Estate administrators and trustees must act in the best interests of an estate or trust. When they don’t uphold that duty, that is referred as a breach of fiduciary duty. This is a serious matter because it can compromise the estate or trust creator’s intentions and potentially hurt heirs or beneficiaries.
There are many ways these individuals can breach fiduciary duties. Understanding common concerns may help beneficiaries spot the signs of misconduct and/or inadequate approaches and take legal action accordingly to correct the breach and tp better ensure that the assets in question are properly managed.
Mismanagement of assets
Mismanaging assets may involve poor investment decisions that lead to significant losses, negligence in managing the assets that results in value depreciation or failure to secure and insure property adequately. Mismanagement demonstrates a lack of due diligence and care expected of someone in their fiduciary role, which directly impacts the estate’s value and the beneficiaries’ inheritance.
Self-dealing
Self-dealing occurs when an estate administrator or trustee prioritizes their interests over those of the beneficiaries. This may include entering into transactions that benefit the trustee personally, such as selling estate assets below market value or allocating favorable investment opportunities to themselves or entities in which they are interested.
Co-mingling of funds
Fiduciaries must keep their finances separate from those of the estate or trust they manage. Co-mingling of funds happens when a trustee or estate administrator mixes personal assets with those of the estate or trust. This leads to confusion about asset ownership and potentially using estate or trust assets for personal gain.
Failure to act impartially among beneficiaries
A trustee or estate administrator must act impartially with beneficiaries. Favoritism or discrimination among beneficiaries can manifest in various ways, including unequal asset distribution, providing more information or access to one beneficiary over others or making decisions that disproportionately benefit one party at the expense of others.
Neglecting to provide accounting and information
Beneficiaries have the right to be informed about the management and status of the trust or estate. A breach of fiduciary duty occurs when an estate administrator or trustee fails to provide regular, detailed accounting or withholds information beneficiaries are entitled to. This lack of transparency can sow distrust and mask other breaches of duty, such as mismanagement or self-dealing.
Any of these situations demand immediate attention from beneficiaries. Having a legal representative to protect their interests may be beneficial, as these situations can become rather complex and consequential.