Do you suspect there was a breach of fiduciary duty? Here are a few basics of what this means, how it can happen and the next steps.
What is Fiduciary Duty?
At a high level, a person or organization with fiduciary duty is put in charge of someone or something that belongs to someone else. They have to put the client’s needs above their own, acting in trust and good faith.
This can mean a wide variety of things. For example, if someone passes away, a fiduciary may be put in charge of managing the deceased person’s financial assets. If a fiduciary is given guardianship over a child, they are to act in the best interest of their ward.
Fiduciary duty often applies in certain industries. After all, some people are regularly put in charge of taking care of someone else and their assets. Accountants, insurance agents, money managers, and board members are just a few types of positions that naturally have fiduciary duties.
For the sake of this article, let’s talk about child guardianship. Sometimes this comes up in our family law practice, so this is what we’ll focus on.
What Happens in a Breach of Fiduciary Duty?
Just as you may expect, a breach of fiduciary duty is when the person who has guardianship of the child failed in some way. Probably the easiest thing to discuss here is finances.
It can be tempting for the guardian to make decisions in their own best interests instead of the ward. For example, maybe they choose to invest funds in something less proven due to the promise of fast growth. The guardian may be so focused on trying to make a lot of money fast that they fail to protect the money the ward already has.
The guardian should also keep the ward’s financial assets separate from their own. Combining them is almost always a bad idea because it becomes nearly impossible to separate them once combined. For example, if the funds were combined into a bank account and a debit card purchase goes through, whose funds paid for that purchase? Was it the ward’s, or the guardian’s? It’s up for debate, which is not something you want.
At the end of the day, the point is that a guardian should do everything they can to protect the ward’s assets. That doesn’t mean everything should go into a savings account that pays 0.01% interest just because it’s secure. But it also doesn’t mean it’s okay to throw tons of money into penny stocks that are very risky.
What Happens with a Breach of Fiduciary Duty Claim?
The first and most important thing we can recommend is that you call a lawyer. Whether you are the person who wants to file a claim or you are the guardian being accused, you shouldn’t go through this alone. Find an expert to fight for you and make sure justice is done.
Give us a call at 714-456-9118. As experts in family law, we’ll do everything we can to make sure you have great representation and advice to get you through this.