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4 ways a fiduciary breach of duty happens

On Behalf of | Nov 22, 2023 | Fiduciary Representation |

Maintaining the integrity of an estate plan demands a fiduciary’s commitment to excellence.

Navigating the responsibilities with precision helps build trust and ensures the smooth execution of the plan. That makes it important to avoid actions that could lead to mistrust or legal issues.

1. Lack of transparency

One glaring sign of a fiduciary breach is a lack of transparency in financial matters. Chosen representatives should provide clear and comprehensible information about the estate’s assets, transactions and overall financial status. If there is a veil of secrecy surrounding these details, it may indicate a breach of fiduciary duty.

2. Unexplained delays

Timeliness is key in executing an estate plan. Delays without clear justification may signal a fiduciary breach. Whether it is in the distribution of assets or the settlement of debts, any unexplained prolongation could lead to complications and discontent among beneficiaries.

3. Mismanagement of assets

If there is evidence of careless handling, unauthorized transactions or neglect of investment opportunities, it raises concerns about the fiduciary’s commitment to preserving the estate’s value. A breach of duty may occur when the appointed representative fails to act prudently, potentially diminishing the assets intended for beneficiaries.

4. Failure to communicate

Effective communication is important in a fiduciary role. A breach may manifest in the form of inadequate or inconsistent communication. If the representative fails to keep beneficiaries informed about the estate’s status, decisions or any changes in the plan, it can lead to confusion, mistrust and suspicion.

In a recent study indicated that only 33% of Americans had an estate plan. For those who do, they expect oversight of their plan to follow their wishes. By avoiding certain practices, a fiduciary can navigate the complexities of estate planning with diligence.