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  • Writer's pictureJerry Ipsen, CFE, MBA

When Fiduciaries Run Awry

A fiduciary is said to be a person or professional entity in a position of trust with a responsibility to someone else. Their duty is to act in the best interest of the other party, usually the beneficiary or even the conservatee. With positions involving the distribution of services or money, comes the abuse by some pursuing their own agenda. Violations of said duty regarding trust matters include:

  • Acting in conflict with the best interests of the beneficiary

  • Demanding unreasonable compensation or attempting to profit from the fiduciary position without the consent

  • Failing to distribute funds in a timely manner

  • Failure to properly invest or account for financial activities

  • Failing to respond to requests for information by beneficiaries or other interested parties

  • Negligently managing or valuing assets during the process of estate administration

  • Removing property from an estate without approval

  • “Self-dealing” or transferring assets from an estate to the fiduciary during the process of administering the estate

When an allegation of a breach occurs, usually that of the fiduciary’s financial obligations, services of the Fraud Examiner may be requested by the family to defend the fiduciary's decisions or by counsel for the beneficiaries seeking explanations. In either case, the Fraud Examiner will most often begin with the examination of financial information and that of relative bank statements to determine the existence of any financial improprieties. During the process, prospective witnesses may be identified and spoken to as well. Following the examination of financial records and speaking with witnesses, the Fraud Examiner will submit a report of their findings. The Certified Fraud Examiner can serve as an expert witness.

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