When the COVID-19 pandemic first reached our state back in March 2020, the Iowa Supreme Court suspended all in-person fiduciary litigation proceedings and proscribed attorneys from filing new probate lawsuits.
The Court thereafter allowed estate dispute trials to move forward under restrictive conditions, but in September, ordered fiduciary litigators to conduct their civil court business remotely until summer 2021 at the earliest.
Lack of in-person court contact at first provoked significant probate dispute backlogs and caused delays in many pre-existing probate litigation matters.
Like many lawyers across the state at the time, Iowa Probate Litigation had to embrace virtual technology quickly if the firm had any hope of moving their fiduciary litigation cases forward during the pandemic.
Our estate dispute practice welcomed the challenge, and today, we can effectively interact with the courts electronically and conduct virtual non-jury hearings and fiduciary litigation conferences with the aid of modern videoconferencing and telephony tools.
Electronic attorney-client communication has further become the legal norm during the pandemic. Instead of an in-person meeting, a probate litigator may perform a socially distant initial consultation with you via Skype, Zoom or by email.
If you believe a fiduciary has breached a legal duty due owed to you, having a general feel of how fiduciary litigation works before consulting with a lawyer online may help you better grasp the issues you’ll discuss during your virtual attorney-client meeting.
Let’s examine some fiduciary litigation fundamentals to give you a better insight into this unique area of law.
Defining Fiduciary Litigation
Fiduciary litigation merges estate law and traditional tort negligence into one proceeding.
Individuals or business entities become fiduciaries, and subsequently assume the high legal duties and responsibilities that follow, after a court appoints them to care for another person’s estate or financial affairs while he/she is alive or immediately after his/her death.
Fiduciaries are commonly executors, trustees, confidential partners, power of attorney holders and guardians, all of whom agree to act in the best interest of the people they work for before assuming their positions.
Fiduciary Duty Formation and Legal Responsibilities
The fiduciary duties owed to you may arise in three forms:
- By Statute—via probate codes (executor, trustee), estate law (beneficiary and heir) and family law (guardian, ward).
- By Contract—through a durable or non-durable power of attorney or an attorney-client agreement.
- By Confidential Relationship Among Parties—through a person’s contact with a vulnerable loved one who places his/her trust and confidence in the caretaker to manage an estate of which you are a named or unnamed beneficiary.
Iowa codes further impose superior standards of “reasonable” and “prudent” care on fiduciaries during their performance due to the trust conferred on them by the people they work for.
Fiduciaries accordingly must act in the same way as other fiduciaries would under similar circumstances through:
- Performing in good faith and conducting fair dealings.
- Maintaining client loyalty.
- Avoiding conflicts of interest.
- Staying impartial.
- Placing their client’s interest above their own.
- Keeping accurate records
- Reporting to interested parties when necessary or upon demand.
Fiduciary Negligence Lawsuits in a Nutshell
When a person breaches a fiduciary duty mentioned above and the breach harms you economically, the law allows you to bring fiduciary litigation against him/her.
The courts accordingly will remove and replace a fiduciary or surcharge the wrongdoer (hold the fiduciary personally liable for his/her undue negligence) when you win your lawsuit.
Obtaining a favorable jury verdict however will require your fiduciary litigator to present a valid prima facie case to the court backed with enough evidence for the fact finders to rule against the defendant.
A court will therefore will bar your recovery unless you can prove:
- The fiduciary owed you duty.
- The defendant beach the duty owed to you.
- The fiduciary’s negligence actually and proximately harmed your inheritance (either current or future).
What to Expect During a Virtual Consultation
A socially distant initial consultation and interview with a fiduciary litigator generally lasts less than an hour.
During your virtual meeting, your attorney will most likely inquire about the facts and evidence in your case before determining whether your situation is actionable.
Additional consultations however may be needed, depending on the complexity of your case and whether the following important questions were answered in one session:
- Was the wrongdoer in a confidential relationship with the decedent?
- What obligations did the fiduciary agree to perform for you or your loved one?
- Did an economic harm occur?
- How can you show the fiduciary acted reckless or careless when performing his/her assigned duties?
- Does the deceased’s testamentary documents (will or trust) proscribe or penalize you from suing the defendant?
- Did the fiduciary’s negligence harm your inheritance directly or indirectly?
Breach of Fiduciary Duty Examples
Fiduciary appointment requires that individuals perform diligent work during their tenures and never overreach the powers granted to them by the courts.
Lawsuits often arise when a fiduciary’s performance exceeds the scope of his/her responsibilities or when he/she neglects to complete a required fiduciary task.
To further grasp this concept, consider the following fiduciary roles and the negligent acts that may have them facing expensive litigation:
Executor/Executrix
- Fails to settle the estate’s debts, taxes, and expenses before distributing assets.
- Doesn’t notify named beneficiaries before closing probate proceedings.
- Wastes assets while administering the estate.
- Sells estate property for less than market value.
- Takes too long to distribute assets and close probate.
Trustee
- Charges the trust beneficiaries excessive fees.
- Fails to file tax documents to the IRS (income statement, Schedule K)
- Attains excessive losses from high-risk investments.
- Fails to produce annual estate accountings.
- Uses trust funds to settle personal expenses.
- Engages in self dealing investing.
Estate Attorney
- Fails to draft the deceased’s testamentary documents as intended.
- Facilitates an improper execution of a will or trust.
- Doesn’t test the client’s testamentary capacity before he/she plans his/her estate.
Guardian
- Embezzles the ward’s assets.
- Mismanages property set aside for the minor.
Attorney-in Fact or Individuals in Confidential Relationships
- Unduly influences the principal into altering an existing will or trust.
- Doesn’t perform his/her contractual obligations.
- Engages in probate fraud by securing an improper favor from the principal through deceit or duress.
Who Hears Fiduciary Litigation Matters
The Judiciary of Iowa holds original and exclusive jurisdiction over all probate matters and controversies.
Iowa’s eight district courts accordingly oversee will and trust administration as well as hear estate dispute actions and breach of fiduciary duty lawsuits.
The Iowa Court of Appeals and the Iowa Supreme Court hold the authority to resolve probate appeals and hear contested fiduciary litigation jury decisions rendered by the lower courts.
All Things Considered…
While you may have never expected to resolve fiduciary litigation issues through use of a laptop or a cell phone, this is where we are today, and in many ways, the approach is working.
Fiduciary litigators, judges, and the courts have adapted during the pandemic, and communication between such parties continues to mature as we all do our best to maneuver through this strange new world we’re living in.