Key takeaways
- A fiduciary has a legal obligation to act in another person's best interest, typically regarding financial matters.
- Examples of fiduciaries include personal representatives, trustees, guardians, and agents under a power of attorney.
- Breach of fiduciary duty includes actions like self-dealing, mismanagement of property, and failing to disclose conflicts of interest.
- Maryland law provides specific statutes and justifications for removing fiduciaries for misconduct or incompetence.
- Legal action, such as court petitions, can be taken to remove a fiduciary and seek damages if a breach occurs.
- Personal Representatives owing a fiduciary duty to the heirs of the estate
- Trustees owing a fiduciary duty to the trust’s beneficiaries
- Guardians owing the individual they are appointed to protect a fiduciary duty
- Power of Attorneys owing a fiduciary duty to the person who appointed them as their agent
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Fiduciaries can be held legally liable for committing intentional fraud or wrongdoing. They can also be held liable for negligence. A fiduciary must avoid conflicts of interest that could impact the other person’s best interests. Even an appearance of potential conflicts of interest could give rise to a claim for breach of fiduciary duty.
Examples of Ways a Person May Breach Their Fiduciary Duty
Fiduciaries may breach the fiduciary duty in several ways. Common examples of breaching a fiduciary duty include:
- Failing to disclose potential conflicts of interest
- Using the property of the estate, trust, or person for the fiduciary’s personal use or personal gain
- Failing to file required documents and paperwork
- Excessive waste of assets
- Commingling assets of the estate or person with the fiduciary’s assets
- Acting carelessly or recklessly with another’s assets
- Misappropriating, stealing, or borrowing trust or estate funds
- Using property for personal gain
- Failing to maintain proper records
- Favoring one beneficiary over another
- Failing to make sensible investments
- Using their fiduciary position for self-interest
Legal action may be taken against fiduciaries who breach their duties. Courts may replace them and award damages where applicable.
Removing a Fiduciary for Breach of Duty
If you believe that a personal representative, trustee, guardian, or power of attorney has breached their fiduciary duty, you may petition the court to remove the person. Several Maryland code sections speak directly to this issue.
The Maryland Estates and Trusts Code §15-112 provides that a court shall remove a fiduciary who:
- Misrepresented material facts in their appointment
- Willfully or negligently disobeyed a court order
- Is incapable of performing their duties
- Breached the fiduciary duty of loyalty and good faith
- Failed to file a court-required bond
- Failed to administer the estate or duties competently
Under Maryland Estates and Trusts Code §6-306, a personal representative may be removed for reasons such as misrepresentation, disobeying court orders, mismanagement, or inability to serve.
Trustees may also be removed for specific reasons, including:
- Serious breach of trust
- Serving against the best interest of beneficiaries
- Lack of cooperation with co-trustees
- Substantial change of circumstances justifying removal
An attorney can review your legal options and help you determine how best to proceed.
Contact Our Maryland Estate Planning Lawyer for More Information
Choosing someone to act as your fiduciary can be challenging. If you have questions about estates, trusts, guardianships, or estate administration, contact Steve for help today.
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