Breach of Fiduciary Duty
In Florida probate, personal representatives of estates, guardians, and trustees are all fiduciaries and therefore must act within the highest legal and ethical standards or face exposure to personal financial liability in breach of fiduciary duty lawsuits.
Under Florida law, a fiduciary duty exists whenever a person places confidence or trust in another person regarding a particular transaction or in financial affairs, and a breach of fiduciary duty will arise whenever (1) a fiduciary relationship is established; (3) a breach of that duty is shown; and (3) that breach of duty is the proximate cause of the plaintiff’s damage/harm. A lawsuit based upon breach of fiduciary duty may proceed in Florida courts as long as the plaintiff can show that one party has accepted the trust and assumed the duty to protect a weaker party. See, Quinn v. Phipps, 93 Fla. 805, 113 So. 419, 420-421 (1927).
What are examples of breaches of fiduciary duty in probate litigation?
Heirs and beneficiaries, as well as wards, should be concerned about the possibility that there has been a breach of the fiduciary duty owed to them if they:
1. suspect that the trustee, guardian, or personal representative may be self-dealing in some way. Examples might include selling or renting property to friends or family members at a bargain rate; taking assets (cars, computers, boats) for personal use) etc;
2. think that the trustee, guardian, or personal representative is paying themselves too much. While each of these fiduciaries is legally allowed to receive payment for their efforts as well as reimbursement for their legitimate expenses, these amounts should be reasonable. Excessive compensation is a breach of fiduciary duty;
3. believe that the trustee, guardian, or personal representative is making poor or improper investment choices; or
4. fear that the trustee, guardian, or personal representative may be intentionally pilfering or stealing assets.
What are defenses to claims of breach of fiduciary duty?
The primary defense in any breach of fiduciary duty case is to demonstrate that the fiduciary’s actions are within the bounds of the foundational documents (will, trust, etc.) as well as Florida law. For example, what the beneficiaries might argue are “improper investments” a judge may understand to be prudent, risk-averse investing decisions.
However, there are other defenses available to fiduciaries that go outside the substance of the factual breach claim itself. These include the equitable defense of laches (tardiness in asserting the claim as an equitable defense); the statute of limitations (the case is time-barred by law); as well as the situational-specific defenses that include exculpatory clauses and self-executing accounting release provisions.
Self-executing accounting release provisions are found in many trusts. Here, the language of the trust itself excuses any bad acts of the fiduciary/trustee if after a set accounting period no beneficiary has objected. Similarly, exculpatory clauses are provisions setting limitations on the liability of the fiduciary’s unintentional mistakes or errors in judgment (they cannot cover intentional bad acts).
If you have comments or questions regarding how a lawyer experienced in dealing with breach of fiduciary duty/ heir and beneficiary rights at the Law Offices of Adrian Philip Thomas, P.A. might be of assistance in your particular circumstance, then please feel free to contact the firm’s office to schedule a free initial consultation with one of our attorneys.