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A breach of fiduciary duty is an abuse of trust by a party that is legally bound to act in the best interests of a second party. A fiduciary obligation can exist in various types of relationships. From a board of directors to shareholders, a bank to clients, or a trustee to beneficiaries. There are many different situations where fiduciary obligations come into play. No matter in what area the failure of responsibility occurs, The Potts Law Firm breach of fiduciary duty attorneys have the experience to represent your case.
Proving a breach of fiduciary duty involves showing misconduct by a defendant and establishing that damages resulted from the neglect or misbehavior. If you need help with an abuse of trust claim, such as a breach of fiduciary duty, please contact our law firm today. Our attorneys are experienced, effective, and will advise you on how best to proceed with your case.
A fiduciary, the party that owes the duty, is obligated to act on behalf of a beneficiary. When a trust relationship is agreed to, it’s illegal for a fiduciary to take actions that hurt the beneficiary’s interests. The three core duties of this kind of agreement are:
- Care – The fiduciary must use utmost care managing the interests and assets of the beneficiary.
- Impartiality – The fiduciary must not favor one beneficiary over another. All must be treated equally and with disinterest.
- Loyalty – The fiduciary must act only in the interests of the beneficiaries.
A fiduciary relationship is not always clearly stated. In some cases, it may be assumed or based on subjective information. Before a breach can be proven, a fiduciary relationship must first be shown to exist.
Someone hurt by the failure of a fiduciary may be entitled to damages. Courts have several ways of fixing breaches. Injured parties may receive compensation, including either money or punitive damages. Every case is different, and damages may hinge on the nature of the abuse, the fiduciary relationship, and other factors specific to the case. Here are a few of the penalties a court could impose:
- Removal of the fiduciary – A court might order the removal or replacement of a fiduciary.
- Punitive – If a breach is proven, a court could require a fiduciary to pay punitive damages.
- Denial of fees – A fiduciary may be denied the right to collect fees.
- Surcharges – A court could require a fiduciary to pay money to a trust.