Negligence and Fiduciary Duty
A fiduciary is a person who holds a legal or ethical relationship of trust with another party. If a person is a fiduciary, they have what is called a fiduciary duty to that party. A fiduciary duty can exist in several special relationships or circumstances and the type of duty that exists between a fiduciary and their party can vary. If a fiduciary breaches their duty, they may be liable for negligence. When does a fiduciary duty exist? How does a court determine who it exists to? Mohseni v. Hartman answers these questions.
Mohseni v. Hartman, 363 S.W.3d 652, 2011 Tex. App. LEXIS 4412 (Tex. App. 2011)
Facts of the Case: Role and obligations of executor / trustee of a will in Texas
In August 2005, Ali Mohseni loaned Yadollah Mosadegh $150,000 in exchange for a promissory note. The note carried an 18% simple interest rate and was payable in monthly installments of $2,250. Mosadegh died in November 2005. After Mosadegh’s death, Mohseni filed a claim for repayment against the estate in probate court. The trial court approved the claim, but it went unpaid.
The probate court appointed Gaye Laurine Hartman as executrix of the estate in January 2006. In October 2007, Hartman moved to withdraw, and requested appointment of a substitute independent executrix. The motion to withdraw stated that the estate had a value of $800,000, but that it was deeply in debt. The trial court granted the relief, and it replaced Hartman that month.
In April 2009, Mohseni sued Hartman under a negligence claim. He alleged that Hartman failed to pay outstanding payroll, sales, and property taxes owed for the Garson Restaurant, a property of the estate. As a result, he alleged, the estate incurred additional penalties and interest. Mohseni claims that, had Hartman not caused the estate to incur these extra costs, then the estate would have had sufficient money to pay his claim against it. The court found that because no fiduciary duty existed between Mohseni and Hartman that a negligence suit could not succeed.
What This Case Means: Will and Trust Duties and Responsibilities
A negligence cause of action has three elements: A legal duty owed by one person to another, a breach of that duty, and damages proximately caused by the breach. Thus a negligence claim can only exist here if Hartman owed a legal duty of care to Mohseni. Generally, no duty exists to take action to prevent harm to others absent certain special relationships or circumstances. This means that Hartman and Mohseni needed to have a certain special relationship or circumstance present in order for there to be a duty of care and furthermore cause for a negligence claim.
The Texas Estates Code defines an “independent executor” as “the personal representative of an estate under independent administration.” This “administration” that the executor performs refers to the management of the estate of a deceased party. As trustee of the property of the estate, an executor is subject to the fiduciary standards applicable to all trustees. This means that an executor does have a duty of care to a trustee.
An independent executor’s fiduciary duty also runs to the estate’s beneficiaries, and it arises from his status as trustee of the estate’s property. Thus, the independent executor owes a legal duty of care to the estate and its beneficiaries. However, there is nothing in the Texas Estates Code to suggest that there is a fiduciary duty between an independent executor and an estate’s creditor such as Mohseni. Nor is there anything under common law to suggest such a relationship exists. For these reasons, the court found that no fiduciary duty exists between Mohseni and Hartman, and because no fiduciary duty exists, there cannot be a negligence suit.
Do you need to hire an Experience Probate Attorney to help administer an estate?
When a person dies, their estate must go through the probate process in order for their assets to be distributed to their heirs. The executor of the estate is responsible for overseeing this process, and in many cases, it is advisable to hire an experienced probate attorney to help with the administration of the estate.
There are a few key reasons why hiring an experienced probate attorney can be beneficial:
1. Probate can be complex and time-consuming. An experienced attorney will have a good understanding of the probate process and will be able to navigate it more efficiently.
2. An attorney can provide valuable guidance and advice throughout the probate process. They can help you make decisions about how to distribute the assets of the estate, and they can also represent you in court if there are any disputes that arise.
3. An attorney can help protect your interests. In some cases, executors may be tempted to use estate assets for their own personal gain. An experienced probate attorney will make sure that doesn’t happen and will ensure that the estate is distributed according to the wishes of the deceased person.
If you are named as the executor of an estate, it is important to carefully consider your duties and obligations to the decedent’s estate and the beneficiaries. Call us today for a FREE attorney consultation. (281) 219-9090
What are the 4 fiduciary duties?
The term “fiduciary” has a variety of meanings depending on the context in which it is used. Generally, a fiduciary is someone who owes a duty to another person to act in that person’s best interests.
In the context of execution, a Texas executor owes a fiduciary duty to the beneficiaries of the estate. The executor must administer the estate in accordance with the terms of the will and Texas law. This includes ensuring that the assets of the estate are properly distributed to the beneficiaries.
The fiduciary duty owed by an executor to beneficiaries is different from the duty owed by a trustee to beneficiaries. With trust administration, the trustee is required to manage the trust property for the benefit of the beneficiaries. However, an executor is not responsible for managing estate assets after they have been distributed to the beneficiaries.
Texas law requires executors to act in good faith and in a manner that is consistent with their fiduciary duties. If an executor breaches their fiduciary duties, they may be held liable for damages.
What is a fiduciary of a deceased person?
A fiduciary is someone who manages the property or affairs of another person. In the context of a decedent, a fiduciary is someone who is responsible for distributing the decedent’s assets in accordance with their wishes.
There are many different types of fiduciaries, and the specific duties of a fiduciary will vary depending on the type of fiduciary and the situation. However, generally speaking, a fiduciary owes a duty of care and loyalty to the person they are representing. This means that they must act in the best interests of the person they are representing, and must avoid conflicts of interest.
If you have been named as a fiduciary in a will, or if you are otherwise responsible for distributing a decedent’s assets after they die, it is important to understand your obligations. If you have any questions about your duties, you should consult with an experienced probate attorney.
What is the difference between a fiduciary and an executor?
When it comes to estate planning, it is important to understand the difference between a fiduciary and an executor. A fiduciary is someone who is legally obligated to act in the best interests of another person. An executor, on the other hand, is someone who is appointed by a court to carry out the wishes of a decedent.
While an executor may owe a fiduciary duty to the estate, they are not required to act in the best interests of the beneficiaries. Instead, their duties are primarily focused on administering the estate and carrying out the decedent’s wishes.
If you are named as an executor in someone’s will, it is important to understand your duties and responsibilities. You may want to consult with an experienced attorney to ensure that you are properly fulfilling your role.
What does an executor have to disclose to beneficiaries?
As the executor of an estate, you have a fiduciary duty to the beneficiaries of the estate. This means that you must act in their best interests and disclose all material information to them.
Beneficiaries have a right to know about the estate and how it is being administered. Executors must keep beneficiaries informed about the status of the estate and any major decisions that are made. If there are any problems with administering the estate, beneficiaries should be made aware of this as well.
Executors should disclose all material information to beneficiaries in a timely manner. Beneficiaries should not have to request information from the executor; the executor should proactively provide updates.
If you are an executor, it is important to remember your fiduciary duty to beneficiaries. Keep them informed and act in their best interests at all times.
What is an estate beneficiary?
An estate beneficiary is someone who is named in a will or trust to receive assets from the estate. The assets can be anything from cash to real estate. The beneficiary has no legal obligation to the estate, but may have a moral or ethical obligation to the other beneficiaries.