Breach of Fiduciary Duty Damages
The Fiduciary Duty
Fiduciary duties are obligations to act faithfully to benefit a person or group. A fiduciary has a responsibility to act for another person or group ( the beneficiary) that takes precedence over personal interests or the interests of any other person or group. The law imposes fiduciary duties on many types of roles. A guardian is a fiduciary to a minor child in his or her care. Persons that must handle or manage assets belonging to other people have fiduciary duties. Typical examples include accountants, bankers, money managers, executors, and corporate officers.
Breach of Fiduciary Duties and Examples
The fiduciary duty is at the core of the role of a trustee under the California Probate Code. The fiduciary duty has legal and ethical parts. The fiduciary must comply with laws and rules that cover his or her role as the trustee. They must also meet the ethical standards of good faith conduct. Trustees must perform required acts, and they must always provide their best efforts when acting on behalf of the trust and the beneficiaries.
Civil breach of fiduciary duty examples includes the below-listed items.
• Mismanagement by a conflict of interest resulting in benefits to the trustee rather than the beneficiary
• Failing to inform beneficiaries of events known to reduce the value of assets
• Self-dealing actions that place a trustee’s interests above the beneficiaries
• Mismanagement that favors one beneficiary to the harm of one or more other beneficiaries
• Mixing trust assets with trustee’s personal assets to apply for a loan
• Failing to pursue a valid legal claim that would protect trust assets
Can Breach of Fiduciary Duty Be Criminal Offense?
The remedies for breach of fiduciary duty by the trustee can be civil, criminal, or both. An act that breaches a duty of loyalty can be a civil wrong and a criminal violation. In some cases, the beneficiaries might have to weigh the consequences of pursuing both civil and criminal remedies to violate fiduciary duties. They can choose to report a matter for prosecution.
Breach of Fiduciary Duty Penalties
There are civil remedies and criminal penalties for breach of fiduciary duty. Trustees are personally liable for the harm they cause to beneficiaries. The liability extends beyond the end of the trust administration, and beneficiaries have a period under the statute of limitations to pursue claims against the trustee.
The civil penalties include fines, restitution, and courts can order relief that restores the beneficiaries to the place they would have been. Beneficiaries can demand repayment of missing funds, restoration of mismanaged assets, and resignation from the trustee’s role. When accused of breach of fiduciary duty, a trustee must answer. Failure to respond can add to the breach by violating the duty to inform the beneficiaries. Legal assistance is essential to getting the best possible outcome in trust disputes.
Beneficiaries can sue for relief, and courts can grant the below-listed civil remedies.
• Personal liability for losses
• Restitution of assets
• Civil fines for failure to repay funds, restore assets
Trustees must consider the following:
- Trustees must make decisions and manage assets in good faith.
- Trustees often face difficult choices and must interpret rules and regulations.
- Trustee errors can result in personal liability.
Some acts may cause conflicts of interest or other appearances of violations of fiduciary duties. For these and other reasons, trustees benefit from the advice of expert trust attorneys.
Can Breach of Fiduciary Duty Be Criminal Offense?
In the State of California, breach of fiduciary duty penalties includes civil remedies, civil penalties, and criminal penalties. The same conduct can be a civil wrong and a criminal offense. Acts that would be crimes if committed by any person are likely to be crimes when committed by a trustee. Stealing money, forging documents, filing false financial records would be crimes under nearly any circumstance, and this includes trustees.
Criminal Breach of Fiduciary Duty
While every breach of fiduciary duty is not a crime, some breaches of duty can be charged as crimes under the California Criminal Code. Trustees are not immune from criminal prosecution when they commit crimes while in the course of their duties. The beneficiaries can initiate criminal charges by filing information and complaints with law enforcement agencies. The beneficiaries cannot decide whether to prosecute a trustee; only the government can decide whether to charge a crime. The beneficiaries can seek criminal penalties by requesting action from government authorities.
California criminal breach of fiduciary duty examples includes the below-described chargeable conduct.
• Theft of funds from the trust
• Theft of financial instruments
• Intentionally distributing assets to non-beneficiary parties
Legal Assistance to Avoid Breach of Duty
Legal advice from the beginning of the trustee assignment is an excellent way to avoid a breach of duty issues. Many issues can stem from a lack of clear communication. Indeed, one of a California trustee’s fundamental duties is to provide information to the beneficiaries about the trust administration.
It is essential to understand the role and duties of a California trustee. A well-informed trustee is in a better position than someone unprepared for the role. With sound legal advice, a trustee can make adequate plans and take decisive actions to promote the beneficiaries’ interests.