A breach of fiduciary duty can put a business or individual at risk. Fiduciaries are those that hold a trust-based legal or ethical relationship between one or more parties. The violation of trust in a relationship isn’t always actionable unless there is a legal agreement in place defining the relationship and how it must be governed. Learn about what a breach of fiduciary duty is and how one can impact you.
What is a Fiduciary?
Typically, a fiduciary takes care of money or other assets for another person or business.
A fiduciary is not only someone who has promised to be trustworthy but he or she is legally bound not to violate their client’s rights or interests in any way.
What Constitutes a Fiduciary Relationship?
These kinds of duties can be defined by a written agreement between the parties or they can be specified by law based on the nature of the relationship and the implied conduct of each party. Some basic fiduciary relationships include:
- patients and their care providers
- beneficiaries and their trustees
- stockholders and their directors and officers
- clients and their attorneys
- principals and their agents
If you are unsure if you are a party to a fiduciary relationship, a business law attorney will be able to clarify your situation.
Breaches of Fiduciary Duty Examples
Some actions that constitute a breach of fiduciary duty are obvious, while others are harder to detect. The elderly and those that are incapacitated are often preyed upon by malicious fiduciaries. Examples of breaches of duty include:
- embezzlement of estate funds
- co-mingling estate funds with personal funds
- failing to comply with contractual or ethical obligations
- causing harm through the performance of a wrongful act
- causing harm by the omission to act on the principal’s behalf
- accessing or acquiring the principal’s money using deceit, fraud, or undue influence
The circumstances may differ depending on the situation, but a breach of fiduciary duty should always be pursued so that the offending fiduciary cannot continue to take advantage of the trust and goodwill of others.
What is Proof of a Fiduciary Breach?
When a fiduciary commits a breach, the offense can result in civil liability which would allow the plaintiff or principal to sue for monetary damages. If the fiduciary committed a criminal act as well, he or she could be charged in criminal court and be sued by the principal for monetary damages.
Four elements must exist before a fiduciary can be found guilty of having committed a breach.
- Regardless of whether the plaintiff initiated the arrangement by putting his trust in the fiduciary or if the plaintiff was induced or drawn into the arrangement by the fiduciary, the relationship must exist.
- The fiduciary mishandled the plaintiff’s affairs or funds to benefit himself.
- The plaintiff suffered losses or damage.
- The plaintiff’s losses or damage were caused directly by the actions of the fiduciary.
If these elements can be proven, the victim of a breach of duty can file a lawsuit to recover damages.
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A breach of fiduciary duty is always a serious offense. If you suspect that you or a loved one might be the victim of a predatory fiduciary, contact an attorney experienced in business law, litigation, and estate planning for help.
**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice, and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.Tags: Business Law, Estate planning