Breach Of Fiduciary Duty In Probate Cases

A fiduciary is a person or an organization that acts on behalf of another person or persons, also known as the principal(s). Because executors take on the management of another person’s estate, they are fiduciaries. A fiduciary is obligated to put their client’s needs first and preserve trust and good faith. This means that a fiduciary’s duties are both legal and ethical.

Understanding Fiduciary Duty in Probate Cases

Executors, who are also known as personal representatives, are usually put in such a position by testators. That means an executor owes a duty to the estate they are put in charge of and to the estate’s beneficiaries. When a testator names an executor in their Will, they expect that, upon their death, the executor will protect their estate and the interests of the beneficiaries. An executor is obligated to act with utmost good faith and loyalty towards the estate and beneficiaries of the estate. An executor is obligated to put the estate and beneficiaries’ interests first before anything else, including themselves.

In summary, executors are obligated to;

• Put all beneficiaries’ interests above their own
• Act in the estate’s best interest
• Treat beneficiaries fairly and with care and honor
• Remain transparent about all relevant, material information

Breach of Fiduciary Duty in Probate Cases

Breach of fiduciary duty in a probate case can involve an executor doing, among many others, one or more of the following;

• Committing fraud
• Embezzling funds
• Neglecting the estate
• Acting in their own interest
• Failing to follow the instructions in the Will
• Refusing to distribute the assets to beneficiaries as required under the Will
• Commingling estate finds and personal funds

Penalties for Breach of Fiduciary Duty

According to California Probate Code Section 8502, if an executor breaches their fiduciary duty, they can be suspended or removed from office. Suspension or removal from office is one of the common penalties for breach of fiduciary duty.

Another penalty that an executor can face for breach of fiduciary duty is being ordered to pay damages. An executor who breaches their fiduciary duty may be ordered to pay;

• Compensatory damages – meant to compensate the estate and/or beneficiaries for the losses suffered.
• Punitive damages – meant to punish the executor for breaching their fiduciary duty. If an executor is ordered to pay punitive damages, they will pay an additional amount on top of the compensatory damages.
• Double and treble damages – involve the executor being ordered to pay double or triple the amount of compensatory damages.

Additionally, an executor may be required to reimburse a beneficiary for the court costs and attorney fees incurred due to the legal action the breach forced them to take.

Can an Executor Go to Jail for Breach of Fiduciary Duty?

Although it rarely happens, an executor can be jailed for breach of fiduciary duty. For example, if the breach involved theft, fraud, or embezzlement, the executor can go to jail.

Contact The Probate Guy for Legal Help

Do you believe the executor of your loved one’s California estate has breached their fiduciary duty? Or have you been accused of breaching your fiduciary duty? If so, contact the dedicated California probate attorney, Robert L. Cohen – The Probate Guy – to schedule a telephonic consultation.

Source:

leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=8420