New York Fiduciary Duty Law: What to Know Before You Trust Someone with Power

Trust in a business or financial relationship should come with protection. 

When someone has the authority to act on your behalf - whether in managing your company, your investments, or shared assets - they’re expected to follow strict legal obligations. That’s where fiduciary duties come in.

In New York, fiduciary relationships are more than just professional courtesy. They're backed by law and grounded in accountability. If someone in a position of power - like a business partner or financial advisor - puts their own interests first, that’s a problem. And it’s one you shouldn’t ignore.

Our team of commercial litigation attorneys at Horn Wright, LLP, has spent years helping individuals and businesses across the state when fiduciary promises are broken. We know how much is at stake, and we’re here to help you take the next step toward resolution.

Fiduciary Duty in New York: What It Really Means When Someone Owes You Their Loyalty

A fiduciary duty isn’t just a nice promise to do the right thing. It’s a legal commitment - one that says, "I’ve got your back, not mine."

In New York, when someone takes on a fiduciary role, the law expects them to put your interests first. That’s not optional. That’s enforceable. If they put themselves first instead? That’s a breach, and you could have a claim.

These duties usually show up in relationships where one person holds the power and the other person is counting on them to use it wisely. Think financial advisors, company directors, trustees. They’ve got the authority. You’ve got the trust. And the law says they can’t abuse it.

There are a few specific duties you’ll hear about most often:

• Duty of loyalty. They can’t use your trust to benefit themselves.
• Duty of care. They’ve got to make informed, smart decisions on your behalf.
• Duty of good faith. Honesty isn’t optional; it’s legally required.

Courts in New York don’t just look at paperwork to decide if a fiduciary duty exists. They look at the relationship itself. If you trusted someone to act for your benefit and they accepted that responsibility? You may have more legal protection than you think.

Who Are You Really Trusting? These Roles Carry Hidden Legal Power Over Your Life

Not everyone in your business or financial life owes you a fiduciary duty. But some people absolutely do, even if they don’t make it obvious.

In New York, these are the folks most commonly bound by fiduciary responsibilities:

• Business partners: You expect your partner to act in the business’s best interest, not secretly compete or profit on the side. New York Partnership Law Section 43 makes that expectation law.
• Corporate officers and directors: These people shape major decisions. They're legally obligated to serve shareholders and the company, not themselves. New York courts lean on the "business judgment rule" to measure whether their actions were truly in good faith.
• Majority shareholders in close corporations: If you own most of the company and use that power to steamroll minority shareholders? You’re breaching your fiduciary duty. 
• Trustees and executors: These roles involve managing someone else’s assets. That means no mixing funds, no playing favorites, and absolutely no sneaky behavior. Duties are clearly outlined under Estates, Powers and Trusts Article 11
• Financial advisors and investment managers: They’re handling your money. Both state law and federal rules require them to act in your best financial interest. Not theirs.

Even outside these formal roles, trust and reliance can still create legal obligations. If someone repeatedly takes on responsibility for decisions impacting your assets, they may owe you a fiduciary duty, whether or not a contract exists.

This is where a skilled business dispute resolution lawyer can help clarify who owes what and make sure you're protected.

Three Legal Promises They Can’t Afford to Break: Loyalty, Care, and Good Faith

1. Duty of Loyalty

They need to put your interests ahead of their own. That means:

• No undisclosed side deals.
• No personal profits from shared opportunities.
• No conflicts of interest swept under the rug.

If someone’s secretly benefiting from a decision that affects you and keeping you in the dark? That’s a violation, plain and simple. These kinds of breaches often lead to serious breach of contract claims.

2. Duty of Care

Fiduciaries must act thoughtfully. That means researching, asking questions, and making smart decisions. If they’re careless or uninformed, their negligence could cost you and expose them to legal consequences. Courts will often measure this using the business judgment rule.

3. Duty of Good Faith

This is about basic honesty and fairness. If they’re lying, withholding key information, or being deceptive in any way, they’re not just betraying your trust. They’re breaking the law.

These duties don’t operate in isolation. One bad act can breach all three. And when that happens, you may need strong commercial lawsuit representation to make things right.

Is Your Fiduciary Failing You? The Red Flags You Can’t Afford to Ignore

Watch for these warning signs:

• Lack of transparency: Dodged questions, withheld updates, or vague explanations can all signal deeper problems.
• Unexplained financial losses: A few dips are normal, but ongoing losses with no clear reason? That’s different.
• Self-dealing or conflicts of interest: If they’re gaining from a deal that affects you, they better be upfront about it.
• Exclusion from decisions: Fiduciaries shouldn’t be making big moves behind your back.
• Disorganized or delayed records: Sloppy paperwork can point to disorganization, or worse, intentional cover-ups.

If any of this sounds familiar, speak to a partnership dispute attorney. They’ll help you figure out your next steps.

Courts in New York take these cases seriously. Fiduciaries can be removed, deals can be undone, and damages can be recovered. But you’ve got to take action before more harm is done.

Let Horn Wright, LLP, Help Protect Your Interests

You trusted someone and they took advantage of that. Our commercial litigation experts at Horn Wright, LLP, represent clients who deserve better. If you’re dealing with a broken fiduciary relationship, we’ll take on the legal fight so you can focus on moving forward. 

As a trusted and respected breach of fudiciary duty attorneys, we’re proud to be one of the best law firms in America and ready to put our experience to work for you. 

Contact us online to request your FREE consultation.