Back to the Learning Center

By: Scott Grossman on April 25th, 2024

Is Breach of Fiduciary Duty a Tort?

Fiduciary Duty Duty of Care

When it comes to financial matters and legal relationships, it is essential to understand the concept of fiduciary duty. Fiduciary duty refers to the legal obligation of one party towards another, where the fiduciary is expected to act in the other party’s best interests. This duty creates a relationship of trust between the fiduciary and the beneficiary, and any breach of this duty can have serious legal consequences. So, what is a tort? A tort is a civil iniquity that causes someone to suffer loss or harm and results in legal liability for the person who commits the act.  

One aspect of fiduciary duty is the duty of care. The duty of care requires the fiduciary to exercise a certain level of skill, knowledge, and diligence when performing their duties. That means fiduciaries must act prudently, reasonably, and with the beneficiary’s best interests in mind. Failure to meet this duty can lead to a breach of fiduciary duty claim.

Fiduciary Duty Lawsuit

A breach of fiduciary duty can result in a lawsuit filed by the affected party. A fiduciary duty lawsuit is a legal action taken by a beneficiary against a fiduciary who has failed to fulfill their obligations. Such a lawsuit aims to seek remedies for the damages caused by the breach and hold the fiduciary accountable for their actions.

In proving a breach of fiduciary duty, the plaintiff must demonstrate that a fiduciary duty existed, that the fiduciary breached that duty, and that the violation caused harm or damages to the plaintiff. The burden of proof is on the plaintiff, who must provide evidence to support their claims.

Breach of Fiduciary Obligations

A breach of fiduciary obligations occurs when a fiduciary fails to meet the standards set forth by their duty. These obligations can vary depending on the relationship and the specific circumstances. However, they generally include duties such as loyalty, honesty, disclosure, and confidentiality.

For example, in the context of a trustee-beneficiary relationship, the trustee has a fiduciary duty to act in the client’s best interests and disclose any potential conflicts of interest. Suppose the trustee fails to provide suitable investment advice or engages in self-dealing. In that case, it can be considered a breach of fiduciary obligations.

Trustee Duties

Trustees, as fiduciaries, have specific duties and responsibilities when managing trusts. These duties include:

  1. Duty of loyalty: Trustees must act solely in the best interests of the beneficiaries and avoid conflicts of interest.
  2. Duty of prudence: Trustees must exercise reasonable care, skill, and caution when managing the trust assets.
  3. Duty of impartiality: Trustees must treat all beneficiaries fairly and impartially.
  4. Duty of obedience: Trustees must follow the terms of the trust and act within the scope of their authority.
  5. Duty of disclosure: Trustees must provide beneficiaries with relevant information about the trust.

Trust Litigation

When a breach of fiduciary duty occurs within a trust, trust litigation may be necessary to resolve the dispute. Trust litigation involves legal action by beneficiaries or interested parties to protect their rights and interests in a trust.

Trust litigation can arise for various reasons, such as mismanagement of trust assets, failure to distribute assets to beneficiaries, or conflicts among trustees or beneficiaries. In such cases, the court can intervene to ensure that the trust is administered correctly and that the fiduciaries fulfill their obligations.

During trust litigation, the court evaluates the evidence presented by both parties to determine whether a breach of fiduciary duty has occurred. If the court favors the plaintiff, it may order remedies such as monetary damages, removal of the fiduciary, or modification of the trust terms.

A breach of fiduciary duty is a serious matter with significant legal and financial implications. Whether you are a beneficiary seeking remedies for a violation or a fiduciary defending against allegations, it is crucial to understand your rights and obligations under fiduciary law. Consulting with an experienced trust and probate law firm can provide you with the guidance and support needed to navigate these complex legal matters.

More on your Trustee breaching their fiduciary duties

If you would still like more information on trust litigation and removing a trustee, check out our complete overview of California trust litigation, available on our website. If you have more questions about your rights as a beneficiary and what you should know moving forward,

It’s best to reach out as soon as possible. The longer you take, the more damage your Trust could take. Please call us at (888) 443-6590, and we would be more than happy to see if we can assist you.

If you are still having some trouble, have any more questions, or want to talk to someone about your case, please give us a call or fill out our Get Help Now form below.