Executors and trustees owe a fiduciary duty to the heirs and beneficiaries of the decedent. A fiduciary duty consists of a duty of good faith and fair dealing, and a duty to act reasonably in handling the estate or trust. A fiduciary must always consider the best interests of the trust or estate before his or her interests. When an executor or trustee engages in self-dealing to the detriment of the estate or trust, fails to properly safeguard assets under his or her control, or fails to adequately account for actions taken on behalf of the estate or trust, there is a breach of fiduciary duty. The heirs or beneficiaries damaged as a result of a fiduciary’s actions can file a lawsuit against the executor or trustee, and under some circumstances, the executor or trustee can be held personally liable for the loss.
Recent Cases:
Attempted Removal of Co-Executor for Breach of Fiduciary Duty
In the Matter of the Estate of Albert Sauer, 2011 N.J. Super. Unpub. ____ (Docket No.: BER-P-088-11) (Ch. Div. 2011). Decision by the Superior Court of New Jersey, Chancery Division, Bergen County.
An order to show cause and complaint was filed by plaintiff, co-executrix of the Estate, seeking removal of her sister, as co-executrix for failure to account and breach of fiduciary duty for failure to include plaintiff in estate administration decisions and the payment of bills on behalf of the estate.
In this matter, defendant, a co-executrix, acted unilaterally pertaining to the administration of her father’s estate, despite having been appointed as a co-executrix with her sister, the plaintiff herein. Plaintiff sought information and documents and to be included in each decision pertaining to the estate, including paying bills. Defendant refused, instead providing information to plaintiff after decisions and payments were made. There was a guardianship action between the parties prior to decedent’s death, which muddied the waters between the parties.
Defendant also paid her attorney but refused to authorize payment for plaintiff’s attorney. Defendant utilized monies in a joint account established before decedent’s death to pay the bills and refused to transfer the monies into an estate account which would have necessitated a signature on each check by the plaintiff. Numerous letters between counsel were exchanged to no avail. Plaintiff then decided to file the complaint.
The Court held that defendant would not be removed so long as she involved plaintiff in all of the decisions pertaining to the estate, including the signing of any checks. Defendant had the obligation to include plaintiff in each decision as co-executrix. The Court also found that unless plaintiff’s counsel was also paid, that defendant’s attorney would need to disgorge the attorneys’ fees paid to him from the estate until such time as they agreed to pay both attorneys. Each executrix was entitled to hire counsel who should be paid. The matter as to the accounting and misappropriation of funds was allowed to move forward and a case management conference was scheduled.