What Is Breach of Fiduciary Duty in Illinois?
"Breach of fiduciary duty" is a catch-all phrase the law uses to describe when a trusted person -- a "fidiciary" -- commits a wrong against the person who trusted him or her. That usually (but far from always) means in plain English that someone took money or property entrusted to that person. It is somewhat related to common law fraud.
So, the simplest breach of fiduciary duty to describe would be a breach by a trustee of a trust. Almost anything a trustee does wrong with regard the the trust could be considered a "breach of fiduciary duty." Some of these things require little in the way of explanation. If the trustee steals money from the trust, that is a breach of fiduciary duty.
Suppose, instead, that the trustee invests the money is a stock, and loses money. That may not be a breach, if he was allowed to invest in stocks and just made an honest bad choice. But, in many trusts it will be againt the trust rules to invest in stocks. So, the investment is a breach of fiduciary duty. In fact, the trustee has breached the duty the second he made the improper investment, even if he did not lose any money. Whether that wrongful act can result in a lawsuit, though, is another issue.
Before looking at the question of whether a person can be sued, a short summary of the other "fiduciaries" in day to day lives is appropriate:
3. Real estate brokers
Also, as a general rule, any person who is in a special relationship of trust may be considered a fiduciary. Some accountants fill this role, or any preson taking care of a sick, dependent person. The law leaves this pretty much open to interpretation.
Note, oddly, a few seeming "fiduciaries" who are not typically considered fiduciaries, at least under Illinois law:
Insurance companies (unless they are holding money in trust)
The principle behind excluding bankers and insurers seems to be that they are adequately regulated when dealing with the day-to-day affairs of their business. Insurance broker liability has been limited by statute, but brokers remain liable as "fiduicaries" if they take money in trust.
So how does one "breach" a fiduciary duty? Many ways:
Lawyers are in breach in almost every situation that would be considered malpractice, although that imposes no different punishment than malpractice itself. Any time a lawyer misappropriates a client's money, that too consitutes breach of fiduciary duty and grounds for disbarment.