Beneficiary Brings Claim Against Executor for Breach of Fiduciary Duty in Tennessee Estate Litigation Case

Posted by Martin Heller Potempa & Sheppard, PLLC on December 6, 2017

The executor of an estate owes fiduciary duties to the beneficiaries and may be held responsible for failing to carry out these duties reasonably. The Court of Appeals of Tennessee addressed this type of dispute in an October 11, 2017 case. The decedent’s two sons were the sole beneficiaries of their mother’s estate. One of the sons was named as the executor in the mother’s will. The beneficiary-son filed a petition alleging that the executor-son breached his fiduciary duty. When the Probate Court found there was no breach of duty, the beneficiary appealed.

In order to recover damages for a breach of fiduciary duty, the plaintiff must establish:  (1) a fiduciary relationship, (2) a breach of the resulting fiduciary duty, and (3) an injury to the plaintiff or a benefit to the defendant as a result of that breach. In Tennessee, the executor of an estate has a duty to deal with the beneficiaries in utmost good faith and exercise the same degree of diligence and caution that a reasonably prudent person would exercise in the management of their own affairs. If the executor acts reasonably and in good faith, he is shielded from liability if, in light of subsequent events, his judgment turned out to be wrong.

One of the specific duties, among others, of an executor is to collect the estate’s assets within a reasonable time, timely discharge his statutory obligations, and distribute the estate and close its administration as quickly as possible. The beneficiary first alleged that the executor breached his fiduciary duty by failing to make any monetary distributions until more than five years after the estate was opened.

On appeal, the court, however, found it was a reasonable amount of time, in light of the facts that there was ongoing litigation involving the estate, including ancillary administrations taking place in two other states, his legal counsel advised him not to make a distribution, there was a need to ensure adequate funds remained to cover the administration, and the beneficiary refused to sign a receipt and waiver.

Secondly, the beneficiary claimed that the executor did not properly handle the estate tax matters. Although the executor admitted to making slight errors on some of the tax forms, the court concluded that there was no evidence of harm to either the estate or the beneficiary, thus negating any claim for breach of duty.

Finally, the beneficiary asserted that the executor failed to distribute the decedent’s tangible personal property in a fair and unbiased manner. The appeals court agreed with the probate court’s conclusion that no attempts made by the executor would have qualified as a fair and equitable distribution of the tangible personal property in the beneficiary’s mind. The court also found no evidence to suggest the executor failed to act in good faith.  Affirming that no breach of duty existed, the court denied the beneficiary’s request for damages.

At Martin Heller Potempa & Sheppard, our Nashville probate attorneys can guide you through the estate administration process as well as offering advice in estate planning matters.  Schedule your free consultation today by calling our office at (615) 800-7096 or contacting us online.