A person or party that has been granted fiduciary responsibility is responsible for dutifully handling the estate and assets of a business or an individual. It is mandatory that the fiduciary handles the estate and assets in a responsible and unbiased manner.
Fiduciaries that do not handle estates in such a manner are breaking the law and can be held legally liable for doing so.
Are you are being sued by another party for breaching fiduciary duty? Maybe you are wondering about the potential legal hurdles that you may face in the future. Here are some general topics and terms you need to know to avoid legal liability.
What Does Breach of Fiduciary Duty Entail?
There is more than one way to breach fiduciary duty. In fact, there are a number of different ways in which you can do so. Each one of them involves taking advantage of your position as a fiduciary in order to benefit yourself.
Some ways in which you can breach fiduciary duty are described below.
Improperly Recording Assets
As a fiduciary, you are responsible for keeping a person or business entity's assets in order. If records show assets which have been recorded improperly, you can be held liable for breaching fiduciary duty.
Acting With Bias
Making fiduciary decisions with bias to benefit yourself or others is a breach of fiduciary duty. You have been given the responsibility to make decisions that will benefit all interested parties, not just a select few.
Improperly Recording Transactions
Not only must you keep an estate's assets in order, you need to track its transactions as well. Any and all transactions which are made in the name of the estate must be properly recorded. If they're not, they can be legally challenged by interested parties.
What are the Legal Consequences of a Breach of Fiduciary Duty?
While penalties for breaching fiduciary duty are usually distributed on a case-by-case basis, they typically fall under one of three classifications. Those classifications are as follows.
Removal of Power
If you're guilty of breaching your fiduciary duty, the minimum penalty you will receive is the removal of power. You will be forced to forfeit your power over the estate that you currently control.
Forfeiture of Funds
In cases where the breach causes other parties to lose money, the fiduciary may be forced to forfeit funds or pay damages to said parties. There are no generally established repayment amounts; the specific repayment amount will be based on the amount that was lost from the estate.
Prosecution for Fraud
In especially extreme cases of fiduciary breach, the fiduciary can be prosecuted for fraud. Depending on the scope of the fraud one can face small fines, significantly larger fines, and in the event of a criminal prosecution by the State, even jail time. The nature and extent of liability to you, the fiduciary, is generally decided on a case-by-case basis.
Hire a Lawyer to Fight on Your Behalf
If you're being sued for breach of fiduciary duty, you have a serious legal battle ahead of you. This legal battle will involve the complexities of wills and estates and the legal claims against you for your actions or failure to act . Your best solution for a favorable outcome is to have an experienced probate attorney on your side.
Looking for a probate attorney in the Chicago area? The experts at John J. Pembroke & Associates are more than prepared to fight your battle with you.
Contact us today for a free consultation!