Breaching A Fiduciary Duty In Texas

Robert Ray

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 accountability. A 2015 case out of Fort Worth dealt with the issue of breaching a fiduciary duty in Texas.

Deed

A man (agent) had his aunt (principal) give him a power of attorney. About a year before the aunt died, the nephew executed deeds to the aunt’s real estate to himself and his son. After the aunt died, a probate was filed. When the beneficiaries of the aunt found out about the deeds, they were understandably upset.

Family Settlement Agreement

Apparently, most of the beneficiaries did not have the money to sue the agent so they entered into a family settlement agreement to give one of the beneficiaries the right to sue the agent for breaching a fiduciary duty in Texas. A suit was filed and the trial court ruled that a breach of fiduciary duty had occurred. The agent claimed that the power of attorney gave him the right to deed the property so he appealed.

Self-Dealing

The appeals court agreed that the agent had the power to deed the property but ruled that a breach of fiduciary duty had occurred. The court pointed out that the agent engaged in self-dealing. The court agreed that the evidence conclusively established that the agent breached his fiduciary duty to the aunt by self-dealing by utilizing the power of attorney to transfer the Property belonging to the aunt to himself. The court went on to order the property returned to the aunt’s estate and ordered that all liens since the deeds were executed were void.

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The Author

Robert Ray

Robert Ray handles inheritance disputes of all kinds. He takes cases throughout Texas.
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