A fiduciary is a personal representative of an estate that is held to a high ethical and legal standard while performing their duties as a representative, executor, administrator, trustee or guardian of a New York probate estate. A fiduciary duty occurs when beneficiaries place their confidence and trust in the person acting as the fiduciary to manage financial and legal matters on their behalf and handle the winding up and closing of a probate estate.
Responsibilities and Duties of a Fiduciary:
• To avoid conflicts, personal financial, self-interests and monetary gain
• To establish and maintain trust and loyalty with beneficiaries and all interested parties to the estate
• To disclose information and inform beneficiaries of all financial and legal matters
A fiduciary is in charge of the following responsibilities:
• Managing financial accounts including bank accounts, stock accounts, 401(k),etc. and making financial investment
• Preparing and overseeing accountings
• Selling and disposing of estate property and assets
• Paying bills and handling claims
• Distributing assets to beneficiaries, creditors and other interested parties
• Winding up estate matters and closing the estate
Breach of Trust
When a fiduciary fails to perform his or her services in an ethical and legal manner, a fiduciary breach of trust occurs. If a beneficiary or other interested party has been financially or legally harmed as a result of the fiduciary breach of trust, the injured person or persons have the right to file a legal action in a New York Court against the fiduciary for breach of trust. As a result of a breach of fiduciary duty, a fiduciary may face both financial and legal liability and exposure and removal of their duties if found guilty by a court.
Examples of a breach of fiduciary duty include the following:
• A fiduciary receives a monetary gain or has a personal interest in an activity that the fiduciary performs as part of their duties. For instance, the fiduciary sells real estate that belongs to the estate to his wife or other family member at a substantial discount, and then resells the property for profit and receives a portion of the proceeds. Or a fiduciary sells an expensive piece of artwork to a friend or business associate who owns an art gallery at a substantial discount.
• The fiduciary is taking too much money for services they are performing that are considered extraordinary and unusual in the normal course of their duties.
• The fiduciary has made bad or illegal investment and the beneficiaries have suffered or will suffer financial losses as a result of such actions.
• There are mistakes in accountings that have caused financial harm to the beneficiaries.
• The fiduciary is taking estate assets such as cash, artwork or other collectibles and receiving financial gain or keeping the assets.
It is important for the fiduciary and the beneficiaries to establish a relationship of trust and communication in order to avoid any misunderstandings, financial losses or conflicts of interest. The parties should seek the assistance of professional legal and financial advisors to ensure the fiduciary performs his or her duties properly and to reduce the exposure and legal and financial liability of the fiduciary, the estate and the beneficiaries. Following professional advice will save all parties time and money and help avoid probate litigation.
If you wish to speak to a New York estate attorney, call the Law Offices of Albert Goodwin at 718-509-9774.