Under the Texas Estates Code and Texas Trust Code, executors and trustees owe beneficiaries the "highest duty recognized by law." At Robbins Estate Law, we have handled thousands of probate matters, holding fiduciaries accountable when they prioritize self-interest over their legal obligations.
Hopefully, our loved ones have planned how to distribute their property when they’re no longer with us. Depending on how your relative chose to distribute their property after death, you may find yourself involved with a will’s executor or a trust’s trustee. Under the law, these people owe you the highest degree of care.
They owe you and other recipients of estate property a fiduciary duty. But just what is a fiduciary duty? And what can you do if your trustee or executor breaches their fiduciary duty? We explain this complex legal relationship below. If you have questions, don’t hesitate to contact our team at Robbins Estate Law.
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What is a Fiduciary Duty?
To understand a breach of fiduciary duty in Texas, one must first define the underlying legal obligation. A fiduciary duty is the highest legal obligation one party has to act in the absolute best interests of another person, known as the beneficiary. While a contract or formal agreement can establish this bond, the Texas Estates Code and various statutes also assign these duties to specific roles, such as executors and trustees.
- Duty of Care: Acting with diligence and prudence.
- Duty of Loyalty: Prioritizing the beneficiary above all else.
- Good Faith: Operating with honesty and intent to fulfill the role.
- Confidentiality: Protecting sensitive estate or trust information.
- Prudence: Making reasonable, well-investigated financial decisions.
- Disclosure: Keeping beneficiaries fully informed of all material facts.
The Duty of Care
The fiduciary duty of care mandates that an individual diligently pursue the beneficiary's best interests through reasonable and prudent decision-making. In Texas, this requires the fiduciary to take an active role, thoroughly investigate all available options, and consult with professional experts—such as accountants or attorneys—when specialized knowledge is required to protect estate assets.
The Duty of Loyalty
The duty of loyalty is the cornerstone of the fiduciary relationship, requiring the person in charge to put the beneficiaries' interests first, without exception. A critical component of this duty is the strict avoidance of conflicts of interest, which occur if a fiduciary makes decisions based on self-gain or personal interest.
For example, in a trustee-beneficiary relationship, the trustee is legally barred from making trust-related decisions for their own financial gain. Any action that prioritizes the trustee's pocketbook over the beneficiary’s inheritance constitutes a fundamental violation of this duty
Common Fiduciary Relationships in Texas
Texas law recognizes fiduciary duties across various professional and personal landscapes. While these duties exist between lawyers and clients, doctors and patients, or even between spouses, they are most critical during the Texas probate and trust administration process.
In Texas estate planning, the primary fiduciary roles include:
- Executors and Administrators: Appointed to manage an estate under the Texas Estates Code.
- Trustees: Bound by the Texas Trust Code to manage assets for beneficiaries.
- Guardians: Court-appointed individuals who owe a duty of care to their ward.
These fiduciaries are legally charged with gathering, accounting for, and managing assets with absolute transparency. A breach often occurs when a representative fails to prioritize the beneficiaries—such as through self-dealing, commingling personal and estate funds, or complete neglect of duties.
Defining a Breach of Fiduciary Duty
A breach of fiduciary duty occurs the moment a fiduciary stops acting in your best interest and starts acting in their own. Under Texas law, beneficiaries have the right to hold these parties accountable through litigation.
- The Existence of a Relationship: A formal fiduciary relationship was established by law (e.g., the Texas Estates Code) or by a written agreement (e.g., a Trust document).
- The Occurrence of a Breach: The fiduciary failed to uphold their duties of loyalty, care, or full disclosure.
- Resulting Damages or Unjust Enrichment: The breach directly caused financial harm to the beneficiary or resulted in an improper profit for the fiduciary.
If a fiduciary has leveraged their position for personal financial gain without your explicit, informed consent, they may be held liable for damages, removed from their position, or ordered to forfeit their commissions.
Common Examples of Breach of Fiduciary Duty in Texas
A breach occurs whenever a fiduciary fails to fulfill their legal obligations to the beneficiaries. In the context of Texas estate planning and probate, these failures often jeopardize the integrity of the entire estate.
Specific examples of when a trustee, executor, or administrator may be held liable for a breach include:
- Self-Dealing and Improper Profits: Using estate or trust assets for personal financial gain or business interests.
- Embezzlement: Illegally misappropriating or stealing funds from the trust or estate.
- Asset Neglect: Failing to manage assets properly, allowing the estate or trust to "waste" or lose value through inaction.
- Failure to Notify: Neglecting the legal requirement to give proper notice to all heirs or beneficiaries.
- Accounting Failures: Failing to provide an accurate, transparent accounting of all estate or trust transactions.
- Improper or Untimely Distributions: Making disbursements that violate the governing documents or failing to distribute assets according to a reasonable timeline.
- Disregard of Instructions: Failing to carry out the specific directions laid out in the will or trust agreement. Conflicts of Interest: Maintaining personal interests that clash with those of the beneficiaries, which is often grounds for removal and replacement of the fiduciary.
Because fiduciary litigation is complex, these examples represent only a fraction of potential misconduct. Identifying a breach requires a detailed analysis of the specific facts of your situation. Engaging an experienced attorney is essential to navigating court filings and preventing further harm caused by a fiduciary's failures.
Who Can Sue for a Breach of Fiduciary Duty?
Not just anyone can sue for a breach of fiduciary duty in Texas. Only the parties who are supposed to benefit from the fiduciary relationship can sue a fiduciary. For example, in a trust, a beneficiary can sue a trustee.
Remedies Available for Breach of Fiduciary Duty in Texas
The law provides several powerful remedies to protect beneficiaries, which are generally categorized into non-monetary and monetary relief.
Non-Monetary Relief: Immediate Asset Protection
When an untrustworthy fiduciary jeopardizes an estate or trust, the court can take swift action to prevent further "waste" or mismanagement.
- Removal of the Trustee or Executor: Permanently stripping the fiduciary of their authority.
- Appointment of a Receiver: Placing assets under the direction of a court-appointed third party.
- Injunctive Relief: Ordering the fiduciary to take a specific action or, more commonly, stopping them from taking further unauthorized actions.
- Disgorgement of Profits: Forcing the fiduciary to return any personal gains realized through their wrongful activity.
- Fee Forfeiture: Requiring the fiduciary to forfeit any compensation or commissions they would have otherwise earned.
Monetary Relief: Recovering Your Losses
In addition to stopping the misconduct, harmed parties can seek financial restitution:
- Actual Damages: Direct compensation for the financial loss caused by the breach, such as trust funds lost through neglect.
- Special or Noneconomic Damages: In certain cases, compensation for emotional distress or mental anguish may be available.
- Attorney's Fees: Under specific provisions of the Texas Trust Code, a court may order a trustee to pay the harmed beneficiary's legal fees.
What Is the Time Limit to File a Case for Breach of Fiduciary Duty?
The Texas Statute of Limitations
Every legal claim in Texas is governed by a Statute of Limitations, which is the strictly enforced time limit for filing a lawsuit.
- The Four-Year Rule: In Texas, you generally have four years from the date of the breach to file a claim for breach of fiduciary duty.
- The Risk of Delay: While four years may seem substantial, delaying legal action allows a rogue fiduciary more time to deplete assets or conceal evidence.
Early intervention is critical to stopping the "hemorrhaging" of an estate. If you suspect a breach, we recommend a consultation immediately to preserve your rights before this statutory window closes.
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Let Us Help with Your Case
Understanding the obligations of a fiduciary can be difficult. Preparing a court case to protect your assets can also be complicated.
If you are a beneficiary of an estate or a trust, Robbins Estate Law is here to help you. We’ll discuss the facts of your case and help you understand your rights under the law.
We are highly experienced attorneys from the top law schools in the country. You can rely on us for all of your trust and estate matters. Contact us today online or by phone to find out how we can help you.
FAQs
What is the statute of limitations for a breach of fiduciary duty in Texas?
In Texas, you generally have four years from the date the breach occurred—or the date it was discovered—to file a formal lawsuit. However, because an untrustworthy fiduciary can quickly deplete estate assets, you should seek legal intervention as soon as you detect warning signs to prevent further loss.
Can a trustee be removed for "self-dealing" in 2026?
Yes. Under the Texas Trust Code, self-dealing—which includes using trust assets for personal gain or commingling funds—is one of the most common grounds for the immediate removal of a trustee. Texas courts may also order the fiduciary to forfeit their compensation and return any profits made from the unauthorized transactions.
What is the current federal estate tax exemption limit for 2026?
As of January 1, 2026, the federal estate tax exemption has significantly decreased due to the sunset of the Tax Cuts and Jobs Act. High-net-worth families in Texas must now plan for a much lower threshold, making it critical that fiduciaries manage tax-sensitive assets with extreme diligence to avoid unnecessary tax liabilities for beneficiaries.
Who is responsible for paying the legal fees in a Texas fiduciary lawsuit?
While each party typically pays their own fees, the Texas Trust Code allows a judge to order a trustee to pay the harmed beneficiary's attorney’s fees in a successful breach of fiduciary duty claim. This serves as a vital remedy to ensure beneficiaries are not financially penalized for holding a rogue fiduciary accountable.