Having a conflict of interest might put a fiduciary in breach of their legal duty If their interests clash with beneficiaries, they might make decisions that harm beneficiaries. As a beneficiary, you have the right to know how conflicts of interest impact fiduciary responsibilities, and what to do if they arise.
Favoring one beneficiary over another is a conflict of interest. As is a trustee commingling their own assets with the trusts for personal gain, or selling trust assets to themselves for a low price. Funneling trust money into personal accounts is self-dealing and presents a serious conflict of interest. Beneficiaries can respond with lawsuits against fiduciaries. Through your lawsuit, we can make a fiduciary restore the trust’s value and get them removed from their position of authority.
For help with your case, call the Heyman Law Firm’s fiduciary litigation attorneys today at (410) 305-9287.
How Does Having a Conflict of Interest Impact a Fiduciary’s Role?
A fiduciary has a legal duty to act in the beneficiaries’ best. A trustee, for example, has to operate the trust responsibly and make decisions for the beneficiaries’ benefit, not their own.
If the fiduciary has a conflict of interest, they might breach their legal duty. Trust decisions may be influenced by their personal interests, not the beneficiaries’.
For example, fiduciaries might invest trust funds in personal businesses, make undisclosed distributions to themselves, or even sell trust assets at beneficiaries’ expense.
Having a conflict of interest greatly impacts a fiduciary’s role, and beneficiaries are right to want to address it.
What Are Conflicts of Interest for Fiduciaries?
We can help pinpoint and prove a fiduciary’s conflict of interest and how it stops them from meeting their duty.
Self-Dealing
Self-dealing occurs when fiduciaries use trusts for their personal gain. Selling trust assets to themselves for below market value, giving loans to themselves from the trust, and gifting trust assets to themselves are examples of trustee self-dealing.
Favoritism
Trusts may have several beneficiaries. The trustee’s job is to treat beneficiaries according to trust instructions. Favoring one beneficiary over another creates a conflict of interest. If a fiduciary gives unfair distributions to a beneficiary, it affects the others, too. Since it is not in the best interest of all beneficiaries, it’s a breach of the fiduciary’s legal duty.
Comingling Trust Assets
Comingling assets occurs when fiduciaries mix their own assets with trust assets. This can be as simple as putting money from the trust into their personal bank accounts. More egregious examples include mixing trust investments with a fiduciary’s personal investment portfolio.
Can Beneficiaries Sue Fiduciaries for Conflicts of Interest?
When conflicts of interest make fiduciaries breach their legal duty, beneficiaries may file lawsuits. The statute of limitations for these lawsuits is not long, so do not wait to see if you have a case.
Under Md. Code, Ests. & Trs. Art., § 14.5-904(a), beneficiaries have one year after receiving a report of a potential claim to sue for breach of trust. Beneficiaries can request reports at any time and are entitled to know about trust activity. If the trustee doesn’t disclose the potential claim, you will have three years to sue.
Even if you got a report, it may not trigger the one-year statute of limitations if it leaves out mandatory information.
What Are Signs a Fiduciary Has Conflicts of Interest?
Beneficiaries understandably trust fiduciaries to uphold their legal duty. Identifying common signs a fiduciary has a conflict of interest can help you notice mismanagement sooner.
Fiduciaries should send reports about a trust’s property, receipts, liabilities, disbursements, and assets annually. They should also promptly respond to any other beneficiary requests for reports, according to § 14.5-813(a).
Refusal to send reports could indicate a conflict of interest. If you get accounting reports but they seem off, our lawyers can review them.
Also, if you stopped receiving trust distributions or if the distributions seem to be the wrong amount, tell our lawyers. Our fiduciary litigation attorneys can review recent accounting reports and look for evidence of trust mismanagement.
How Can I Document a Fiduciary’s Conflict of Interest for My Lawsuit?
We can help beneficiaries document breaches of fiduciary duty and conflicts of interest for their lawsuits.
Trust accounting reports tell us much about the trustee’s activity. We can send written requests for these reports to trustees. However, if the trustee has a conflict of interest or has been self-dealing, they may not readily hand accounting reports over.
We can go through the courts to get accounting reports if necessary.
Filing a lawsuit can help us uncover additional evidence. Through the discovery process, we may obtain the fiduciary’s personal financial information, among other important evidence. This may reveal where trust funds have gone and if the fiduciary has been commingling assets.
Can I Get a Fiduciary Removed for a Conflict of Interest?
Conflicts of interest can certainly get fiduciaries removed, and we can make that a main goal of your lawsuit.
When faced with proof of their breach of fiduciary duty, trustees might willingly step aside. Some trusts name successors. For those that don’t, the court may appoint one.
Trustees who have benefited from their position of power may want to keep it. If they don’t agree to leave their position, we can go to trial.
Trials may also help beneficiaries recover damages from the fiduciary’s breach of duty. If self-dealing, favoritism, or commingling assets affect beneficiaries’ distributions, they can recover the difference.
Your case can likely do more than get the fiduciary removed, especially if the trust’s value suffered because of their misconduct. Tell us the main goal of your lawsuit against a fiduciary, and we can help you achieve it.
Call Our Lawyers to Discuss Your Lawsuits Against a Fiduciary
Get help with your case from the fiduciary litigation attorneys of the Heyman Law Firm by calling (410) 305-9287.