John Crow 
When you hand someone the keys to your family’s finances, your property, or your most important decisions, you are placing enormous trust in that person. You expect them to act in your best interests, not their own. Unfortunately, that does not always happen.
Whether you are watching an executor play favorites with your parent’s estate, a trustee who refuses to answer basic questions, or a business partner quietly steering deals to benefit only themselves, you may be facing a breach of fiduciary duty in Tennessee. Understanding what that means, and what you can do about it, is the first step toward protecting everything your family has worked to build.
Key Takeaways
- A fiduciary is someone the law requires to act in another person’s best interests. When that person puts their own interests first, a breach of fiduciary duty occurs.
- Common fiduciaries in Tennessee include executors, trustees, agents under powers of attorney, business partners, corporate officers, and board members.
- To prove a breach of fiduciary duty claim, you generally must show that a fiduciary relationship existed, the fiduciary breached their duty, you suffered damages, and that breach caused your losses.
- Common estate-related breaches include misappropriating funds, self dealing in real estate, failing to disclose important information, and delaying distributions to beneficiaries.
- Crow Estate Planning & Probate, PLC offers free consultations throughout its several offices in Tennessee.
What Is a Fiduciary?
A fiduciary is a person who holds a special relationship of trust with another party. They manage money, property, or key decisions on behalf of someone else, and Tennessee law holds them to the highest standard of care the state recognizes.
That standard comes with real obligations. A fiduciary must act with loyalty, honesty, care, and full disclosure, always placing the beneficiary’s needs ahead of their own personal gain. When a fiduciary fails to meet those obligations, whether through deliberate misconduct or careless management, a breach occurs.
And these situations are not rare. In Tennessee, fiduciary duty issues show up in disputes over family homes, rental properties, lake houses, retirement accounts, and bank accounts that have been passed down or placed under someone else’s control. These are real families dealing with real money, and the consequences of a breach can follow them for years.
Common Fiduciary Relationships in Tennessee
Fiduciary relationships arise in both family estate planning and small business settings throughout Tennessee. Recognizing who qualifies as a fiduciary helps you spot problems before they become serious.
Estate and trust fiduciaries include:
- Personal representatives such as executors and administrators who settle a loved one’s affairs
- Trustees who manage family trusts on behalf of beneficiaries
- Agents named under durable powers of attorney
- Guardians or conservators appointed to protect adults or minor children
Business fiduciaries include:
- Business partners in an LLC or partnership
- Majority shareholders and company shareholders in closely held companies
- Corporate officers and board members with decision-making authority
- Managers of family-owned businesses
Some fiduciary duties are established by Tennessee state statutes. Others arise from written documents like operating agreements, trust agreements, and powers of attorney. Not every trusted person is a fiduciary in the legal sense. Tennessee courts examine the level of control, the degree of trust involved, and the extent to which one party relied on another when determining whether a fiduciary relationship existed.
The Core Fiduciary Duties Under Tennessee Law
Most fiduciary obligations fall into three categories that appear regularly in Tennessee probate and business disputes.
Duty of Loyalty
A fiduciary must avoid conflicts of interest, refrain from competing with the entity they serve, and never use their position or access to information for personal gain without proper authorization. A managing member who quietly redirects clients from a family LLC to a company they personally control is a clear example of violating this duty.
Duty of Care
A fiduciary must manage money and property prudently. This means paying debts and taxes on time, maintaining adequate insurance, preserving asset values, and seeking professional guidance when the situation calls for it. A trustee who leaves large cash balances sitting idle for years while markets grow may be failing this standard in ways that cause lasting harm to beneficiaries.
Duty of Good Faith and Full Disclosure
A fiduciary must keep beneficiaries reasonably informed, answer their questions honestly, and never hide material facts about assets, transactions, or fees. This duty applies to trustees, executors, agents, and even a corporate board member whose decisions affect the value of company assets.
What Constitutes a Breach of Fiduciary Duty in Tennessee?
A breach of fiduciary duty does not always involve outright theft. Sometimes it is careless management, poor judgment, or a pattern of behavior that falls below the standard Tennessee law requires.
Intentional breaches are often the clearest cases. An executor who diverts estate funds into a personal account, or a business partner who secretly moves a profitable contract to a side company they control, has clearly placed personal gain ahead of their legal obligations.
Negligent breaches can be harder to spot but just as harmful. A trustee who fails to pay property taxes on a family lake house until the property is lost at a tax sale has caused real damage even without any intent to steal. Even chronic failures to communicate, maintain records, or account for transactions can add up to a breach that justifies removal under Tennessee law.
Tennessee probate courts give judges wide discretion to remove fiduciaries, order formal accountings, and impose other consequences when a breach is proven. If something feels wrong, that instinct is worth taking seriously.
Fiduciary Duty Examples: Red Flags Tennessee Families Should Know
Concrete fiduciary duty examples help families recognize when something has gone wrong. Here are some of the most common examples we see in Tennessee estates, trusts, and small businesses.
Estate and trust examples:
- Misappropriating funds from an estate checking or savings account
- Selling the family farm or a rental property to a relative at a below-market price without proper disclosure
- Refusing to provide a formal accounting to beneficiaries for months or years
- Delaying distributions or general administration without any legitimate legal reason
Power of attorney examples:
- An agent using a parent’s funds to purchase their own home or pay personal debts
- Changing beneficiary designations for personal benefit shortly before the principal’s death
- Making large, unexplained withdrawals from accounts they control on behalf of another
Guardianship and conservatorship examples:
- A conservator paying themselves excessive fees without court approval
- Failing to arrange necessary medical treatment for the person in their care
- Neglecting to file required annual reports with the Tennessee court
Small business examples:
- A managing member diverting company assets to a competing venture they control
- Secretly blocking other partners from accessing company financial records
- A corporate officer steering business decisions that benefit only themselves at the expense of other shareholders
Proving a Breach of Fiduciary Duty Claim in Tennessee
To prevail on a breach of fiduciary duty claim in Tennessee, the injured party must establish four elements:
- Fiduciary relationship: Prove the defendant actually served as a trustee, executor, agent, corporate officer, or another recognized fiduciary under Tennessee law.
- Breach of duty: Show specifically how the fiduciary failed to act with loyalty, care, or good faith. Financial records, bank statements, emails, and transaction histories are often critical.
- Suffered damages: Demonstrate a real financial loss, such as missing funds, lost investment income, unnecessary tax liability, or reduced asset values.
- Causation: Establish that the defendant’s breach directly caused the losses. Accountants and financial experts frequently provide testimony to help prove this connection in Tennessee courts.
Breach of Fiduciary Duty vs. Breach of Contract in Tennessee
These two claims often arise together but address different issues, and Tennessee courts treat them differently.
A breach of contract involves failing to fulfill specific written promises, such as those found in LLC operating agreements or trust documents. A breach of fiduciary duty involves violating the deeper obligations of trust, loyalty, and good faith that exist beyond what any contract spells out.
Consider a managing member who takes unauthorized distributions from company assets. That may constitute a breach of contract. If they also hide those distributions from other partners, that layer of concealment adds a fiduciary breach on top of the contract violation. Tennessee courts may award separate damages for each claim, and fiduciary breach cases sometimes allow broader equitable remedies that contract claims alone do not provide.
Remedies Available Under Tennessee Law
Tennessee courts have flexible tools available when fiduciary misconduct is proven.
Monetary remedies:
- Reimbursement of misappropriated or misused funds
- Recovery of lost profits or investment income
- Surcharges against the fiduciary requiring them to personally restore losses
- Punitive damages in cases involving intentional or egregious misconduct
Equitable remedies:
- Removal of the executor, trustee, agent, or corporate officer from their position
- Appointment of a neutral successor to take over management of the estate or trust
- Court orders requiring complete and formal accountings for all transactions
Property-based remedies:
- Rescinding improper real estate transfers made without proper disclosure
- Voiding self dealing transactions entered into for personal benefit
- Imposing a constructive trust on assets that were wrongfully taken or diverted
Some of these remedies have strict deadlines under Tennessee law. In Tennessee, some breach of fiduciary duty claims must be filed within a set period of time depending on the nature of the claim and when the breach was discovered. The sooner you consult an attorney, the better your chances of preserving evidence and meeting filing deadlines.
Preventing Fiduciary Problems Through Careful Planning
One of the best things you can do for your family is put thoughtful planning in place before a dispute ever arises.
Well-drafted wills, revocable living trusts, and powers of attorney should clearly spell out the fiduciary’s powers, reporting responsibilities, and limits on self dealing. The more specific those documents are, the harder it becomes for anyone to act without accountability.
Tennessee business owners should invest in detailed LLC operating agreements that define voting rights, profit distributions, and conflict-of-interest rules for all parties. When selecting fiduciaries, prioritize skill and temperament over birth order or family obligation. Consider naming co-fiduciaries or a corporate trustee to provide built-in checks and balances on how assets are managed. For trusts, add a trust protector, who oversees the trust and trustee to an extent.
These steps do not eliminate all risk, but they make it significantly harder for any one person to act without oversight.
How Crow Estate Planning & Probate, PLC Can Help Tennessee Families
Crow Estate Planning & Probate, PLC serves families and business owners throughout Tennessee. The firm works on both sides of fiduciary duty issues, whether you believe someone has violated their obligations to you or you are a fiduciary trying to fulfill your responsibilities correctly and protect yourself from personal liability.
Services include reviewing trust and company records, formally requesting accountings, negotiating resolutions, and filing or defending breach of fiduciary duty claims in Tennessee courts when necessary. The firm serves clients across Tennessee.
If something feels off, a conversation with a Tennessee estate planning attorney early on can often resolve the issue before it escalates into full litigation. You do not have to wait until things get worse to get answers.
Schedule a free consultation today to talk through what you are seeing and find out what your options are.
Frequently Asked Questions About Breach of Fiduciary Duty in Tennessee
How do I know if someone actually breached their fiduciary duty in Tennessee?
Warning signs include unexplained withdrawals, refusal to share financial statements, delayed distributions without explanation, and sudden property transfers you were never told about. Start by requesting a written accounting. If that request is ignored or produces incomplete answers, consult a Tennessee attorney who can review the documents and evaluate whether what you are seeing rises to the level of a legal breach. Not every mistake qualifies, but patterns of secrecy or self-interest often do.
Can a fiduciary be held personally liable for losses in Tennessee?
Yes. Tennessee law allows fiduciaries to be held personally liable for losses they caused. Courts may surcharge the fiduciary, requiring them to repay funds from their own assets, and may also impose interest or additional damages suffered by the beneficiaries. Professional liability insurance does not necessarily protect a fiduciary from removal or a repayment judgment.
How long do I have to bring a breach of fiduciary duty claim in Tennessee?
Time limits vary depending on the type of fiduciary relationship and the specific nature of the breach. In Tennessee, some claims must be filed within one to four years of discovery. Because these rules are technical and highly fact-specific, anyone who suspects harm should seek damages advice from an attorney promptly rather than waiting to see how things unfold.
Can a fiduciary be removed in Tennessee without going to full trial?
In many Tennessee probate cases, beneficiaries can file a petition asking the judge to suspend or remove a fiduciary within the existing estate case without filing a separate lawsuit. Judges may impose temporary restrictions or appoint a neutral third party to oversee assets while the matter is resolved. Experienced counsel can sometimes negotiate a voluntary resignation, which avoids the cost and delay of extended court proceedings.
What if I am a fiduciary in Tennessee and I am worried about making mistakes?
Seeking legal guidance early is one of the best ways to protect yourself from unintentional breaches and personal liability. Keep detailed records of every decision and transaction. Communicate regularly with beneficiaries. Avoid large or unusual transactions without written legal advice. Reach out to Crow Estate Planning & Probate, PLC to review your responsibilities and confirm that how you are managing assets is legally sound.
About the Author
With nearly two decades of legal experience, John advises individuals and families on wills, trusts, probate matters, and complex inheritance disputes. His practice includes both practical estate planning for families seeking clarity and peace of mind and sophisticated planning for high-net-worth individuals involving advanced trust structures and asset protection strategies.
Over the course of his career, he has helped hundreds of families plan their estates, administer probate estates, and resolve contested inheritance matters.
John earned his Bachelor of Arts in History with honors from Vanderbilt University and his Juris Doctor from Cumberland School of Law at Samford University. He is based in Clarksville, Tennessee and works with clients throughout Middle Tennessee and Western Kentucky. Learn More.
Licensed in Tennessee and Kentucky