Fiduciaries have a special relationship with the parties they protect and are required to meet a high standard of care under the law. When they fail to fulfill their duties, an interested party may seek to remove and replace the fiduciary. If you believe a fiduciary is not acting appropriately, there are specific steps you must take and it is best to consult an attorney because you will likely need to go to court.
What Is a Fiduciary?
A fiduciary is a person who owes certain legal duties to parties who place their trust in the fiduciary. Examples of fiduciaries include executors and trustees who owe a duty of care, loyalty, and fair dealing to beneficiaries of the will or trust.
How Should a Fiduciary Act?
Fiduciaries must act to protect the interests of all beneficiaries equally as provided in the terms of the will or trust. This includes protecting the value of the assets by not wasting assets and investing prudently.
What Happens If a Fiduciary Is Acting Inappropriately?
There are several legal remedies to hold a fiduciary responsible for their actions. Beneficiaries can seek an accounting of assets. To do this the beneficiaries would make a motion or application in court to compel an accounting of assets. The court then orders the fiduciary to provide detailed information on the assets, income, expenditures, and creditor claims of the estate or trust so the court can verify that the funds have been handled appropriately.
Another option is for the beneficiaries to bring a legal proceeding to challenge certain actions of the fiduciary or enjoin actions that the fiduciary may take in the future.
How Can a Fiduciary Be Removed and Replaced?
Depending on the results of the accounting and/or legal challenge discussed above, the next step may be to ask the court to remove and replace the fiduciary. The action can be brought by a beneficiary or other interested party.
Executors are appointed by the court. Therefore, when an executor has acted inappropriately, only a court may remove them, unless the executor voluntarily steps down. Replacing the executor also must be done by the court since courts have the sole power to appoint an executor to act on behalf of an estate.
Trustees are not necessarily court-appointed, but court action may still be needed to remove and replace a trustee, depending on the provisions of the trust and applicable state law. Importantly, some trust agreements contain provisions that allow for the beneficiaries or a trust protector to substitute a new trustee or add an additional trustee.
Do You Need Assistance With Replacing a Fiduciary?
Establishing that a fiduciary has breached his or her duties and should be replaced can be challenging and time-consuming. Our attorneys are highly experienced in estate and trust administration issues and can help you assess the strength of your case and how to proceed to ensure assets are protected. Contact us for a consultation today.s
