If you are the executor of someone’s New York estate or the trustee of his or her trust, that makes you a fiduciary. In other words, you are someone entrusted with the power and authority to handle assets for the benefit of others. Because the decedent or trust settlor trusted you to manage and distribute his or her assets, you owe a duty to the estate or trust to do so competently, appropriately and for the benefit of the designated heirs and/or beneficiaries.
Becoming a fiduciary is serious business and entails many duties on your part. As FindLaw explains, should you fail to fulfill those duties by properly managing and distributing the assets entrusted to your care, the heirs and/or beneficiaries can sue you for breach of fiduciary duty .
Breach versus mistake
You need not be perfect as a fiduciary. You can make an occasional mistake and you also can sometimes fail to make the best possible decisions with regard to asset investments, etc. Such things are not breaches of your fiduciary duties and responsibilities. Instead, a breach amounts to a deliberate act on your part that is detrimental to the estate or trust such as one of the following:
- Failing to disclose pertinent information to the heirs or beneficiaries
- Acting in your own self-interest rather than those of the heirs or beneficiaries
- Acting in any manner contrary to their best interests
In order to prevail in their suit against you for breach of your fiduciary duty, the heirs or beneficiaries must prove the following four things:
- That the decedent’s will appointed you as executor or the settlor’s trust appointed you as trustee
- That the will or trust set forth your fiduciary duties
- That you breached one or more of those duties
- That the heirs or beneficiaries suffered financial damages because of your breach
Should the heirs or beneficiaries win their lawsuit, you may have to personally pay them the amount of their damages. In addition, you could have to pay them punitive damages if the judge or jury decides that your breach amounted to fraud or malice.
This is general information only and not intended to provide legal advice.