Trust Litigation and Breach of Fiduciary Duty
The firm has a proven track record of successfully representing beneficiaries and Trustees in fiduciary and trust litigation. When a family member takes control of a trust, he may not have the beneficiary’s best interest at heart. The Trustee may be failing to make distributions, mismanaging trust assets, failing to provide information, or in some cases, stealing from the trust. The shock of realizing a trusted brother, sister, or other family member has hidden trust assets, or has thrown up obstacles in your search for truth, can be emotionally and financially devastating. Suing a family member is a challenging decision. We can help you find peace.
The firm is often engaged to protect the rights of the beneficiary, and to hold the fiduciary accountable. The fiduciary duties owed by a trustee are substantial – often the highest standard of conduct imposed by civil law – and may give rise to a range of strong remedies, including:
- denial of the Trustee’s compensation
- removal of the Trustee,
- a Constructive Trust imposed against wrongfully transferred assets
- Disgorgement of all profits or benefits received by the trustee.
In Texas, a Trustee owes to his beneficiaries the highest fiduciary duties recognized by law. Ames v. Ames, 757 S.W.2d 468, 476 (Tex. App.–Beaumont 1988) aff’d as modified, 776 S.W.2d 154 (Tex. 1989)(holding “a trustee is definitely required to conduct himself, in his trustee affairs, with scrupulous good faith and fidelity when dealing with the interests of his beneficiary.”)
A Trustee owes to his beneficiaries an unwavering duty of good faith, fair dealing, loyalty, and fidelity. Herschbach v. City of Corpus Christi, 883 S.W.2d 720, 735 (Tex. App.–Corpus Christi 1994, writ denied).
In Texas, a Trustee may owe his beneficiaries the following fiduciary duties (among other potential duties):
A strict duty of good faith, fair dealing, honest performance, and strict accountability. In re Estate of Miller, 446 S.W.3d 445, 455
(Tex. App.—Tyler 2014, no pet.).
A duty of loyalty. A Trustee may not use his position to obtain any advantage that is inconsistent with his primary duty to the beneficiaries. MacDonald v. Follett, 180 S.W.2d 334 (1944).
A duty to avoid self-dealing. Self-dealing is generally defined as an occurrence in which the fiduciary uses the advantage of his position to gain a benefit at the expense of those to whom he owes a fiduciary duty. Mims-Brown v. Brown, 428 S.W.3d 366, 374 (Tex. App.—Dallas 2014, no pet.). Even “gifts” to the Trustee from creator of the trust are presumptively invalid. Even in the case of a “gift,” transactions involving parties with a fiduciary relationship are presumed invalid and requires proof by the Trustee that they were fair and reasonable. Stephens County Museum, Inc. v. Swenson, 517 S.W.2d 257, 260 (Tex. 1974), citing Pomeroy, Equity Jurisprudence § 956 (5th ed. 1941); Archer v. Griffith, 390 S.W.2d 735 (Tex. 1965).
A duty to account for all trust property and for any profit or benefit made by the Trustee from his administration of the trust. Texas Trust Code 114.001
A duty of full disclosure of all material facts known to them that might affect [the beneficiaries'] rights.” Huie v. DeShazo, 922 S.W.2d 920 (Tex. 1996).
A duty of competence. A trustee can exercise his fiduciary duty in such a negligent manner that his lack of diligence will result in a breach of his fiduciary duty. Jewett v. Capital Nat. Bank of Austin, 618 S.W.2d 109, 112 (Tex. Civ. App.–Waco 1981, writ ref'd n.r.e.).
Understanding how these duties apply to your particular case – and the remedies available to you – requires an experienced trust litigation lawyer. We would appreciate the opportunity to talk to you about you case and discuss ways The Camp Firm PLLC can help.