Breach of Fiduciary Duty Forgivable?

Robert Ray

When someone is found to have breached a duty, a large judgment can be rendered against them. If they can’t afford to pay the judgment, they can file for bankruptcy and ask that the judgment be discharged meaning that they don’t have to pay it. There are some exceptions to this when dealing with fiduciaries. The bankruptcy code specifically prohibits the discharge of a judgment if the judgment is for breach of fiduciary duty.
In March, 2013, the Supreme Court of the United States was asked to interpret that provision of the bankruptcy code. In the case before the court, a brother had breached his fiduciary duty as found by a state court but all the monies had been paid back into the trust and the brother did not breach is duty intentionally or with knowledge that his actions were a breach of his duties. The Supreme Court held that in order to deny a discharge of a fiduciary, the judgment must be related to intentional bad conduct by the fiduciary. They held that in the case before it, since the brother did not intentionally breach his duty, the money had been repaid and there was no malice involved, the judgment against him for breach of his fiduciary duty could be discharged in bankruptcy. No. 11-1518.

Copyright by Robert Ray a Texas inheritance attorney. The foregoing information is general in nature and does not apply to every fact situation. If you are concerned about inheritance laws, inheritance rights, have a family inheritance dispute, a property dispute or want information about contesting a will and need an inheritance lawyer, we can help. Please go to our main site and use the contact form to contact us today. We are Texas inheritance lawyers and would love to learn about your case and there is no fee for the initial consultation.


There are new cases all the time that clarify or change the law on inheritance disputes. Keep up-to-date by subscribing to our blog.



Recent Posts

Can An Executor Sell Property To Himself

Facts Can an executor sell property to himself? An executor, a trustee, and a holder of a power of attorney are all fiduciaries and owe the upmost duty to those they serve. In a Texas case out of the Houston Court of Appeals in 2016, a will had given a certain piece...

Breaching A Fiduciary Duty In Texas

Power of Attorney A power of attorney in Texas creates a fiduciary duty between the person who holds the power (agent) and the person who gives it (principal.) The agent owes his principal a high duty of good faith, fair dealing, honest performance, and strict...

Arbitration Clauses In Wills

What is an arbitration clause The Supreme Court of Texas upheld an arbitration clause in a trust and the same reasoning may apply to wills although the court has not ruled on this question where a will was involved. Arbitration clauses are usually found in contracts...

Elder Abuse Is Increasing

Elder abuse is increasing in Texas. Elder abuse is often at the hands of those closest. In an article in the Arizona Daily Star by Patrick McNamara, which was published on their website,, the paper reported that law enforcement is seeing an increase in...

Can An Executor Or Trustee Go To Jail?

Can An Executor Or Trustee Go To Jail? As with most legal questions, it depends. Failure To Follow An Order When a judge orders someone to do something and that person doesn't do it, the judge can hold him in contempt and put him in jail. Failure To Pay A Debt Of The...

Does a “Request” in a Trust Mean You “Must?”

The Trust The Dallas Court of Appeals in a 2014 case had to determine if the Trustors use of the term "request" in his Texas trust meant the parties "must." The case involved an arbitration clause in the Texas trust that said in section 14.02 "We request that any...

The Author

Robert Ray

Robert Ray handles inheritance disputes of all kinds. He takes cases throughout Texas.
© Copyright 2024 | All Rights Reserved.

Pin It on Pinterest

Share This