Thousands of ordinary people are thrown into the role of a “fiduciary” every single day. A person in a fiduciary relationship is under a duty to act for the benefit of the other as to matters within the scope of the relationship. A fiduciary duty, in the eyes of the law, begins once the fiduciary knowingly acts on behalf of the beneficiary, and in their benefit, or upon acknowledgment of the fiduciary duty by entering an official relationship that imposes said rules.
Fiduciary relationships exist in various settings, such as:
- Employer to employee;
- Accountant to client;
- Attorney to client;
- Principal to agent;
- Executor to heir;
- Guardian to ward; and
- Trustee to beneficiary.
The nature and extent of the duties imposed differ somewhat depending on the relationship. Nonetheless, knowing how to identify a breach of fiduciary duty allows a person to react quickly and prevent further damage. It is legally permitted for the wronged individual to sue for and receive damages as well as any profits made by the fiduciary in breach of their fiduciary duty.
A breach of fiduciary duty can be any behavior that is not in the best interest of the client, ward, etc.; any action that solely benefits the fiduciary; or any failure on part of the fiduciary to be completely transparent with important information.
The plaintiff making a claim against a party for a breach of their duties must prove that a fiduciary relationship existed to begin with, that the defendant breached their fiduciary duty, and finally, that said breach was damaging to the plaintiff. The breach is only actionable if there is proof that the plaintiff suffered damages as a result of the breach.
By ensuring a basic understanding of your fiduciary duty and what behavior is expected of you, you will be more likely to prevent any breaches of your duty. If you suspect a breach of fiduciary duty, consider seeking a legal remedy soon.
If you have any questions regarding your rights as a Fiduciary, Trustee, or Beneficiary, it is important to meet with a skilled attorney to learn about what options may be available to you.