fMany people assume fiduciary duties only begin after formal appointment, but Texas law recognizes when duties attach much earlier. Understanding when a fiduciary relationship in Texas legally begins is critical in estate and trust cases, especially when someone has exercised informal control over assets or engaged in pre-appointment conduct.
A fiduciary relationship in Texas can arise in two main ways: through formal appointment by law or through informal conduct that creates a relationship of trust and confidence. Knowing the difference protects your rights and helps you understand when someone may have breached their fiduciary duty.
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When fiduciary disputes arise, you need attorneys who understand Texas law and can protect your interests. Staubus, Blankenship, Legere and Walker PLLC brings over 100 combined years of estate and trust litigation experience to every case. Our attorneys hold the highest AV rating available from Martindale Hubbell and have been ranked as a Tier One Best Law Firm in Dallas/Fort Worth for trust and estate litigation by Best Lawyers. Multiple members of our team have earned Super Lawyers Rising Stars and designations from Thomson Reuters.
We focus solely on probate, trusts, and guardianship disputes, which means we bring focused knowledge and personal service to your case. When it matters most, Staubus, Blankenship, Legere and Walker PLLC delivers the knowledge and resources you need.
Formal Fiduciary Relationships: When Duty Attaches by Law
Formal fiduciary relationships arise as a matter of law the moment someone accepts a fiduciary role. These relationships have clear legal authority and defined duties established by statute, court order, or legal document. Under the Texas Trust Code, trustees and other fiduciaries have specific obligations that attach immediately upon acceptance of their role. The Texas Probate Code also establishes clear timelines for when executor duties commence.
The Moment Formal Duties Begin
In Texas, formal fiduciary duties attach upon appointment or acceptance of the fiduciary role. For a trustee, this happens when they accept the trust. For an executor, duties begin when they are appointed by the court and accept the position.
In addition, for a guardian, duties attach upon court appointment. For an agent under a power of attorney, duties begin when the agent accepts the authority granted in the document. The key is that formal fiduciary relationships do not require a relationship of trust and confidence to exist—the law imposes the duty automatically based on the legal role itself.
Key Formal Fiduciary Roles in Estate & Trust Cases
Several formal fiduciary relationships commonly appear in estate and trust litigation. A trustee owes fiduciary duties to beneficiaries from the moment they accept the trust. An executor owes fiduciary duties to beneficiaries and the estate from the moment they accept appointment. A guardian appointed by the court owes fiduciary duties to the ward. An agent under a power of attorney owes fiduciary duties to the principal. Each of these roles carries specific legal duties defined by Texas law, including the duty of loyalty, the duty of care, and the duty of good faith and fair dealing.
Informal Fiduciary Relationships: The Gray Area
Informal fiduciary relationships are more complex because they do not arise from formal appointment or legal document. Instead, they emerge from the facts and circumstances of a relationship, particularly when one person exercises control over another’s assets or finances based on a relationship of trust and confidence. These situations often lead to breach of fiduciary duty claims that require careful legal analysis. Understanding these informal relationships is critical in trust litigation and fiduciary litigation cases.
When Informal Duties Can Attach
Texas courts recognize informal fiduciary relationships in situations where no formal appointment exists but the facts show a relationship of trust and confidence. These relationships can arise in family situations, domestic relationships, and social relationships. The key question is whether one party relied on another to manage their affairs or assets.
Courts examine whether the person exercised control, whether the other party relied on them, and whether a relationship of trust and confidence existed. Informal fiduciary relationships can be just as binding as formal ones, and breach of an informal fiduciary duty can result in the same legal liability. This principle is well-established in Texas estate law.
Recognizing Informal Control of Assets
Informal control of assets occurs when someone manages another person’s finances or property without formal legal authority. This might include an adult child managing a parent’s bank accounts before guardianship is established, a family member paying bills and making financial decisions for an elderly relative, or a trusted friend handling investment decisions for someone who is ill.
If the other person relied on this arrangement and the person exercised control over the assets, a court may find that an informal fiduciary relationship existed. This is important because it means the person can be held liable for breach of fiduciary duty even though they were never formally appointed. Cases involving undue influence often involve these informal control scenarios.
When Fiduciary Duty Legally Attaches: The Critical Timing
The timing of when fiduciary duty attaches matters significantly in estate and trust disputes. Understanding this timing helps identify when someone may have breached their duty and what remedies may be available. This is where executor misconduct and other fiduciary violations often come to light. The State Bar of Texas provides guidance on fiduciary responsibilities and professional standards.
Pre-Appointment Abuse and Liability
One of the most important concepts in fiduciary law is that duty can attach before formal appointment in certain circumstances. Pre-appointment abuse occurs when someone exercises control over assets or finances before they are formally appointed as a fiduciary.
For example, an adult child might manage a parent’s finances for months before the parent becomes incapacitated and a guardianship is established. If the parent relied on the child’s management and the child exercised control, a court may find that an informal fiduciary relationship existed during that pre-appointment period. This means the child could be held liable for any breach of duty that occurred before the formal guardianship was established.
Pre-appointment conduct is examined closely by Texas courts. If someone held themselves out as having authority over another’s assets, made financial decisions on their behalf, or exercised control with the other person’s reliance, they may have created an informal fiduciary duty. This duty can attach even if the person never intended to become a fiduciary and even if no formal appointment ever occurred. Understanding common reasons for estate litigation can help you identify potential issues early.
The Attachment Test
Texas courts use a specific test to determine when fiduciary duty attaches in informal relationships. The court examines whether: (1) a relationship of trust and confidence existed between the parties, (2) one party relied on the other to manage their affairs or assets, and (3) the other party exercised control or influence over the assets or decisions. If all three elements are present, a court may find that an informal fiduciary relationship existed and that fiduciary duties attached at the point when the reliance and control began.
For formal relationships, the attachment test is simpler: duty attaches upon appointment or acceptance of the role. For informal relationships, the timing depends on when the facts show that trust, reliance, and control came together.
This is why pre-appointment conduct matters—if someone was already exercising control and the other party was already relying on them, the fiduciary duty may have attached long before any formal appointment occurred. Cases involving trust contests frequently examine these timing issues.
Formal vs. Informal: Understanding the Difference
The distinction between formal and informal fiduciary relationships affects how courts analyze the case and what duties apply.
- Formal relationships have clear legal authority and defined duties established by statute or court order.
- Informal relationships depend on the facts and circumstances of the specific situation.
Both can result in breach of fiduciary duty claims, but the standards of proof and the specific duties may differ. Both types of fiduciaries owe duties of loyalty and good faith, but the scope and application of these duties may vary.
Understanding which type of relationship applies to your situation is essential to understanding your legal rights and options. For more information on how these disputes are resolved, see our guide to estate litigation, trust disputes, and resolution options.
Frequently Asked Questions
What is the difference between a formal and informal fiduciary relationship?
A formal fiduciary relationship arises by law when someone is appointed to a specific role, such as trustee, executor, or guardian. An informal fiduciary relationship arises from the facts and circumstances of a relationship, particularly when one person exercises control over another’s assets and the other person relies on them. Both types create legal duties, but formal relationships have duties defined by statute, while informal relationships depend on the specific facts.
Can someone be held liable for fiduciary duty before they’re officially appointed?
Yes. If someone exercised control over assets and the other party relied on them, an informal fiduciary duty may have attached before any formal appointment occurred. This means a person can be held liable for breach of fiduciary duty for conduct that happened before they were formally appointed as a fiduciary. This principle applies to trustees, executors, and other fiduciaries.
What happens if a fiduciary breaches their duty before formal appointment?
If an informal fiduciary relationship existed, a person could be held liable for damages caused by breach of that duty, even if the breach occurred before formal appointment. The key is whether the facts show that a relationship of trust and confidence existed and that the other party relied on the person’s management of their assets. These cases often involve accounting disputes and detailed financial analysis.
How do Texas courts determine if an informal fiduciary relationship exists?
Texas courts examine whether there was a relationship of trust and confidence, whether one party relied on the other to manage their affairs or assets, and whether the other party exercised control or influence. If all three elements are present, a court may find that an informal fiduciary relationship existed. The Texas Supreme Court has established clear precedent on this three-part test.
What should I do if I suspect pre-appointment fiduciary abuse?
Contact an estate litigation attorney immediately. Pre-appointment abuse can be difficult to prove, and evidence may be lost over time. An experienced attorney can help you preserve evidence, understand your legal options, and determine whether you have a claim for breach of fiduciary duty. If you’re a beneficiary, you have specific rights to challenge fiduciary conduct.
Protect Your Rights: Contact Staubus, Blankenship, Legere and Walker PLLC Today
If you believe someone has breached their fiduciary duty—whether before or after formal appointment—you have legal options. Staubus, Blankenship, Legere and Walker PLLC represents beneficiaries and principals in fiduciary disputes throughout the Dallas area and surrounding communities. Our attorneys understand the details of formal and informal fiduciary relationships and can help you understand when duty attached and whether a breach occurred.
Call (214) 833-0100 to schedule a consultation with one of our experienced estate litigation attorneys. We serve Dallas, Plano, Richardson, and surrounding areas. Let our firm put our experience to work for you. Contact us now!
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