further financial harm.

If a fiduciary wronged you, you may be entitled to file a lawsuit against them. You can pursue damages that include your financial losses and any profits the fiduciary made from their wrongdoing.

There are many ways to breach a fiduciary duty, such as:

• Mismanaging assets
• Failing to be transparent about their actions
• Leveraging property or funds for their own benefit
• Taking any other action that works exclusively to their advantage

If you suspect that your fiduciary mishandled your funds, it’s crucial to consult with a trust administration attorney. An attorney can investigate the case to determine whether a breach occurred and the best course of action to take.

Keep in mind that suing is not always the most advisable next step. For example, your agreement with the fiduciary may contain an arbitration clause that prohibits you from suing and requires you to resolve disputes through arbitration instead. A good lawyer will identify your options and discuss all possible ways to resolve your case.

Elements of a Breach of Fiduciary Duty Claim

To prove a breach of fiduciary duty, you need to establish four things: duty, breach, losses, and causation.

Duty

Working professionals are required by law to conduct their business honestly and ethically. A fiduciary relationship involves explicitly looking out for the financial interests of the principal. To bring a breach of fiduciary duty claim, you’ll need to establish that a fiduciary relationship existed, whether by law or by contract. The fiduciary duty should be in writing, if possible.

Breach of Duty

You must demonstrate the fiduciary breached their duty to manage your affairs responsibly. Proving this will require evidence showing the breach. An experienced attorney can help gather the information needed to support your claim.

Losses

You will need to show that you suffered specific losses due to the fiduciary’s misconduct or mismanagement of your assets. For example, if a trustee sells a piece of property for less than it is worth to a family member or someone they know, that could constitute a breach of fiduciary duty, and you would be able to put a dollar amount on that loss. This will strengthen your case.

Causation

The final element in a breach of fiduciary duty claim is causation. You will need to demonstrate that the losses you suffered directly resulted from the fiduciary’s misconduct and that recovering legal compensation can make you “whole” again.

Consequences of a Fiduciary Breach

There are a range of consequences for when a fiduciary breaches their duty. Non-legal ramifications include loss of reputation for the fiduciary, meaning other clients may choose not to work with them in the future.

Also, if you take legal action and prevail, the fiduciary could face legal consequences, such as financial penalties to reimburse you for your losses and legal fees. A fiduciary who breaches their duty to a principal could also have their license revoked.

Get Aggressive Legal Help From Brown & Hobkirk, PLLC

The experienced attorneys at Brown & Hobkirk, PLLC know how grave a breach of fiduciary duty can be. If a fiduciary harmed you or your business, let us step in and help fight for the accountability and compensation that you deserve.

The first step is a free consultation. Call or contact us today. We represent clients in Scottsdale, Phoenix, Peoria, Chandler, or Tucson and throughout Arizona.