Appointing a trustee of your estate, hiring a financial planner, planning your business relationships – all are examples of situations that require a great deal of trust. That trust is better known as a fiduciary duty. Fiduciaries are held in the highest confidence, but what happens when the fiduciary breaches that trust? Here’s a quick glimpse into fiduciary relationships, responsibilities, and what happens when the duty is breached.
What is Fiduciary Duty?
Simply put, fiduciary duty is the responsibility to act in the best interest of another party. In a fiduciary relationship, the fiduciary accepts both the duty of loyalty and the duty of care in regards to the other party. The fiduciary must put aside all personal benefit when acting on behalf of the other party. They are legally bound to act in good faith and with confidentiality while disclosing all relevant information to the other party.
Examples of Fiduciary Relationships
There are countless examples of fiduciary relationships. They occur when one party is placed in a position of trust over another person or party. A fiduciary relationship is often in place to protect assets or rights of one party, which is why loyalty and duty of care are so important to the relationship.
What is a Breach of Fiduciary Duty?
A breach of fiduciary duty is when one person fails to act in the best interest of the other party. That breach often involves personal gain. In order to prove a breach of fiduciary duty, three things must be established: the relationship itself, the breach, and any damages incurred from the breach. Because some fiduciary relationships are more clearly stated than others, you may need an attorney to help you prove the relationship. An attorney will also help with identifying the cause of the breach and assigning monetary damages.
Some examples of breach of fiduciary duty include embezzlement, failing to protect confidential information, failing to disclose conflicts of interest, self-dealing, and misuse of company assets.
What Are the Consequences of a Breach of Fiduciary Duty?
There can be several consequences for breaching fiduciary duty. In the state of Wisconsin, breach of fiduciary duty is considered intentional tort, meaning that the act was done purposely and not due to negligence. Breaching fiduciary duty is a wrongful act that can have negative repercussions for both parties.
A breach of fiduciary duty can damage the reputation of both parties in some instances. Someone found guilty of a fiduciary breach is unlikely to maintain a positive reputation in his or her field, while a victim of a breach can be seen as a liability.
In some instances, the case can go to court to hold the fiduciary liable. The victim can seek monetary compensation for damages, legal fees, loss of income or income potential, and mental anguish. More severe cases involving insider trading or embezzlement may even lead to a criminal trial.
What Do I Do If I’m a Victim of a Breach of Fiduciary Duty?
Breach of fiduciary duty cases are often complex, but an attorney who specializes in such cases can be an invaluable asset. If you suspect a breach of fiduciary duty in your fiduciary relationship, contact Atolles Law, S.C. today for a consultation. We’ll fight for your rights to ensure you’re compensated fairly. We also have attorneys that specialize in defending fiduciaries against accusations of a breach of fiduciary duty.