A fiduciary duty exists when an individual trust a person to carry out an obligation which could be a certain transaction or something related to his or her affairs; and a breach occur when the fiduciary does something that goes against the interest of the principal. When a breach of fiduciary occur, a lawsuit can be filed by the principal. Such lawsuit will only go ahead in a court provided the complainant is able to prove that there was a fiduciary agreement between the two parties where one of the parties chose or accepted to act in the best interest of the other. Legally, the principal can claim for damages including profit earned by the fiduciary as result of the breach. A breach of fiduciary is a very serious case, thus, anyone found guilty of such offence doesn’t only have his or her finances in the line, but such a person reputation will also be smeared. Only when there is a legal document stating the roles of a fiduciary would a fiduciary be able to perform any related duties
How can a Fiduciary be breached?
A breach of fiduciary occurs only if the fiduciary carries out an act that goes against the wishes or the interest of the principal. Also, a breach of Fiduciary can be regarded as any behavior whatsoever that benefits the fiduciary, or action that is done out of the interest of the principal. It is important to know that, without a fiduciary agreement between two parties, a fiduciary breach can’t occur. There must be an agreement in place first.
Before a breach, a fiduciary performs in the interest of the principal.
A breach of fiduciary usually happen when a fiduciary acts in a way that doesn’t conform to their obligation. Such breach is often accompanied by severe legal implication. This type of breach is nothing like a breach of contract; it is way more complex and serious. Because it is the duty of the fiduciary to uphold or work in the best interest of the principal, he or she will have to ensure that the property, money, etc., of the principal is well managed and protected. Perhaps, you are conversant with a contract and you believe that this term is a little similar to a contract. Well, a fiduciary obligation is quite different from a contract. It involves an agreement made between two parties where one party agrees to act according to the wishes of the other party who can be termed the principal. The party who is chosen as the fiduciary owes the legal obligation to the principal, and it is the duty of such party to ensure that no clash of interest emanates between the fiduciary and the principal.
Always understand the form of the Relationship that exist between you and your Fiduciary
There are several types of fiduciary relationships, and one of them is the common fiduciary relationship that exist between an employer and employee or a lawyer and a client. There also exist other prevalent examples and they are:
The fiduciary duty of a lawyer to a client in need of legal assistance, the fiduciary duty of a banker to his clients, the fiduciary duty of a trust creator to the beneficiary, the fiduciary duty of a corporate officer to the shareholder, the fiduciary duty of an estate executor to the beneficiaries of an estate.
Bottom line on relationship with fiduciary.
- Fiduciaries are vital to the implementation of estate plan or actualization of a contract.
- In case of estate plans, a fiduciary act as a personal representative and ensure that the estate plan beneficiaries get allocated assets.
- Once involved in your estate plan, fiduciary duties involves ensuring that no family feud come up when administering your estate.
- Because it is the duty of the fiduciary to uphold or work in the best interest of the principal, he or she will have to ensure that the property, money of the principal is well managed and protected
- A breach of fiduciary occurs only if the fiduciary carries out an act that goes against the wishes or the interest of the principal.
- Fiduciary may or not may guide you through any probate process should in case involved in estate plans.
- It is important to know that, without a fiduciary agreement between two parties, a fiduciary breach can’t occur. There must be an agreement in place first.