Taxation & Estate Planning

A Good Example Of Fiduciary Duty - And Of Its Breach

By Michael D. Bonasera, Esq.

Joel A. Schoenmeyer of The Death & Taxes Blog writes here about an oft-repeated issue: How do you define fiduciary duty?

This question is obviously important when a client comes to you alleging that such a duty has been breached.

Wikipedia has 11 relationships in which a fiduciary duty is commonly found but then it follows those up with additional “possibilities”… Its not exactly a science. The duty is one that encompasses principals of equity and fairness and therefore necessarily lives in a gray area.

This case (PDF) though gives us a pretty good example of the duty and of its breach.

Mr. Schoenmeyer summarizes the facts as follows:

The case pitted a decedent’s executor (his brother and business partner) against the decedent’s widow. The case revolved largely around appraisals of the business owned by the decedent and his brother, and the court found that the executor abused his discretion in obtaining low-ball appraisals and hiding more accurate appraisals from the widow.

And it feels that the court decided correctly doesn’t it?

Judge Cardozo is famous for saying:
“A [fiduciary] is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of honor the most sensitive, is the standard for behavior.”

I’m not sure what that means either but like another Judge is famous of saying (about a slightly different topic), you know it when you see it.

Full post as published by The Ohio Trust & Estate Blog on December 31, 2007 (boomark / email).