A fiduciary is someone the law requires to put another person’s interests ahead of their own. Executors, administrators, trustees, guardians and agents under a power of attorney all fall in that group. When one of them looks after themselves first, the claim is breach of fiduciary duty.
Most of our fiduciary cases fall into a handful of patterns, and each one tends to turn on a particular question.
Estate property sold to the fiduciary or a relative. We look at the price, how the property was marketed, and whether anyone else had a chance to buy it.
A house occupied rent-free by the executor. The question is fair rental value for the time they lived there, and who paid the taxes, insurance and upkeep.
Estate funds mixed with personal accounts. We trace the estate’s money through the combined accounts and compare it against the fiduciary’s own records.
Fees paid without approval. The court looks at whether the services were necessary and whether the amount was reasonable.
A business run into the ground. The test is whether the decisions were prudent based on what the fiduciary knew when they made them.
Large transfers in the last years of life. These turn on capacity, undue influence, and whether an agent under a power of attorney went beyond their authority.
These cases are won on documents. We start with bank statements, closing files, tax returns, the inventory, and the accounting if there is one.
For an estate, the usual first step is the Section 404.001 accounting demand. Once fifteen months have passed since the clerk first issued letters, an interested person can demand an accounting, and the executor has sixty days after receiving the demand to produce it.
For a trust, Property Code Section 113.151 lets a beneficiary make a written demand for a statement of accounts. If the trustee hasn’t delivered it within ninety days, any beneficiary can sue to compel it. A beneficiary who wins that suit may be awarded court costs and reasonable and necessary attorney’s fees, against the trustee individually or in the trustee’s capacity as trustee. A trustee doesn’t have to account more often than once every twelve months unless a court orders it.
One rule helps claimants. When a fiduciary benefits from a transaction with the people they owe duties to, Texas law presumes the transaction was unfair, and the fiduciary has to prove it was fair. A fiduciary without good records will have a hard time carrying that burden.
In Dallas County, the three statutory probate courts hear both the estate administration and the claims that come out of it.
All three sit on the 7th floor of the George Allen Courts Building, 600 Commerce Street, Dallas, Texas 75202.
Estates Code Sections 31.002 and 32.005 treat an action against a personal representative arising out of their performance of their duties as a matter related to the probate proceeding, which belongs in the statutory probate court. Sections 32.006 and 32.007 give statutory probate courts jurisdiction over actions by or against a trustee and actions involving trusts, concurrent with the district courts. Property Code Section 115.001 gives district courts exclusive jurisdiction over trust proceedings, and subsection (d) makes an exception where jurisdiction is conferred on a statutory probate court.
So a claim against an executor and a related claim against the trustee of a trust created by the decedent’s will can be heard together here. Under Local Rule 2.01(b), an action concerning a testamentary trust gets a new cause number and is assigned to the court where the administration of the will that created the trust is pending, which keeps it in front of the same judge. Claims involving a living trust also fall within the probate courts’ trust jurisdiction under Section 32.006.
Breach of fiduciary duty and fraud each carry a four-year limitations period under Civil Practice and Remedies Code Section 16.004(a). Claims that depend on setting aside a will face a shorter deadline. Estates Code Section 256.204 requires a will contest to be filed within two years after the will was admitted to probate, or within two years after discovering a forgery or fraud. That two-year deadline is the one people most often miss.
If the breach was concealed, the discovery rule may extend the deadline, but it’s risky to count on it. If the numbers look wrong, have someone review them now, while the estate is still open.
Bring the inventory, any accounting you’ve received, and the bank records if you can get them. The first consultation is short and free.