Experienced Palm Beach probate litigators deal often with trusts, trustees and the attaching fiduciary duties. Beneficiaries often want to know how can I know when a trustee breaches their duty. The truth is its not like you are going to get a “breach of fiduciary duty” notice coming in the mail. But knowing what your trustee owes you is a good place to start. Do you know what a trustee owes you? Lets start there.
Fiduciary Duties
- Fiduciary duties are a broad term of what a West Palm Beach trustee owes the beneficiaries of a trust.
- There are two basic duties crumpled up within a fiduciary duty to a beneficiary, do you know what they are?
- First a trustee owes a duty of loyalty to the beneficiaries.
- Second, a trustee owes a duty of prudence.
- Take a look at each independently to better understand them.
- Then ask yourself what can you do about the breach?
Loyalty
- A West Palm Beach trustee owes a duty of loyalty to the beneficiaries of a West Palm Beach trust.
- This means that the beneficiary and the trust take precedence over his own interests.
- A trustee usually breaches this duty by self-dealing in other words being more loyal to himself or herself than he is to the beneficiaries.
- The trustee cannot buy the trust’s property even if it is at a fair price.
- The trustee cannot loan himself trust funds even if he pays it back without interest.
- These violate his duty of loyalty to the beneficiaries.
- Anything that is motivated by his own self interest may be considered self dealing so watch out for these kind of actions, these will likely constitute a breach of fiduciary duty.
Prudence
- What is a duty of prudence?
- Trustees have a duty to deal prudently with trust property but what does that mean?
- It means a few things.
- For one thing it is generally understood that it is imprudent to let a trust just sit idly – that is a waste.
- So first a duty to invest means the trustee has to invest the money somewhere so that it can create more money just sit there.
- With that duty comes an ancillary duty to invest properly or prudently.
- This means the trustee must do with the money as a reasonably prudent investor would.
- This includes a duty to diversify trust property and not just invest in one thing.
- A trustee who makes bad investments can be liable for breaching their duty to invest prudently but it should go without saying you will have to prove more than just loss to collect.
- You will have to prove that the investments were actually imprudent.
- So what can you do to remedy a breach of fiduciary duties?
Remedies
- There are several available remedies to a beneficiary who has a trustee liable for breach of fiduciary duties.
- Obviously you may be able to get the trustee to pay you back money they embezzled or improperly invested.
- A more interesting remedy though tracing may be available where a trustee profited improperly off of trust property.
- Are you prepared to fight a breach of fiduciary duty suit in West Palm Beach?
Know your rights and protect your wealth.