Who is Considered a Fiduciary?
An executor, administrator, administrator CTA, administrator DBN, temporary administrator, preliminary executor, trustee (lifetime or testamentary), guardian, voluntary administrator, ancillary fiduciary, and the donee of a power during minority are all considered fiduciaries in Surrogate's Court. Surrogate's Courts have also interpreted an agent acting under a power of attorney as a fiduciary.
What Are the Responsibilities of a Fiduciary?
As a fiduciary, you have many responsibilities. If a fiduciary mismanages an estate or trust, the statutory commissions that compensate fiduciaries for their efforts may be forfeited. A surcharge may also be imposed for the injury they cause to the estate or beneficiaries, which means you could be forced to personally pay the estate's and/or other interested parties' expenses, such as attorney fees.
If you are the executor of an estate, you are responsible for filing the necessary court documents to start the probate process, as well as notifying banks and government agencies of the decedent's death and completing their last tax returns. Once the estate administration process is completed, you are responsible for collecting and distributing the property.
What is Breach of Fiduciary Duty?
A breach of fiduciary duty occurs when one party fails to act in the best interests of another. Executors, Trustees, and Powers of Attorney must act honorably and in accordance with the law. A beneficiary or other interested party can bring an action against a fiduciary if there is a question about whether that fiduciary has acted appropriately.
The laws governing the acts of fiduciaries are complex. Our trusts and estates department has represented a number of clients in their capacity as a fiduciary and as a beneficiary in cases where the fiduciary's actions have been called into question.
In these types of contested litigated situations, having skilled counsel is critical to avoid the various traps that await the unwary, including the possibility of being surcharged for the opposing party's legal bills.