What is a Fiduciary Relationship?
A fiduciary relationship arises when one party places special trust and confidence in another, who is then legally bound to act in the best interests of the party placing the trust. This relationship can take many forms in a variety of contexts, including trustees and beneficiaries, guardians or conservators and their wards or protectees, and attorneys and clients, among others.
Fiduciary Duties and Breach
Fiduciaries are held to high ethical and legal standards. They must act in utmost good faith, avoiding conflicts of interest, and strive to act in the best interests of the beneficiaries. Their duties typically include a duty of loyalty, a duty of care, a duty to account, and a duty of full disclosure.
Breach of fiduciary duty occurs when the fiduciary violates these obligations, resulting in harm to the beneficiary. Examples of breach could include misappropriation of funds, self-dealing, failure to disclose pertinent information, or negligent management of assets.
What is Fiduciary Litigation?
Fiduciary litigation encompasses legal disputes arising from alleged violations of duties by fiduciaries. It primarily focuses on holding fiduciaries accountable for their actions and obtaining remedies for the beneficiaries who have been harmed. Fiduciary litigation can involve many different types of relationships and a wide range of disputes, including:
- Trust and estate disputes: These often involve allegations of breach of duty by the trustee or personal representative, leading to mismanagement of trust or estate assets.
- Power of attorney disputes: These may involve allegations that a financial power of attorney, who owes fiduciary duties to the client, has breached these duties, causing harm to the client.
- Conservatorship and guardianship disputes: These can involve allegations that the conservator or guardian has failed to properly manage the financial or personal affairs of the ward or protectee.
Process of Fiduciary Litigation
Fiduciary litigation typically begins with the aggrieved party (the plaintiff) filing a lawsuit against the fiduciary (the defendant). The plaintiff must prove that a fiduciary relationship existed, the fiduciary breached their duties, and this breach resulted in harm.
If the plaintiff successfully proves their case, the court can award various forms of relief, including:
- Monetary damages: These compensate the beneficiary for the financial loss caused by the breach.
- Equitable remedies: These can include removing the fiduciary, compelling them to take a certain action, or issuing an injunction preventing certain actions.
- Constructive trust or disgorgement: These are used to recover property or profits obtained through the breach of duty.
Navigating the complexities of fiduciary litigation requires a deep understanding of fiduciary duties and the associated legal obligations. At Fritz Law LLC, we use our experience and knowledge to help clients navigate these challenging disputes and provide invaluable guidance throughout the process.