Fiduciary duty is the term in California that describes the obligation that particular trusted parties have to their beneficiaries. For example, the person or institution that oversees and runs a trust has a fiduciary duty to do what is best for the beneficiary of the trust. A breach of that trust can lead to litigation.
When are fiduciaries needed?
When a person writes a will and their children are underage, it is common for them to create a trust. The trust is a legal entity that will hold all of the financial assets and wealth until the children are of age. Another instance is if the child has a mental impairment that makes them unable to manage their own finances. In both cases, a person like a lawyer, banker or relative is in charge of overseeing the trust, keeping track of the assets and acting in the best interests of the beneficiary. If they do anything that is in their own interest rather than the interest of the beneficiary, that is a fiduciary breach.
What can happen due to a fiduciary breach?
A fiduciary breach is a serious matter that involves civil and potentially criminal legal activity. The trustee is placed in a position of power and has access to assets that do not belong to them, so abusing that power is a violation of the laws that govern the fiduciary relationship. Litigation might be the only way to resolve a violation and address any grievances.
There is a lot at stake in a fiduciary relationship. Often, the party who is vulnerable does not have the experience or power to bring a suit themselves, making it especially fraught with risk. However, the law makes it possible to hold fiduciaries accountable when they misuse their power.