Learn about troubles with an executor, administrator or other fiduciary.

Trustees, Executors, Fiduciaries, and the Problems That May Arise

When there is a will, or an estate that needs to be distributed among beneficiaries, an executor is often placed in charge of getting this done.

Because the executor of an estate is a type of fiduciary, it’s helpful to understand more about what a fiduciary is and what’s expected of them.

What is a fiduciary? A fiduciary is anyone who has control or custody over the funds or property of another person.

A trustee, an executor, and even a banker are just a few examples of fiduciaries.

They are people with responsibility over another person’s assets.

A great deal of trust is placed in a fiduciary’s hands and thus there is also the potential for misuse and abuse of the estate with which they are entrusted. For the purposes of this article, the fiduciary we’ll be talking about is the executor of a will but the information also applies to trustees, holders of a power of attorney and other fiduciaries.

Problems can arise with fiduciaries who are deliberately misusing funds and/or assets, or with fiduciaries who accidentally mishandle the estate with no intention to cause harm.

The Law is Specific About the Duties of a Fiduciary

Because fiduciaries often oversee the distribution of other peoples’ funds, the law places unusually strict guidelines over how they handle an estate.

According to Texas law, the fiduciary owes the beneficiaries of an estate they are overseeing the duties of “...loyalty and good faith, integrity of the strictest kind, fair, honest dealing and the duty not to conceal matters which might influence his actions to his principal’s prejudice.”

What does that mean for you?

It means that the executor entrusted to act as fiduciary of your loved one’s estate must act in the beneficiaries’ best interests and not their own.

Everything they do with the funds and property entrusted to their care should be judged in light of this one question: “How does this help the beneficiary?” If there is an action that does not help the beneficiary, the fiduciary is normally not allowed to do it.

Failure to take action according to this strict code of conduct could result in the removal of the fiduciary.

The takeaway?

If you believe the executor of a will in which you are a beneficiary is using the funds or property of the estate in a way that does not help the beneficiaries - especially in those ways where the executor, themselves, might profit - you may dispute their assignment as executor or have them removed after appointment.

Accounting

Not all fiduciaries are removed due to deliberate mishandling of the estate.

The accounting duties of a fiduciary are strict and rigorous.

A fiduciary has a duty to make a full and accurate disclosure of all his fiduciary activities, transactions, profits and mistakes even when - and especially when - it hurts.

These accountings may be at regular intervals - such as once per year - as well as when a beneficiary demands that one be made. In both cases, it is the fiduciaries duty to make the accounting available.

Other Fiduciaries

An executor is not the only fiduciary. Others who may be fiduciaries and have to follow the strict duties and reporting of an executor are:

  1. Holders of powers of attorney,
  2. Administrators,
  3. Trustees,
  4. Partners, and
  5. Agents

These are formal relationships but fiduciary duty may also arise out of informal relationships between two people when there is a high degree of trust, influence, or confidence held by one for the other. These may be the result of natural developments, but sometimes are acquired through abuse, manipulation, or dominance.

Remedies

If a fiduciary fails to live up to the high standards imposed on him by law, he may be removed, made to pay any damages caused by his breach of duty, forced to return any property that he may have taken from the estate, denied compensation as well as forced to return any compensation that he has received, pay exemplary (punitive) damages and attorney's fees. The remedies available to the beneficiaries are:

  1. Removal.
  2. Actual damages.
  3. Disgorgement of fees.
  4. Denial of compensation.
  5. Punitive or exemplary damages.
  6. Attorney's fees.

Every case is different and the result will depend on how the account was mishandled, to what degree, and why.

While every executor has the responsibility to live up to the standards expected of a fiduciary, juries will treat the fiduciary who is milking the beneficiaries’ funds to their benefit more harshly than they will the elderly aunt who hasn’t stolen any money, but who has not made regular accountings or disbursements.

You deserve to have your inheritance handled effectively, accurately, and appropriately. If you suspect that the executor of a will is not fulfilling their responsibilities, please don’t hesitate to get in contact with us.

 

 The rest of this article is the old webpage that we had in place of the information that you just read. You can read it although you will see that it is a repeat of what has been said. The above information is an easier read and less lawyerly than the paragraphs below but they contain essentially the same information.

 

 Start here if you have questions about a fiduciary such as a trustee, executor, administrator, etc. or want to find out about protesting the appointment of an executor, trustee, administrator or other fiduciary. Fiduciary is the general term. Anyone who has custody or control of funds or other property that belong to another is a fiduciary. An executor of a will is a fiduciary because he has custody and control of the estate's funds, the funds that belong to the beneficiaries of the will. An administrator is a fiduciary for the same reasons. The trustee of a trust is a fiduciary because he has custody and control of the trust property that belongs to the beneficiaries of the trust. A stock broker may be a fiduciary. A banker may be a fiduciary. What makes a person a fiduciary is that he has custody and control of funds or property that belong to another.

Background

There is a valid will or trust. You are a beneficiary of the will or trust or you are an heir when there is no will. You are having trouble because a fiduciary is misusing funds, is not accounting for funds or is not paying out funds from the will, trust or estate and you want to know what your rights are. This article should be your starting point to learn about fiduciaries. It provides general information about fiduciaries and their responsibilities. This general article will lead you to specific articles on the site and on our blog where you can find more detailed information about the particular question you have concerning fiduciaries. Click on any highlighted or underlined word to get more information.

Who is a fiduciary

Formal relationships. These include but are not limited to:

  1. Holders of powers of attorney,
  2. Executors and administrators,
  3. Trustees,
  4. Partners,
  5. Agents, and
  6. Spouses.

Informal relationships. These arise when a relationship is a moral, social, domestic or purely personal one and one person trusts in and relies on another. A fiduciary duty based on an informal relationship may arise when a high degree of trust, influence, or confidence has been acquired and abused. It may also arise either as a result of dominance on the part of one or weakness and dependence on the part of another.

Duty

The law places the most exacting civil duty recognized by law on fiduciaries. The fiduciary owes the beneficiary the duties of "...loyalty and good faith, integrity of the strictest kind, fair, honest dealing and the duty not to to conceal matters which might influence his actions to his principal's prejudice." They must place the interest of the beneficiaries above even their own interest. Everything they do with the funds and property in their care must be judge in the light of this question "how does this help the beneficiary?" If there is an action that does not help the beneficiary, the fiduciary is not allowed to do it. The fiduciary is not allowed to use the funds or property to benefit his own interest. If he does, he is guilty of self dealing. A trustee must not have a conflict of interest with the beneficiary or with the use of the funds or property in his control.

Accounting

The law requires that a fiduciary render an accounting of the funds that have come into his control as well as the funds that he paid out. The timing of this accounting varies but generally, he must account at least once a year. The fiduciary also must make an accounting when an accounting is demanded by a beneficiary. A fiduciary has an affirmative duty to make a full and accurate confession of all his fiduciary activities, transactions, profits, and mistakes even when - and especially when - it hurts. The breach of the duty of full disclosure by a fiduciary is tantamount to fraudulent concealment. 760 / 642.

Remedies

If a fiduciary fails to live up to the high duty imposed on him by law, he may be removed, made to pay any damages caused by his breach of duty, forced to return any property that he may have taken from the trust, denied compensation as well as forced to return any compensation that he has received, pay exemplary (punitive) damages and attorney's fees. The remedies available to the beneficiaries are:

  1. Removal.
  2. Actual damages.
  3. Disgorgement of fees.
  4. Denial of compensation.
  5. Punitive or exemplary damages.
  6. Attorney's fees.

Of course every case is different. There is never an excuse for a fiduciary violating his duty but the remedies juries impose will vary from case to case depending on the intent of the fiduciary. They will treat harshly the fiduciary who is milking the beneficiaries funds but will treat lightly the elderly aunt who hasn't stolen any money but who has not made regular accountings or disbursements. However, no matter their intent, if a fiduciary breaches their high duty imposed by law, the court will probably remove them.

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Robert Ray is Board Certified

Robert Ray is the Editor and owner of this site. Board Certified, Personal Injury Trial Law — Texas Board of Legal Specialization.

We handle cases throughout Texas. Our principal office is in Tyler, Texas.

Robert Ray, Texas inheritance attorney.Click here to email us or to go to the contact form if you want to contact us about a Texas inheritance dispute.

Robert Ray is Board Certified

Robert Ray is the Editor and owner of this site. Board Certified, Personal Injury Trial Law — Texas Board of Legal Specialization.

We handle cases throughout Texas. Our principal office is in Tyler, Texas.

Robert Ray, Texas inheritance attorney.Click here to email us or to go to the contact form if you want to contact us about a Texas inheritance dispute.