What is a Fiduciary Claim?

An Executor named in a Will has many responsibilities to the beneficiaries receiving gifts under the Will.

The most important of these responsibilities is an Executor’s duty, to act in the best interests of all beneficiaries and to act impartially between all beneficiaries named in the Will. This duty is commonly referred to as a ‘fiduciary duty’ and is a legal duty that the Executor must satisfy.

In the event that an Executor breaches their fiduciary duty to one or more beneficiaries, then the beneficiary may have a claim against the Executor for this breach. This type of action is called a ‘Fiduciary Claim’.

If you are a beneficiary under a Will and you believe that the Executor of the Estate has not acted in your best interests, then you need to speak to a Probate specialist about your options in taking action against the Executor for a breach of their fiduciary duty. It is important to seek legal advice as soon as possible, and ideally, before any distribution of the Estate has been made by the Executor.

A recent Supreme Court decision in McGrath v Troy as administratix of the estate of the Late Warren Terence Wade involved a Fiduciary Claim.

In these proceedings the deceased had died without a Will. His mother was granted Letters of Administration for her son’s Estate. The proceedings were commenced by a previous girlfriend of the deceased, on behalf of their three year old son. The claim was for the deceased’s mother, the administrator of her son’s Estate, to restore moneys wrongfully distributed to beneficiaries and to restore moneys that she had paid to herself as debts owed to her by the deceased.

The deceased had an Estate valued at $130,000. Out of this amount the deceased’s mother had made the following payments:

  •  Funeral expenses for the deceased of approximately $10,000;
  • A payment to herself of $20,000 that she claimed was repayment for a debt owed to her by the deceased;
  • A payment to her daughter, the deceased’s sister, of $40,000 for an alleged debt owed to her by the deceased; and
  • Payment of the legal fees for the administration of the Estate.

The remainder of the funds in the Estate after payment of the above sums were divided equally between the deceased’s mother, father and sister.

The Court held that the actions of the mother, acting as the administrator of her son’s Estate, had breached her fiduciary duty to beneficiaries. In particular, the deceased’s three year old son. The Court ordered that the mother be removed as the administrator of the Estate and that the moneys wrongly paid and distributed from the Estate by the deceased’s mother be restored.

It is an unfortunate reality that Executors of Estates can and do, breach their fiduciary duty to  beneficiaries. If you are a beneficiary and believe that you may have a Fiduciary Claim then you need to seek legal advice as soon as possible.

Graeme Heckenberg is an expert Wills and Estate lawyer. If you are living on the Northern Beaches and surrounding Peninsula and need help and advice in a Will dispute or Estate matter, call Northern Beaches Lawyer today for an appointment close to home on 9221 0341 – City Experience By the Beach.