What is a breach of fiduciary duty?

| Jun 23, 2020 | Business Law |

If someone entrusts you with a large sum of money, a breach of fiduciary duty may come as a surprise to them. 

Under Colorado law, as part of your scope and duties, to your beneficiary, you must act primarily for their benefit in making decisions relating to the entrusted funds, otherwise known as a trust, such as exercising reasonable care in making investment decisions or purchases. You also have a duty to act with utmost good faith and owe a duty of undivided loyalty.


When you are negligent with respect to handling trust funds, or intentionally diminish the trust for the benefit of someone besides the beneficiary, it creates a breach of your fiduciary duty. You may be liable to pay actual and punitive damages for this action in civil court for this action.


Determining whether there was a breach is an important process. Looking at the financial problems caused is often the biggest determinate. If you are referring to the beneficiary and taking his or her wishes into account, it is likely you are making decisions that will benefit him or her. Once you neglect your duties, it may turn into a breach of duty.

You should also avoid exploiting a common relationship or information about private assets from the beneficiary. This leads to a conflict of interest, due to you passing confidential information along to another party.

Consequences and remedies 

Once someone has breached his or her fiduciary duties, there are several ways to remedy the situation. In a lawsuit, a judge or jury will seek to compensate the beneficiary for actual economic losses that were caused by the breach.  Because this is a tort, non-economic damages such as mental anguish damages may also be awarded.  Finally, depending on whether the breach of fiduciary duty was willful and/or intentional, punitive damages may also be awarded.  In most cases, a breach of fiduciary duty usually has heavy costs associated with it.