Breach of Fiduciary Duty Claims by Florida Heirs and Beneficiaries: When the Estate’s Representative Goes Rogue and Does Bad Things
Posted By Larry Tolchinsky on December 5, 2013
What happens to property, real and personal, in Florida after someone dies in the State of Florida is well-settled: Florida statutes and Florida case law work together to insure that there is a smooth transition in ownership of everything from raw minerals and undeveloped land to jewelry, works of art, and personal belongings like clothing and cars. In a series of laws passed by the Florida legislature, Chapter 733 of the Florida Statutes’ Estates and Trust Code deals specifically with the administration of the probate estate.
One of the lynch-pins in the Florida probate process is the appointment of an individual to oversee this transition, the “personal representative” of the decedent’s estate.
Florida Personal Representative of the Estate Is Responsible for Handling Estate Matters from Start to Finish
Once someone is appointed to be the personal representative of an estate here in Florida, that person has a job to do in overseeing all the responsibilities connected with that estate (the property and liabilities left by the decedent) until the final action of closing the estate. The estate’s representative is appointed by the Florida probate judge, and the term “personal representative” under Florida law can describe the role that some may recognize as executor (executrix) or administrator (administratrix).
The Florida personal representative is often a person who was trusted by the person who has died. However, banks or trust companies are often appointed as personal representative appointees in Florida courts, especially in large or complicated estates.
Duties of a personal representative under Florida law are varied. These include:
- Finding the probate assets — the representative must locate the assets no matter how troublesome this may be, and protect and safeguard the estate’s assets so they can be distributed to heirs and beneficiaries.
- Finding the creditors who are owed money — the representative has to make sure that debts left by the decedent are respected; creditors must be notified so they can decide on filing claims against the estate for payment. This includes publication of an official “Notice to Creditors” in the local newspaper by the representative and taking reasonable steps to find these creditors.
- The representative also has to provide a “Notice of Administration” that gives details about how Florida estates are probated with information of how to file objections to anything that is done in the course of the estate administration.
- Tax returns must be completed and filed, and taxes must be paid as they come due.
- Claims that are submitted must be reviewed to make sure they are legitimate and if they are, then the representative must pay them.
- Claims that are suspicious must be challenged.
- Creditors who sue the estate for payment must be fought by the personal representative on behalf of the estate.
- To the extent necessary, the personal representative must hire those he or she needs to help him or her, including lawyers, CPAs, financial advisors, etc.
- The personal representative must determine the amount to be paid under Florida statutes to any surviving spouse as well as other family members
- The personal representative must distribute estate assets according to Florida law and the testamentary documents (which includes transfers of title, etc.)
- The personal representative must close the estate (close bank accounts, etc.) and notify the court accordingly.
Breach of Fiduciary Duty – When Personal Representatives Mismanage the Estate or Take Advantage for Personal Gain
Obviously, the personal representative appointed to oversee the administration of a Florida estate undertakes lots of responsibility and wields lots of power. Heirs and beneficiaries depend on the personal representative to do the right thing and to act with integrity — however, there are occasions where temptation is too great and personal representatives take advantage of their position for their own gain, and other situations where they simply mismanages the decedent’s probate estate.
In these situations, Florida law allows the heirs and beneficiaries to file legal claims against the personal representative for any harm they suffer from the representative’s bad acts. This is done through a lawsuit based upon the personal representative’s breach of his or her fiduciary duty to the beneficiaries or heirs.
Fiduciary duty is the highest duty recognized in Florida law; as the Florida Supreme Court explained long ago in the oft-cited case of Quinn v . Phipps, a confidential relationship exists “where confidence is reposed by one party and a trust accepted by the other.”
The personal representative can be sued for either negligently performing his or her duties or for handling the estate administration in such a way that he or she has personally gained at the expense of the beneficiaries or heirs as a form of Florida probate litigation.
Self-dealing examples here can include things like renting out the decedent’s oceanfront condo to friends during the administration process at a lowball rate, or letting someone use the decedent’s car (like their teenager).
Negligent examples can include allegations of poor investment choices for estate assets during the pendency of the administration or the payment of claims without adequate vetting.
Personal representatives may mount successful defenses to these allegations; Florida probate judges understand these can be emotional cases where beneficiaries may view value of assets and investment/creditor decisions with different perspectives than a representative (particularly an institutional one). Self-executing accounting defenses may also exist if the testamentary documentation foresaw a challenge and included language that forgives any bad acts if there has been no challenge for a certain period of time.
As detailed in Florida Statute 733.504, the following are all bases for the removal of personal representative:
(1) Adjudication that the personal representative is incapacitated.
(2) Physical or mental incapacity rendering the personal representative incapable of the discharge of his or her duties.
(3) Failure to comply with any order of the court, unless the order has been superseded on appeal.
(4) Failure to account for the sale of property or to produce and exhibit the assets of the estate when so required.
(5) Wasting or maladministration of the estate.
(6) Failure to give bond or security for any purpose.
(7) Conviction of a felony.
(8) Insolvency of, or the appointment of a receiver or liquidator for, any corporate personal representative.
(9) Holding or acquiring conflicting or adverse interests against the estate that will or may interfere with the administration of the estate as a whole. This cause of removal shall not apply to the surviving spouse because of the exercise of the right to the elective share, family allowance, or exemptions, as provided elsewhere in this code.
(10) Revocation of the probate of the decedent’s will that authorized or designated the appointment of the personal representative.
(11) Removal of domicile from Florida, if domicile was a requirement of initial appointment.
(12) The personal representative would not now be entitled to appointment.
Removing a personal representative is not easy to do in Florida, but it can occur when any of the preceding elements exist, including where the personal representative is acting for their own gain and/or where the p.r. mismanages the decedent’s probate assets.