What is an informal fiduciary relationship?
A fiduciary owes the duty to put the interests of the principal above his own. Under Texas law, a fiduciary duty can be established by informal or formal relationships. Formal fiduciary relationships include attorney-client, principal-agent, executor-beneficiary, and trustee-beneficiary relationships, as well as partners in a partnership. In Estate of Whipple, the San Antonio Court of Appeals nicely summarized Texas law regarding informal fiduciary relationships: An informal fiduciary duty may arise from a moral, social, domestic or purely personal relationship of trust and confidence, generally called a confidential relationship. The relationship must exist prior to, and apart from, the agreement that is the basis of the suit. In other words, there must be a preexisting special relationship of trust and confidence that is betrayed in later dealings. A fiduciary duty may arise from an informal relationship where one person trusts in and relies upon another, whether the relation is a moral, social, domestic, or purely personal one. . . Factors that may be considered in determining whether a confidential relationship existed include whether the plaintiff relied on the defendant for support, the plaintiff’s advanced age and poor health, and evidence of the plaintiff’s trust. (citations redacted) If an informal fiduciary relationship is shown, any transactions between the fiduciary and principal, including gifts, are subject to scrutiny. Any ill-gotten gains may subject to a constructive trust.