How Lawyers Approach Fiduciary Litigation Action

Fiduciary litigation includes many legal actions that involve estate dispute lawsuits, Will challenges, breach of fiduciary duty claims, power of attorney abuse, and executor, trustee, or guardianship removal proceedings.

You may feel you’re tied to your fiduciary and bound to the decisions it/he/she makes for you. However, this notion is untrue, as recipients of estate assets hold many legal options to remedy negligent fiduciary performance or intentional hijackings of inheritances.

The first step in becoming whole again after your fiduciary has harmed you involves consulting with and retaining a fiduciary litigation attorney specializing in Iowa estate disputes.

Your lawyer can help you petition the courts to recover estate financial losses incurred due to a breach of fiduciary or intentional fiduciary wrongdoing. You may further ask the courts to remove and replace your fiduciary after recovering your losses.

Some of our readers may need clarification about how fiduciary litigation attorneys work cases or how these lawsuits progress through the court system. Let’s examine fiduciary litigation action and remedies and discover how lawyers approach them.

1. The fiduciary position.

Fiduciaries are individuals or business entities where you’ve placed your trust and confidence to act in good faith, honesty, and in your best interest while they prudently care for your financial assets or real property.

2. Defining the relationship between you and the fiduciary.

In Iowa, people form fiduciary relationships in three manners, via statute, contract, or confidential relationship.

Iowa Trust and Probate Code define and oversee fiduciary relationships created by statute. Contract and Trust law mandate the duties among parties in contractual fiduciary agreements. And Iowa probate code clearly holds that people may form confidential, fiduciary relationships when a vulnerable party places trust and confidence in another who is aware of the trust and confidence provided.

Below are the most common fiduciary positions based on relationship formation:

  • By Statute: executors, trustees, personal representatives, or guardians.
  • By Contract: trustees, power of attorney agents, lawyers, bankers.
  • By Confidentiality: caregivers, companions, family members.

3. Explore the fiduciary duties owed to you.

Your fiduciary holds several different legal duties and responsibilities. The number of obligations owed to you would depend on the nature of your relationship.

In general, a breach of any of the duties listed below is actionable in fiduciary litigation:

  • Duty of Good Faith and Fair Dealing—must act with subjective honest and honorable intentions on your behalf.
  • Duty of Loyalty—must place your interests before and above any personal interests.
  • Duty of Impartiality—fiduciary cannot favor one beneficiary over another.
  • Duty to Delegate—must use reasonable skill, care, and caution when delegating another person or entity to work in your best interests.
  • Duty to Inform and Maintain Records—must perform Estate or Trust accountings and make full financial disclosures to you.

4. Consider whether you hold standing to sue.

Case law and statutes clearly define the parties that hold standing to sue in fiduciary litigation. Standing gives you the right to make legal claims against your fiduciary or to seek an order for removal and replacement.

In general, any “interested person,” as defined under Iowa Probate and Trust Code, holds standing to bring fiduciary litigation action.

For example, a named heir in a Will is an interested person under the law who can seek the removal and replacement of an executor. Beneficiaries of Trust agreements are interested persons who can petition the courts to compel their fiduciaries to produce an estate accounting. Thus, heirs, beneficiaries, estate creditors, and the like typically hold standing to sue fiduciaries.

5. The fiduciary litigation prima facie case.

Fiduciary litigation is an evidence-specific lawsuit, and to prevail, you must hold proof that shows:

  • Duty Owed: You and the defendant were in a fiduciary relationship.
  • Breach of Duty: The defendant breached one or more of the legal duties owed to you (see #3).
  • Causation and Damages: Your fiduciary’s negligent or intentional wrongdoing proximately caused you actual damages.

An experienced fiduciary litigation attorney must therefore consider the scope of the defendant’s actual and implied fiduciary duties owed to you and the standards by which the courts will measure said obligations. Your lawyer may also examine which party holds the burden of proving the case and whether heavy burdens can be shifted to the defendant.

6. Choose the proper court and venue to file your lawsuit.

Iowa District Courts hold original and exclusive jurisdiction to hear breach of fiduciary duty lawsuits or equity actions that seek to remove and replace fiduciaries. The proper filing venue would depend on the District Court serving your county. For simple Will and Trust administration matters, the Court’s clerks hold jurisdiction to resolve such issues.

7. Exploit fiduciary litigation discovery devices.

Attorneys gather information to support or defend a fiduciary litigation claim during the discovery phase of a lawsuit. Your attorney has access to numerous discovery devices that can compel your fiduciary to produce previously unavailable information vital to your case.

A Request for the Production of Documents is a popular discovery tool used to obtain evidence from adverse parties that will help prove your case. Defendants receiving these discovery requests must conduct diligent searches for the items sought or face a judicial order that will compel the production.

A Request for Admissions is also another valuable discovery tool that your lawyer will use to persuade your fiduciary to admit specific facts that can be later presented in court. Defendants must respond to these requests in good faith, and the courts will deem every request conclusively true when parties fail to answer them promptly.

Finally, a deposition is a discovery device that extracts evidence via witness testimony. Witnesses deposed are subpoenaed to testify about information relevant to your case. Your lawyer will prepare questions for witnesses, and a stenographer will transcribe their answers, which you can use as evidence during a trial.

8. Plead for the correct relief.

Before filing your fiduciary litigation action with the courts, you must first consider what resolution would make you whole again and then compare that resolution with the court remedies available per Iowa Code.

Fiduciary litigation petitions are complicated legal complaints that must hold the proper prayers for relief before the courts can accept them.

As mentioned earlier, petitioners may seek two distinct remedies in fiduciary litigation: compensatory damages and equity action.

Compensatory Damages are the monetary damages sought to repair a wrong or to compensate you for your financial injuries. This legal remedy further comes in two kinds, economic and non-economic damages.

  • Economic damages are out-of-pocket financial injuries and/or actual pecuniary or monetary losses you suffered due to the fiduciary’s wrongful act.
  • Non-economic damages cover injuries like duress or emotional distress. These remedies require that you prove the injury was a foreseeable result of the defendant’s wrongful act, a heavy burden to overcome, making recovering under this theory unlikely. However, when you hold proof that the defendant acted intentionally, you may plead exemplary damages, a remedy used by the courts to punish wrongdoers.

Iowa Trust Code §633A.4503 further allows the courts to surcharge fiduciaries who engage in breaches of duty up to the amount required to make you whole again, plus interest. Surcharging obligates fiduciaries to use their personal funds to pay you back when they cannot recover the assets they lost or took.

In certain circumstances, the court may also allow you to choose one of three compensatory damage remedies, under Coster v. Crookham (Iowa 1991), when you win your case:

  • Full compensation of property and assets taken from the estate.
  • Compensation for personal profits the defendant made.
  • Compensation for profit the estate would have earned had wrongdoing not occurred.

Equitable Relief in fiduciary litigation is a court-granted remedy used to compel performance or to refrain a fiduciary from performing their duties. However, these legal remedies are only available when compensatory remedies are insufficient to resolve the matter.

In fiduciary litigation, equitable relief includes but is not limited to fiduciary removal and replacement, forced estate accountings, injunctions, equitable liens, and/or constructive Trusts.

Your petition must accordingly present the legal grounds for seeking a prayer of equity relief, which may include breach of duty, refusal to cooperate, unfit to perform, persistent negligence, or unanimous agreement among all beneficiaries.

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