When you make your Florida estate plan, you want to make sure your family and loved ones are taken care of and your property and assets are distributed as you want. To this end, you create a will, a power of attorney, a health care surrogate, and a living will to cover all of your bases. You establish a trust and get all of your finances in the proper order. And, most importantly, you make sure someone you fully trust is in charge of handling and managing all of your affairs.
But what if the person you choose doesn’t fulfill his or her duties to properly manage your assets?
In cases like these, you have a breach of fiduciary duty.
A fiduciary is someone who is responsible for managing the assets of another person or a group of people. Fiduciaries can be asset managers, bankers, accountants, board members, corporate officers, trustees, and personal representatives or executors.
So if you have a trust, you have a trustee. And if you have a will, you have a personal representative.
And these fiduciaries are required to administer trusts and estates:
- In good faith
- According to the terms and conditions set forth in the document
- According to Florida law
- In the best interests of the beneficiaries
Let’s delve a bit deeper into the actual duties a fiduciary has and then see what can happen to a fiduciary if he or she breaches those duties.
A Fiduciary’s Duties
Florida has a trust code that sets guidelines and standards for trustees. This code is also applicable to personal representatives. A few of those duties include:
- Duty to administer. Upon accepting a position as a trustee or personal representative, the fiduciary is responsible for administering the trust or estate in good faith according to the document, law, and beneficiaries.
- Duty of loyalty. A fiduciary is solely responsible for acting in the best interests of the beneficiaries.
- If there are multiple beneficiaries, the fiduciary shall act impartially in their administration, giving due regard to the beneficiaries’ respective interests.
- Prudent administration. A fiduciary is responsible for considering the purposes, terms, distribution requirements, and other circumstances of the trust or will. The fiduciary shall always exercise reasonable care, skill, and caution.
- Expenses of administration. In the administration of the trust or will, the fiduciary shall only incur expenses that are reasonable in relation to the trust or estate, the purposes of the trust or estate, and the skills of the trustee or personal representative. The fiduciary must also account for all expenses.
- Control and protection. The fiduciary shall take reasonable steps to take control of and protect the trust or the estate.
- Duty to inform and account. The fiduciary is also responsible for keeping the beneficiaries reasonably informed about the administration of the trust or estate.
While there are numerous other duties and responsibilities a trustee or personal representative has, these are the main ones that may cause issues down the line.
And what actions are available to beneficiaries if they have a claim about the fiduciary’s behavior?
Breaching Fiduciary Duties
If a fiduciary fails to stick to their duties, he or she could end up being removed from their position while also being held personally liable for damages.
It’s also important to note here that whomever creates a will or trust cannot remove any of the fiduciary’s duties that are already set forth in the law. For example, the law says a fiduciary must keep track of all expenses. A trust or will cannot specifically say that a fiduciary doesn’t have to keep track of all expenses.
So if a beneficiary has an issue with the fiduciary’s performance, the beneficiary can file a claim against the fiduciary. If the fiduciary wants to defend his or her actions, they will have to do so from their own pocket instead of pulling from the trust or estate.
Some examples of a breach of fiduciary duty could possibly include:
- Self dealing – managing assets for personal gain, i.e. selling or renting property to friends and family or taking assets for personal use
- Overcompensating themselves with trust or estate funds
- Making poor or improper financial decisions
- Intentionally stealing assets from the trust or estate
If you believe that someone is breaching their fiduciary duty, you should consult with an experienced Florida estate planning attorney as soon as possible to protect your rights. Time is of the essence, because there might be a statute of limitations regarding the amount of time you have to file a claim.
About the Author:
Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.