A breach of fiduciary duty in estate administration occurs when a personal representative (commonly referred to as an “executor”) fails to act in the best interests of the estate or perform their duties in accordance with the ethical standards they are required to adhere to. In the event a personal representative fails to follow the instructions outlined in the will, act fairly toward all beneficiaries, or refrain from self-dealing, their actions may count as a breach of fiduciary duty. If you are a beneficiary or heir of a loved one’s estate and you suspect the personal representative is not acting in good faith, it’s essential to consult with a knowledgeable trusts and estates attorney. They can advise you regarding your legal rights and remedies, and discuss the best course of action to take.
Key Takeaways
- A breach of fiduciary duty in estate administration occurs when the personal representative fails to act in the best interests of the estate or its beneficiaries.
- The essence of a personal representative’s fiduciary duties are acting with loyalty, impartiality, prudence, and good faith in carrying out all tasks related to the administration of the estate.
- Breaches of fiduciary duty in estate administration often involve dishonesty, wrongdoing, or neglect. Specific examples can include self-dealing, mismanaging assets, commingling personal and estate assets, or failing to communicate with beneficiaries.
What are a Personal Representative’s Fiduciary Duties?
A personal representative has certain fiduciary duties that must be upheld throughout the process of administering the decedent’s estate. The essence of these duties lies in acting in the best interests of the estate and the beneficiaries or heirs, making prudent financial decisions, and setting aside all personal interests. These responsibilities are comprehensive, covering everything from managing assets to settling the decedent’s debts, and ensuring accurate record keeping.
Whether they were named in the decedent’s will or appointed by the court, the key duties of a personal representative include:
- Securing, inventorying, and managing all probate assets
- Prioritizing paying valid creditors
- Paying debts and taxes on time
- Keeping a record of all communications
- Maintaining a record of receipts and expenses
- Filing the necessary legal documents, including a final accounting
- Distributing assets in accordance with the terms of the will
In all the above tasks, a personal representative is required to act with loyalty, impartiality, prudence and good faith. They must also abide by all laws and statutes, keep beneficiaries informed and maintain records of all transactions regarding the estate.
Common Examples of Breach of Fiduciary Duty
There are many ways a personal representative can breach their fiduciary duties during the process of estate administration. For example, they may act in their own best interests, rather than in the best interest of the beneficiaries, or fail to fulfill their obligations. A breach can also occur if the personal representative delays distribution, stalls in closing the estate, or misses deadlines. Typically, a breach of fiduciary duty involves some type of dishonesty, wrongdoing, or neglect.
A breach of fiduciary duty in estate administration can arise in connection with the following:
- Self-dealing or engaging in conflicts of interest
- Mismanaging assets or selling estate assets for less than fair market value
- Commingling personal and estate funds
- Failing to maintain proper records of all transactions related to the estate
- Failing to communicate with beneficiaries
- Favoring one beneficiary over others
If you are a beneficiary and suspect a breach, it’s crucial to gather the evidence you will need to support your claim. Collect bank statements, property records, and any other financial documents you have regarding the estate matter. Demand an accounting and keep records of all communications you have had with the personal representative. To stop the personal representative’s wrongful actions, it may be necessary to seek judicial intervention and file a petition in court.
What are the Consequences of Breaching a Fiduciary Duty in Estate Administration?
The consequences associated with breaching a fiduciary duty in estate administration depend upon the specific duty that was breached and the actions taken by the fiduciary. If a court determines that a breach occurred, the judge might order the personal representative to take specific actions or refrain from certain conduct. In extreme cases, they might also order the removal of the personal representative and appoint a new one.
The court can also hold a personal representative accountable for any financial damages caused by their wrongdoing. Significantly, the court has the authority to order a surcharge, which would require the personal representative to repay the lost estate funds from their own pocket. A judge may also order estate assets to be frozen to prevent further dissipation.
Contact an Experienced Michigan Trusts and Estates Attorney
If you are the beneficiary of a loved one’s estate and believe the personal representative is not acting in accordance with their fiduciary duties, a knowledgeable trusts and estates attorney can help. The attorneys at Barron, Rosenberg, Mayoras & Mayoras are committed to helping estate beneficiaries and heirs navigate the estate administration process and representing their interests in estate disputes. Schedule a consultation today by calling (248) 641-7070 in Michigan or (941) 222-2199 in Florida to learn how we can assist you. You can also use our simple online contact form.