Trusts, wills and powers of attorney are just some of the most common estate planning instruments. These documents and how they are drafted is pivotal to ensuring that a person’s final wishes are honored.
However, the documents only provide instructions, and it is still up to humans to ensure that these instructions are honored. For example, the executor of the estate has the responsibility of ensuring that the instructions in a will are carried out. A trustee is supposed to ensure that trusts are used appropriately.
People tasked with implementing estate planning documents are placed in a position of trust, and they have fiduciary duties. What constitutes a breach of fiduciary duty?
Executors and fiduciary breaches
One duty that an executor must carry out is distributing assets according to the instructions provided by the deceased. They must distribute assets to designated beneficiaries.
One example of a serious breach would be if an executor transfers assets to themselves. This is called “self-dealing.” Self-dealing is unlawful. The executor must remain loyal to beneficiaries and ensure that assets are distributed according to the instructions of the will.
Trustees and fiduciary breaches
A trustee is tasked with managing and administering assets within a trust. One example of this could be holding onto money for a beneficiary and distributing it once they attend college. Sometimes, trustees are tasked with making investments using estate assets.
If a trustee uses assets within a trust for their own benefit, this is also self-dealing and a breach of fiduciary duty. The same can be said if they use assets within a trust to make reckless investments.
When a fiduciary has breached their duties, it may be possible to remove them from their position. Financial compensation could also be an option. Seek legal guidance to find out more about potential remedies for breach of fiduciary duties.