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How To Prove Breach Of Fiduciary Duty

Fiduciaries are appointed to serve the client or beneficiary’s best interests. Fiduciaries can be any person, from a financial advisor to or trustee of a trust. They are responsible for providing their beneficiaries and clients with the best care, loyalty, and good faith. Fiduciaries sometimes don’t always act in the best interests of their clients. This is called a breaching fiduciary obligation. This article will discuss what constitutes a breach and how to prove it in court. Call Hess-Verdon & Associates anytime at 1-888-318-4430.

What is Fiduciary Duty, and how can it be applied?

Fiduciary duty requires an entity or person to act in their beneficiary’s or client’s best interest. This duty can arise in many relationships, such as attorney-client or trustee-beneficiary and financial advisor-client. Fiduciaries must act in the best faith, loyalty, and care for their beneficiaries or clients.

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What is a Breach of Fiduciary Duty, and How can it be prevented?

A fiduciary breach occurs when the fiduciary fails or is not acting in the best interest of the client/beneficiary. This could take many forms, such as self-dealing or misappropriation, failure to disclose conflicts of interest, and even the inability to report on financial matters. The fiduciary, i.e., the Executor or Trustee, may be held responsible for damages if they breach their fiduciary duty.

Types of fiduciary relationships

There are many types of fiduciary relationships.

  • Attorney-client
  • Trustee-beneficiary
  • Executor-estate
  • Financial advisor-client
  • Shareholder of corporate officer
  • Director-corporation
  • Partner-partner

Element of a Breach Of Fiduciary Duty Claim

A plaintiff must prove the following elements to establish a breach of fiduciary obligation:

  • Existence of a fiduciary obligation
  • Breach of this duty
  • Causation
  • Damages

Proving a breach of fiduciary duty

It can be challenging to prove a breach of fiduciary duties because it involves complicated legal and factual issues. A plaintiff must show that the defendant violated their duty and caused harm to the plaintiff to prove a breach of fiduciary duties. This can be accomplished through expert testimony, documentary evidence, and witness testimony.

In a Breach of Fiduciary duty Lawsuit, Damages

A plaintiff may be entitled to damages if they prove a breach of fiduciary duties. These damages may include actual damages such as lost money or punitive damages meant to punish the defendant’s wrongful conduct.

Defenses against a Breach Of Fiduciary Duty Claim

There are many defenses that a defendant may raise against a claim of breach of fiduciary duties.

Absence of a fiduciary relation: A breach of fiduciary obligation claim cannot be made if there are no fiduciary relations between the plaintiffs and defendants.

Good faith: A defendant who acted with good faith and reasonable care may be exempted from liability for breaching a fiduciary obligation.

Consent: The plaintiff may consent to the actions of the defendant.

Statute of Limitations to File a Breach of Fiduciary Duty Claim

The statute of limitations to file a claim for breach of fiduciary duties varies from state to state, depending on each claim’s nature. The plaintiff must file the claim within a specified period from the date of the breach or the date the plaintiff discovered it.

How to Prevent a Breach of Fiduciary Duty

It is essential to:

  • Make sure you do your research before choosing a fiduciary.
  • You can monitor the actions of the fiduciary and ask questions if necessary.
  • Make a written agreement.
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Conclusion

Both the beneficiary and the fiduciary can suffer severe consequences if they are found to have breached their fiduciary duties. The plaintiff must prove that the defendant violated their duty and that the breach injured that plaintiff. The plaintiff could be eligible for damages if they are successful. It is essential to carefully choose a fiduciary, keep an eye on their actions and make a written agreement. This will prevent any breach of fiduciary duties.

FAQ

What is a fiduciary obligation?

Fiduciary duty is a legal obligation requiring an entity or person to act in their client’s or beneficiary’s best interest.

What is a breach of fiduciary duty?

A fiduciary breach occurs when the fiduciary fails or is not acting in the best interest of the client/beneficiary.

How can you prove that there was a breach of fiduciary obligation?

A plaintiff must prove the existence, breach, causation, damages, and fiduciary obligation to establish a breach.

What damages can you recover from a lawsuit for breach of fiduciary obligation?

A plaintiff who proves a breach of fiduciary duties may be eligible for punitive and actual damages.

How do you avoid a breach of fiduciary obligation?

It is essential to carefully choose a fiduciary, monitor their actions, and make a written agreement detailing their duties and responsibilities.

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