Under what circumstances can a fiduciary be held liable for misconduct?

A fiduciary can be held liable for misconduct primarily when they breach their fiduciary duties. These duties include loyalty, care, and good faith towards the beneficiaries. A fiduciary is expected to act in the best interests of those they represent and manage the entrusted assets with care and skill. If they fail to meet these responsibilities—perhaps by engaging in self-dealing, negligence, or failing to disclose conflicts of interest—they can indeed be held accountable for the resulting harm to the beneficiaries. Breach of these duties indicates a failure to adhere to the high standard of conduct expected of fiduciaries, leading to potential legal consequences.

The other choices do not meet the criteria for liability. Acting in the best interest of the beneficiary aligns with the fiduciary's obligations, and following explicit instructions is generally acceptable, provided those instructions don't compromise their duties. Seeking legal counsel is often viewed as a prudent step that can help fiduciaries fulfill their responsibilities correctly, rather than a source of liability. Thus, the breach of fiduciary duties is the key basis for establishing misconduct and potential accountability.