What Is Fiduciary Litigation in Texas?

Trustees, executors, agents, and other fiduciaries may have significant control over property, money, and decisions that affect other people. That authority comes with legal responsibilities, and disputes can arise when a fiduciary mismanages assets, puts personal interests first, withholds information, or fails to follow the terms of a trust or estate.

Fiduciary litigation in Texas can provide a legal path for addressing these disputes and determining whether a fiduciary has breached their duties. Depending on the circumstances, a case may involve requesting an accounting, challenging transactions, seeking the removal of a fiduciary, or pursuing compensation for financial harm.

At Henington Lewis Law Firm PLLC, Samantha Lewis helps clients navigate disputes involving trusts, estates, and fiduciary responsibilities. Our experience with estate and legacy planning also allows us to evaluate these conflicts in the context of the documents and planning decisions that may be at the center of the dispute.

What Is a Fiduciary?

A fiduciary is a person or entity with a legal duty to act in the interests of another person or group in matters within the scope of the fiduciary relationship. Depending on the role, a fiduciary may manage property, administer an estate, control trust assets, or make financial decisions on someone else’s behalf.
When a fiduciary uses that authority improperly or fails to meet the duties associated with the role, beneficiaries or other interested parties may have grounds to challenge those actions.

Types of Fiduciaries

Several legal relationships can involve fiduciary duties. Common examples include:

• Trustees who manage trust property and make distributions to beneficiaries according to the terms of a trust;
• Executors and administrators who manage a deceased person’s estate and carry out responsibilities during probate. Disputes over their conduct may raise questions about whether an executor has fulfilled their legal responsibilities;
• Guardians who have court-authorized responsibilities for certain personal or financial matters involving a minor or incapacitated person;
• Agents acting under a power of attorney who receive authority to make certain decisions or manage property on another person’s behalf; and
• Other professionals or individuals who may owe fiduciary duties based on the specific legal relationship and circumstances involved.

The responsibilities are not identical in every fiduciary relationship. The duties that apply depend on the person’s role, the governing documents, and applicable Texas law.

Fiduciary Duties

The specific duties a fiduciary owes depend on the role, governing documents, and circumstances. Trustees, executors, agents, and other fiduciaries may have different responsibilities, but fiduciary relationships commonly involve duties such as:

• Duty of loyalty. A fiduciary may have a duty to put the interests of beneficiaries or the person they represent ahead of their own interests and avoid improper self-dealing or conflicts of interest.
• Duty of care. Fiduciaries may be required to manage property and make decisions with appropriate care and diligence.
• Duty of impartiality. When a fiduciary is responsible for multiple beneficiaries, the fiduciary may have obligations to consider their respective interests rather than improperly favoring one beneficiary.
• Duty to inform and account. Depending on the relationship, a fiduciary may need to provide information, maintain records, or account for how property has been managed.
• Duty to follow governing documents. Trustees, executors, and other fiduciaries generally must exercise their authority consistently with the documents and legal rules governing their role.

For trustees specifically, the Texas Property Code establishes standards for investing and managing trust assets. A trustee’s responsibilities can include evaluating investments, managing trust property, making required distributions, maintaining records, and administering the trust according to its terms.

Problems may arise when a trustee uses trust property for personal benefit, fails to make required distributions, does not provide information or accountings when required, or disregards the terms of the trust. Depending on the circumstances, beneficiaries may be able to challenge that conduct through litigation.

What Does Fiduciary Litigation in Texas Involve?

Fiduciary litigation may arise when a trustee, executor, or other fiduciary fails to fulfill the legal responsibilities associated with their role. Depending on the circumstances, an interested party may pursue a legal action for breach of fiduciary duty or seek other remedies related to the fiduciary’s conduct.

Common disputes can involve:

• Failure to make required distributions. Beneficiaries may challenge a trustee who refuses or fails to distribute trust assets according to the trust terms.
• Mismanagement of assets. Disputes may arise over improper investments, inadequate recordkeeping, misuse of property, or failure to safeguard assets.
• Self-dealing or conflicts of interest. A fiduciary may face a challenge when personal interests interfere with responsibilities owed to beneficiaries or the estate.
• Failure to provide information or accountings. Beneficiaries may seek information about transactions, distributions, expenses, or other decisions involving the property the fiduciary manages.
• Failure to follow governing documents. A trustee or executor may face a dispute for acting inconsistently with the terms of a trust, will, or other document governing their authority.

Many of these disputes can lead to a breach of fiduciary duty lawsuit. The appropriate remedy depends on the fiduciary’s role, the alleged conduct, the governing documents, and the harm involved.

In some estate disputes, the appropriate action may include seeking to remove an executor who is failing to fulfill their responsibilities. Other cases may involve requesting an accounting, challenging a transaction, seeking the return of property, or pursuing monetary relief when the circumstances support it.

How to Remove a Trustee or Executor

Texas law allows courts to remove trustees and executors under certain circumstances, but the grounds and procedures for removal depend on the fiduciary’s role and the facts of the dispute. For example, Texas law provides specific grounds for removing a trustee, including certain violations of the trust terms, failure to provide a required accounting, incapacity or insolvency, or other cause the court finds sufficient.

A removal dispute may involve:

• Requesting removal. A beneficiary or other person with legal standing may ask the appropriate court to remove the trustee or executor and explain the grounds supporting that request.
• Presenting evidence. The parties may present financial records, communications, accountings, testimony, or other evidence related to the fiduciary’s conduct.
• Allowing the fiduciary to respond. The trustee or executor generally has an opportunity to contest the allegations and present evidence regarding their actions.
• Court review. The court considers the applicable law, governing documents, evidence, and circumstances before determining whether removal is appropriate.
• Addressing what happens next. If the court removes the fiduciary, additional steps may be necessary to appoint or confirm a successor and address property, records, accountings, or other unresolved issues.

Removal is only one potential remedy in a fiduciary dispute. Depending on the circumstances, a beneficiary or interested party may instead seek an accounting, challenge a particular transaction, request other court orders, or pursue relief for losses associated with the fiduciary’s conduct.

Protect Your Rights

Fiduciary disputes can involve significant financial interests, trust or estate property, and questions about whether someone with legal authority has fulfilled their responsibilities. If you believe a trustee, executor, or other fiduciary has mismanaged assets, withheld information, engaged in self-dealing, or otherwise breached their duties, understanding your legal options is an important first step.

Henington Lewis Law Firm PLLC helps clients navigate fiduciary litigation in Texas with a focus on understanding the conduct at issue, reviewing the relevant documents and financial records, and identifying potential legal remedies. If you have concerns about a fiduciary’s actions, contact our firm to discuss your situation and the options that may be available.

Frequently Asked Questions

What Is Fiduciary Litigation in Texas?

Fiduciary litigation involves legal disputes over whether a trustee, executor, agent, or other fiduciary has fulfilled the duties associated with their role. These cases may involve mismanagement of assets, self-dealing, failure to provide information, improper distributions, or other alleged breaches of fiduciary duty.

What Is Considered a Breach of Fiduciary Duty in Texas?

A breach may occur when a fiduciary fails to meet a legal duty owed within the fiduciary relationship. Depending on the circumstances, this could involve self-dealing, conflicts of interest, misuse of assets, failure to follow governing documents, or failure to provide required information or accountings.

Can a Beneficiary Sue a Trustee in Texas?

A beneficiary may be able to bring legal action against a trustee when there are grounds to challenge the trustee’s conduct. Depending on the circumstances, the beneficiary may seek an accounting, challenge transactions, request the trustee’s removal, or pursue other available remedies.

Can an Executor Be Removed for Breach of Fiduciary Duty in Texas?

Texas courts may remove an executor under certain circumstances, but removal is not automatic whenever someone alleges a breach of fiduciary duty. Whether removal is available depends on the executor’s conduct, the applicable law, and the facts of the estate.

What Remedies Are Available in a Fiduciary Litigation Case?

The available remedies depend on the fiduciary relationship and the conduct involved. A case may involve an accounting, removal of a fiduciary, recovery or return of property, challenges to specific transactions, monetary relief, or other court orders appropriate to the circumstances.

How Long Do I Have to File a Fiduciary Duty Claim in Texas?

The deadline can depend on the type of fiduciary relationship, the specific claim, when the relevant conduct occurred or was discovered, and other circumstances. Because limitation periods can affect whether a claim may proceed, anyone concerned about potential fiduciary misconduct should consider speaking with an attorney promptly.