When the Person You Trusted Steals the Estate: Breach of Fiduciary Duty in Texas

The Executor Who Became the Problem

Robert Chen died at seventy-one in his McKinney home, leaving behind a paid-off house in the Craig Ranch neighborhood, two brokerage accounts totaling roughly $680,000, a small rental property in Allen, and a will that named his eldest son David as independent executor. It seemed like a practical choice. David was the oldest, the most organized, and the one who lived closest — twenty minutes away in Frisco.

His younger siblings, Angela in Plano and Marcus in Allen, signed the waiver of notice forms David's attorney sent them without reading closely. That is what you do when you trust your brother. The estate was supposed to settle in six months, maybe nine. It didn't.

At the twelve-month mark, Angela asked David for an inventory of the estate. He said he was still working on it. At the fifteen-month mark, Marcus asked for an accounting of what had come in and what had gone out. David said the estate's finances were complicated and that he'd get something to them soon. At the eighteen-month mark, Angela hired a probate litigation attorney — not because she knew something was wrong, but because the delay had become impossible to explain.

The attorney sent a formal demand for accounting under Texas law. Three weeks later, the accounting arrived. Angela and Marcus read it together on Marcus's kitchen table in Allen and did not understand most of it. Their attorney did. Three wire transfers — $85,000, $127,000, and $128,000 — had moved from the estate's bank account to an account David controlled, listed in the accounting as "loan repayments" for debts to David that no one remembered their father owing. The Craig Ranch house had been sold to a colleague of David's for $395,000 — the Collin County Central Appraisal District had the property on the rolls at $512,000. The rental in Allen had been generating income that had never made it into the estate account.

What Angela and Marcus were looking at was not a complicated estate. It was a breach of fiduciary duty — one of the most serious claims in Texas probate law, and one of the most recoverable.

What "Fiduciary Duty" Actually Means in Texas Law

The word "fiduciary" comes from the Latin for trust, and it carries the full weight of that meaning in Texas law. When someone accepts the role of executor or trustee, they do not merely agree to be helpful. They accept a legal obligation — enforceable in court — to act with loyalty, care, and prudence on behalf of the estate and its beneficiaries. Not on behalf of themselves. Not on behalf of the family member they were closest to. The estate and its beneficiaries.

For trustees of a Texas trust, the duties live in two different places, and it is worth knowing which is which. The general duty is Texas Property Code § 113.051: a trustee "shall administer the trust in good faith according to its terms and this subtitle," and, absent contrary terms, "shall perform all of the duties imposed on trustees by the common law" — which is where the broad duty of loyalty comes from. Chapter 117, the Uniform Prudent Investor Act, is narrower than its reputation: it governs the investment and management of trust assets, not the whole of a trustee’s conduct. Within that sphere § 117.007 states the loyalty rule directly — a trustee "shall invest and manage the trust assets solely in the interest of the beneficiaries" — and § 117.004(a) supplies the standard of care, requiring the trustee to invest and manage as a prudent investor would while exercising "reasonable care, skill, and caution." Section 117.005 adds a duty to diversify unless special circumstances make it imprudent. A trustee who invests trust funds in speculative ventures that benefit them personally — or who simply lets trust funds sit in a zero-interest account for years — can face personal liability for the resulting losses.

For independent executors of a Texas estate — the most common arrangement in Texas — the duties flow from the Texas Estates Code. Section 351.102(a) requires the personal representative, immediately after receiving letters, to collect and take possession of the estate’s personal property, record books, and title papers, and § 351.101 sets the standard for holding them: the executor "shall take care of estate property as a prudent person would take of that person’s own property." Section 351.151(a) requires ordinary diligence in collecting debts owed to the estate and recovering property the estate has a claim to — and § 351.151(b) makes the representative and the sureties on the bond liable for wilful neglect of it. Section 351.001 imports the common-law fiduciary principles on top of those statutes. Section 309.051(a) requires a verified, full, and detailed inventory, appraisement, and list of claims to be filed with the court clerk before the 91st day after the representative qualifies, unless the court grants a longer period. Section 404.001(a) gives any person interested in the estate the right to demand a sworn, itemized accounting from an independent executor at any time after 15 months have run from the date the clerk first issued letters.

These are not suggestions. They are legal obligations with legal consequences when violated.

The Most Common Forms of Breach

Breach of fiduciary duty takes many shapes. Some are obvious theft. Others look, on the surface, like administrative delay or good-faith judgment errors — until you examine the financial records.

Self-Dealing

The clearest breach: the executor or trustee uses their position to benefit themselves or a related party at the estate's expense. Selling estate property to themselves or a business they control. Purchasing estate assets at below-market prices. Loaning estate funds to their own companies. Paying themselves compensation that far exceeds what the will authorizes or what is reasonable for the services rendered. In David Chen's case, the "loan repayment" transfers — moving $340,000 from his father's estate to his own accounts — were self-dealing on its face, and the absence of any loan documentation in the estate records made the claim straightforward.

Undervaluing and Misreporting Asset Sales

Texas executors have broad authority to sell estate property. That authority does not include selling property at artificially low prices to friendly buyers. When a home in Craig Ranch with a county appraisal of $512,000 sells for $395,000 to a business associate of the executor, the gap in value does not close on its own. In litigation, the estate can recover the difference — the full market value the estate should have received, minus what was actually received.

Commingling Estate and Personal Funds

Estate funds must be held in estate accounts — separate from the executor's personal accounts, business accounts, and anything else. A trustee who mixes trust assets with personal funds breaches the common-law duty to keep trust property separate and identifiable — imported into Texas law by Texas Property Code § 113.051. It also makes a compliant accounting impossible: § 113.152 requires the written statement to show a complete account of receipts and disbursements with their source and nature, a listing of all property being administered, and the cash balance on hand with the name and location of the depository — none of which can be produced honestly out of a commingled account. Even if no money is ultimately stolen, commingling makes it difficult or impossible to trace estate funds, and courts treat it as a serious breach.

Failure to Account and Report

When an executor or trustee refuses — or simply fails — to provide an accounting of estate or trust assets on request, that silence is itself a red flag. Under Texas Estates Code § 404.001(b), if an independent executor does not comply with a demand for an accounting within 60 days after receiving it, the person who made the demand may sue in the probate court to compel compliance, and after a hearing the court "shall enter an order requiring the accounting to be made." For a trustee the parallel deadline is Texas Property Code § 113.151(a): a written demand, and suit available if no written statement of accounts is delivered on or before the 90th day. A trustee who cannot or will not account for where the money went has almost certainly done something they do not want the beneficiary to see.

Failure to Invest Prudently

Texas law does not require executors and trustees to be investment geniuses. It requires them to act as a prudent investor would act. A trustee who leaves $800,000 in a non-interest-bearing checking account for four years while beneficiaries wait for distributions — when a diversified, conservative portfolio could have generated meaningful returns — can face a surcharge claim for the lost investment return.

Favoritism Among Beneficiaries

When a trust has both current beneficiaries (who receive income) and remainder beneficiaries (who receive principal at the end), the trustee must balance their competing interests. A trustee who systematically strips principal to maximize distributions to a current beneficiary — often a sibling or close friend — at the expense of the remaindermen can be liable for that imbalance.

What Texas Law Allows You to Recover

A proven breach of fiduciary duty opens several doors in Texas courts — and most of what was taken can be ordered returned.

Surcharge. The primary remedy is to make the estate whole. A court can enter judgment against the executor or trustee personally for the full amount of loss the estate suffered — including the value of assets that were sold below market, fees that were improperly taken, and investment returns that were lost due to imprudent management.

Disgorgement of profits. If the executor or trustee profited personally from their breach — by purchasing estate property cheaply and reselling it at a gain, for instance — a court can order disgorgement of those profits above and beyond the estate's losses.

Removal. For independent executors — the most common type in Texas — Texas Estates Code §§ 404.003 and 404.0035 govern removal. Section 404.003 permits removal without prior notice where the executor cannot be served or has misapplied or embezzled estate property. Section 404.0035 covers removal after notice for gross misconduct or gross mismanagement, failure to make a required accounting, or failure to file the required inventory. Texas Property Code § 113.082 permits removal of a trustee for misconduct or for failure to comply with court orders. Removal and surcharge can be pursued simultaneously.

Attorney's fees. In Texas probate proceedings, courts have discretion to award attorney's fees against a party who has engaged in conduct that made the litigation necessary — including an executor who forced the estate through expensive litigation by refusing to account. Fee awards are not automatic, but they are a meaningful tool in the right case.

Punitive damages. Where the breach rises to the level of fraud or intentional misappropriation — as in cases of outright theft — courts may award exemplary damages under Chapter 41 of the Texas Civil Practice and Remedies Code. These are rare in probate cases but available when the conduct is egregious.

How Probate Litigation Works: From Demand to Recovery

Most breach of fiduciary duty cases in Texas begin not with a lawsuit but with a letter — a formal demand for accounting under Section 404.001 of the Texas Estates Code. This demand is served on the executor and requires a response. If the accounting reveals misconduct, the next step is typically a petition filed in the probate court where the estate is pending, seeking surcharge, removal, and attorney's fees.

The litigation unfolds through the standard discovery process: production of financial records, bank statements, appraisals, loan documentation, communications between the executor and the buyers of estate property, and any other records that show what happened to the money. Texas courts have broad authority over their pending probate matters, and judges who handle probate dockets regularly are not easily fooled by creative accounting.

The evidentiary standard matters. Texas law requires proof by a preponderance of the evidence — more likely than not — that the executor or trustee breached their duty and that the breach caused loss to the estate. Financial records, properly authenticated, are usually the most powerful evidence available. A wire transfer from the estate account to the executor's personal account, without documented authorization, is difficult to explain away.

In David Chen's case, the "loan repayments" lacked any written loan agreements, any evidence of the original loans, or any acknowledgment by Robert Chen that these debts existed. The sale of the Craig Ranch house was documented in the MLS listing at $512,000 and the deed of sale at $395,000. The accounting Angela and Marcus finally received told the whole story — and a Collin County probate court heard it.

The Window for Action

Fiduciary duty claims in Texas are subject to statutes of limitations, and the clock does not pause while you wait to understand what happened. For breach of a written trust instrument, the limitations period is generally four years under Texas Civil Practice and Remedies Code § 16.004. For claims arising from the administration of a decedent's estate, the applicable limitations period depends on the nature of the claim and how it is pled — fraud claims carry a four-year period, conversion claims carry two years.

More practically, the longer you wait, the more difficult it becomes to recover assets that have been moved, spent, or transferred. A surcharge judgment against an executor who has already dissipated the estate funds is legally available but practically difficult to collect. Early action — while the money is still traceable — produces better outcomes.

What You Should Do If You Suspect a Breach

If you are a beneficiary of a Texas estate or trust and you have concerns about how the executor or trustee is managing assets, there are concrete steps you can take without filing a lawsuit.

First, exercise your statutory right to demand an accounting. Under Texas Estates Code § 404.001, fifteen months after letters testamentary are issued, any interested person can demand a full accounting. A trustee can be required to account more frequently — typically annually — under the terms of the trust or on court order.

Second, gather what documentation you have. Bank statements, correspondence with the executor, the original will and any trust documents, real estate records and appraisals, tax returns filed on behalf of the estate. The more clearly you can document what should have happened versus what did happen, the stronger the initial consultation with a probate litigation attorney.

Third, act before the money moves further. Probate courts can issue temporary restraining orders that freeze estate or trust assets pending investigation. That relief is available quickly when the facts support it — but it requires getting to an attorney before the assets are transferred beyond reach.

At WG Law, Therese Gutierrez leads the team handling breach of fiduciary duty claims throughout North Texas, including Collin, Dallas, Denton, and Tarrant counties. Therese brings deep experience in Collin County probate courts, where she handles contested estate matters including executor removal and trust litigation. The team represents beneficiaries who have been harmed by executor and trustee misconduct, and executors and trustees who have been wrongly accused.

We offer a free probate case review for families who believe an executor or trustee has mishandled a Texas estate or trust. Call 214-250-4407 or request a consultation to speak with a member of our team about what you have observed and what your legal options are.

This article is general information only and does not constitute legal advice. Breach of fiduciary duty claims in Texas involve complex legal standards, evidentiary requirements, and deadlines that vary significantly by the facts of each case. Consult a licensed Texas probate litigation attorney for guidance specific to your situation.