Fiduciary Duties in Corporations and LLCs

Corporate officers (such as the President, Treasurer and Secretary), partners in a partnership, and Managers and Members of a Massachusetts Limited Liability Company (LLC) owe a fiduciary duty to the business entity. A fiduciary duty means that the individual owes a duty of honesty and loyalty, and must act in the best interest of the business entity. When Boston area corporate officers and LLC participants divert business opportunities or assets to themselves for personal gain, or engage in competing enterprises, that individual has potentially committed a breach of fiduciary duty.

For example, a corporate officer may not use the property of a corporation to benefit another entity or herself/himself. Corporate operating funds, client lists, and other confidential, proprietary information cannot be used for personal gain and to the detriment of the entity. Additionally, a corporate officer must keep and not disclose company confidential information to parties outside of the entity and to its detriment, such as trade secrets or other business processes.

If you have questions about a potential breach of fiduciary duty committed at a business entity in the Boston area of Massachusetts, please contact one of our business litigation attorneys at 781-463-6063.

What Can I Expect if a Trustee Breaches a Trust?

Our Trust Litigation Attorneys located in Lynnfield and serving all of Eastern Massachusetts are responding to the following question: What can I expect if a trustee breaches a trust? 

If a trustee of a trust has breached the trust, beneficiaries may seek various equitable remedies through the Massachusetts Superior Courts and Probate Courts.  "Remedies" provide beneficiaries with a means to be placed into the position that they would have been if the trustee had not breached the trust in the first place. Or remedies will provide the beneficiaries with an order compelling the trustee to take action, such as abiding by trust terms.  There are also other discretionary remedies such as removal of trustee. The following article describes some of the equitable remedies available against Massachusetts trustees who breach their duties to beneficiaries or charitable purposes: 

- If a Trustee causes a loss in income to the trust, then the beneficiaries may request that a court surcharge trustee (make the trustee responsible for repayment of the losses to the trust). In these cases, if a trustee fails to obtain income, capital gains, appreciation or foregoes lucrative opportunities, then the trust would be entitled to restitution from the trustee.  In the case that a Trustee personally benefited financially from any loss to the trust, the beneficiaries could also seek to disgorge the trustee of those gains.

- A trustee may be ordered to account to the beneficiaries for all income, losses, expenses, and other charges related to the trust.  In this case, the trustee must make full disclosure of the financial affairs of the trust. 

- If the Trustee fails to abide by or disobeys trust provisions, then a Court can order the trustee to comply with and follow the terms of the trust. 

- In cases of gross dereliction of duties, fraud, conversion, and self-dealing, a Court can remove a trustee from his / her office; appoint a receiver, temporary trustee, trustee or co-trustee. 

These are merely some of the equitable remedies available to trust beneficiaries in the event that a trustee breaches a trust. If you have questions about these remedies, contact the Law Office of Stefan Cencarik, PLLC, trust litigation and estate litigation attorneys located in the Greater Boston area at 781-463-6063.