Breach Of Fiduciary Duty In Florida
April 28th, 2023
When trustees, professional representatives, and others hired to serve you or your family members’ estate fail to uphold their obligations, it could send you back to court. Understanding when a breach of fiduciary duty has happened can help you decide if you need to have anyone in these positions removed, and what will happen if you do.
What is a Fiduciary in Estate Law?
A fiduciary is a person who is legally responsible to act on behalf of someone else. They hold another person’s property in trust for that person’s benefit, and are legally required to put that benefit first, before their own self interest.
In the financial world, fiduciaries include bankers, financial advisors, and others who handle their client’s money. In estate law, a fiduciary is someone put in charge of a person’s affairs, estate, or trust, including:
- Guardians and conservators
- Personal Representatives of intestate estates
- Executors of Wills
Each of these positions operate slightly differently, but the common thread is that each estate fiduciary is responsible for managing the affairs of the incapacitated or deceased individual, and making decisions for the benefit of the person and their loved ones or named beneficiaries.
What are a Personal Representative’s Fiduciary Duties?
A fiduciary is expected to put his or her charge’s needs first, and act in their best interests, rather than his or her own. This is called the person’s “fiduciary duty.” In court, this one overarching idea is broken up into several “fiduciary duties”:
- Good Faith: To take reasonable efforts to fulfill the terms of the Will or trust or comply with intestate succession laws.
- Loyalty: To put the trust, estate, or individual’s needs before their own interests and avoid personal gain (beyond a reasonable payment for their services).
- Impartiality: Not to play favorites between co-beneficiaries or heirs and balance competing interests fairly.
- Prudent Administration: To take reasonable care of the affairs and assets in their charge, and use reasonable caution in making investments or distribution decisions.
- Control Expenses: To take steps to avoid their payment or other administration expenses inappropriately reducing the size of the trust principal or estate (beyond reasonable fees).
- Protect Property: To take possession of and conserve the property, assets, and items that make up the estate or trust.
- Information and Accounting: To communicate with beneficiaries, heirs, and other interested parties and keep them informed about the estate or trust.
What Constitutes a Breach of Fiduciary Duty?
When a trustee or personal representative doesn’t live up to the beneficiaries’ expectations, they can sometimes face a petition to remove them for breach of their fiduciary duty. These actions are filed with the Florida probate court either in the case overseeing the estate administration, or as a separate lawsuit. In every lawsuit for breach of fiduciary duty, it is up to the moving parties (usually the Will or trust beneficiaries, or intestate heirs) to prove four separate elements:
- Duty: The person had an obligation to act in the best interest of another person or the trust or estate in question. Usually, this is described in the trust documents or in the letters of administration for the estate. If the would-be fiduciary has not accepted the position as trustee, personal representative, executor, or guardianship, there is no duty for them to act in the estate’s best interests.
- Breach: The act that fell short of or was contrary to the duty owed. The breach must go directly against the duty specified, which is why the different fiduciary duties described above are important. This breach of fiduciary duty is the most complicated part to prove, because the probate litigation attorney must draw a line between the duty owed and fiduciary’s behavior.
- Damages: The amount of financial loss to the trust, estate, or beneficiaries caused by the breach of fiduciary duty. This amount must be calculated (or able to be determined), and can’t generally include hurt feelings. Instead, the breach of fiduciary duty must have cost someone something.
- Causation: That the financial loss was directly caused by the fiduciary’s bad behavior. Again, there must be a direct link. For example, a downturn in the stock market does not mean a breach of the fiduciary duty to protect property, but making bad investment decisions might.
Breach of Fiduciary Duty Examples
It can be hard to understand the legal terms around a breach of fiduciary duty, but there is a good chance you have heard news stories about the same kind of behaviors that can trigger probate lawsuits. Some common examples of fiduciary duty breaches include:
- Failing to keep proper accounting of estate records
- Favoring preferred vendors or professionals due to financial benefits to the trustee (kickbacks) rather than the quality of their work
- Acting against trust instructions
- Not protecting estate assets against creditors with uncollectible claims
- Concealing information from beneficiaries
- Favoring one heir or beneficiary over others
What Happens if a Court Finds Fiduciary Duties Have Been Breached?
If the beneficiaries or heirs file a petition to remove a trust administrator or personal representative for breach of fiduciary duty, the Court can remove the person from their position and replace him or her with someone new, including a family member or a professional fiduciary. The family seeking removal may also be awarded financial compensation for any damage done by the trustee or administrator. This may include the cost of hiring a lawyer to have the person removed, as well as any funds depleted, money taken from the estate or trust, and other damages caused by their actions.
Many fiduciary lawsuits start and end with money. You may not know you need to file a lawsuit for breach of fiduciary duty until you begin to realize the accounting you are receiving isn’t adding up (or has gone missing altogether). At Harrison Estate Law, P.A., our experienced estate and probate team can help you determine if there has been a breach in fiduciary duty, and decide if there are grounds to file a lawsuit against the trustee or administrator. We also can help defend fiduciaries against claims by disgruntled family members looking for more than their fair share. Contact us here or call 352-559-9828 to get help today.
Categories: Estate Planning