Back to the Learning Center

By: Scott Grossman on May 20th, 2024

What Constitutes a Breach of Fiduciary Duty in California?

A fiduciary or trustee duty is when you entrust someone to manage your assets, make decisions on your behalf, or act in your best interests. A fiduciary duty is the highest standard of care recognized by the law. It requires the fiduciary to act with utmost good faith, loyalty, and honesty toward the person to whom they owe the duty – the principal or beneficiary. Common examples of fiduciary relationships include:

  • Trustee and beneficiary of a trust
  • Executor or administrator of an estate and heirs/beneficiaries
  • Attorney and client
  • Financial advisor and investor
  • Corporate officer or director and shareholders

A breach of a trustee’s duty occurs when the fiduciary fails to uphold their legal obligations. That usually entails putting their interests ahead of the beneficiaries. In probate and trust cases, this can have devastating emotional and financial consequences. 

Fiduciary Duties Under California Law

California courts recognize three primary fiduciary duties:

Duty of Loyalty

Loyalty requires a fiduciary to act solely in the beneficiary’s best interests. They must avoid self-dealing or engaging in activities that conflict with their personal interests and fiduciary obligations.

Duty of Care

Fiduciaries must exercise reasonable care, skill, and caution in managing the assets or affairs entrusted to them. That includes making prudent investment decisions, properly maintaining records, and overall diligence.

Duty to Avoid Conflicts of Interest

Fiduciaries must remain impartial and avoid situations where competing personal or professional interests could unduly influence their judgment. Potential conflicts must also be disclosed.

Examples of Breaches in California 

Some common examples of actions that may constitute a breach include:


When a fiduciary engages in transactions or activities that benefit themselves instead of the beneficiary. For example, an executor hires their own company to perform services for the estate at an inflated cost.

Misappropriation of Assets

Using the beneficiary’s money or property for the fiduciary’s benefit constitutes misappropriation. That could involve outright theft, unauthorized borrowing, or commingling of funds.

Failure to Disclose Material Information

Fiduciaries must keep beneficiaries reasonably informed about matters affecting their interests. Intentionally withholding crucial facts is a breach.

Negligence in Managing Assets

Failing to exercise proper care and diligence in managing the beneficiary’s assets can lead to losses from imprudent investments, inadequate insurance, or mishandling of real estate or business interests.

Consequences of Breaches in California

When a fiduciary breaches their duties in California, the consequences can be severe both financially and emotionally for families already coping with the loss of a loved one. Potential ramifications include:

Liability for Damages

The trustee may be ordered to reimburse the beneficiary or estate for any losses caused by the breach, including lost income and appreciation. In blatant cases, punitive damages may also be awarded.

Removal from Position

Courts can remove a trustee, executor, or other fiduciary who has violated their duties. That can prolong the probate process and increase costs.

Restitution of Profits

Suppose the fiduciary profited from the breach, such as through self-dealing. In that case, the trustee may be required to disgorge those ill-gotten gains to the beneficiaries.

Potential Criminal Charges

In the most severe cases involving fraud, embezzlement, or theft, the fiduciary could face criminal prosecution, resulting in fines or imprisonment.

The emotional toll of a breach can be immense for families already grieving a loved one’s passing. It can feel violative to discover that the person entrusted with carrying out the decedent’s final wishes has instead violated that sacred duty through dishonest or negligent actions. This dishonesty worsens the heartache. That is why it is essential to know your rights as benefices of a trust. 

Preventing Breaches in California

While it is impossible to stop all breaches of fiduciary duty, there are steps fiduciaries and beneficiaries can take to reduce the risks:

Proper Documentation

Meticulous record-keeping of all transactions, decisions, and communications creates transparency and accountability. Formal accounting should be provided regularly.

Disclosures and Waivers

Potential conflicts of interest should be disclosed upfront, and beneficiaries may waive specific conflicts after being fully informed.

Proper Representation

Finding proper representation, such as as trust and probate attorney in California.  

Your attorney will help you identify conflicts, disclosed, and managed to protect beneficiary interests.

Selecting a qualified, experienced fiduciary is also crucial. Thorough vetting, including reviews of prior work, can help avoid appointing someone who may breach their duties. 

Families dealing with the fallout from a fiduciary’s misconduct should consult a California probate attorney experienced in breach of fiduciary duty claims. With the proper legal guidance, beneficiaries can hold fiduciaries accountable and recover losses.

Beneficiary Rights in California

If you would still like more information on what exactly qualifies as a breach of fiduciary duty, check out our article “20 Ways Your Trustee can be breaching their fiduciary duties” on our website. If you have more questions about your beneficiary rights and what you should know moving forward. 

More on your Trustee Breaching their Fiduciary Duty

Need more information on Trust Litigation? To ensure they follow their fiduciary duties, check out our complete Overview of California Trust Litigation on our website. If you have more questions about your rights as a Beneficiary and what you should know moving forward. 

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.

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.