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.
How can you know if you have a beneficiary duty owed towards another or in the alternative that someone may owe you a fiduciary duty?
- 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 abreach of fiduciary duty will arise whenever
- (1) a fiduciary relationship is established;
- (2) 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.
- To read more See the perennial case of Quinn v. Phipps, 93 Fla. 805, 113 So. 419, 420-421 (1927).
All to often as a Palm Beach Probate Attorney I am asked do these specific facts amount to a breach of fiduciary duty?! The short answer is it depends. Here are just a couple scenarios from recent Florida cases that highlight scenarios that amount to a breach of fiduciary duty.
- If a trustee, guardian or Personal- Representative is “self dealing ” this is likely a breach. 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;
- If a trustee, guardian or Personal- Representative is overcompensating themselves.
- If a trustee, guardian or Personal- Representative is making improper or poor investing choices.
- If a trustee, guardian or Personal- Representative is intentionally pilfering or stealing assets.
If you suspect that someone who owes you a fiduciary duty is breaching that duty, consult an experienced attorney as soon as possible to ensure your rights. There is a statute of limitations thay may limit the amount of time you have to pursue legal recourse!
What If you are the one who is being sued for breach of a fiduciary duty? What can you do? What defenses are available?
- The most common 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 or jury may understand to be prudent, risk-averse investing decisions.
- There are some other defenses available to fiduciaries that go outside the substance of the breach claim itself. These include the defense of laches (waited to long to bring the claim and have waived it); 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 clausesare provisions setting limitations on the liability of the fiduciary’s unintentional mistakes or errors in judgment but they cannot cover intentional bad acts.
If you or someone you know is being sued for breach of fiduciary duty, consult an attorney immediately. In Florida a fiduciary may be personally liable to the damages caused by a breach and personal assets may be at risk.