Legal Definitions - breach of trust

Breach of trust refers to a situation where an individual, who has been given responsibility for managing someone else's assets or acting in their best interest, fails to uphold those duties. This failure can involve violating the specific terms of a formal agreement, such as a legal trust document, or misusing property that was temporarily entrusted to their care. It essentially means breaking the fundamental promise or obligation to act faithfully and responsibly with another's property or affairs, often resulting in harm or loss to the person who placed the trust.

Here are some examples illustrating a breach of trust:

• Imagine an elderly woman appoints her nephew as the trustee of her estate, with instructions that her assets be managed conservatively to provide for her care and, upon her passing, distributed equally among her grandchildren. The trust document explicitly states that no funds should be used for speculative investments. However, the nephew, without informing his aunt or the beneficiaries, uses a significant portion of the trust funds to invest in a high-risk cryptocurrency venture, hoping to quickly multiply the inheritance. The venture fails, causing a substantial loss to the estate.

  This is a breach of trust because the nephew, as trustee, violated the explicit terms of the trust agreement regarding investment strategy and failed in his fiduciary duty to manage the assets prudently and in the best interest of the beneficiaries.

• Consider a scenario where a small business owner hires an independent bookkeeper to manage their company's financial records, including handling invoices and payroll. The bookkeeper is given access to the company's bank accounts for legitimate business transactions. Over several months, the bookkeeper secretly diverts small amounts of money from the company's operating account into their personal account, disguising these transactions as legitimate business expenses.

  This constitutes a breach of trust because the bookkeeper was entrusted with the responsibility of managing the company's finances honestly and accurately. By embezzling funds, they violated the trust placed in them and their professional duty to act in the best interest of the business owner.

• A family goes on an extended vacation and asks a trusted neighbor to regularly check on their house, water the plants, and collect mail. The family explicitly tells the neighbor not to invite anyone else into the house. While the family is away, the neighbor decides to host a small gathering with friends inside the house, resulting in minor damage to furniture and a broken window.

  This is an example of a breach of trust because the neighbor was given temporary control and access to the property under specific conditions (to care for it and not misuse it). By inviting guests and causing damage, they violated the clear instructions and the implicit trust placed in them to safeguard the property.