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Self-Dealing By Fiduciaries in Florida

Self-dealing is what it sounds like: selfishly taking something for oneself. Self-dealing includes the obvious situation, such as when the news reports that a trusted employee or bookkeeper was actually embezzling money.

But self-dealing includes other less-obvious situations. Everyday people in positions of trust make decisions that are supposed to be made for the benefit of others. Trustees, for example, are required to manage trust assets for the benefit of the beneficiaries, not themselves. In exchange for doing so, the trustee is paid a fee. Likewise, a personal representative is supposed to manage estate assets for the benefit of the beneficiaries, not himself.

Consider these three examples:

  • A trustee chooses to invest trust assets with his spouse who is an investment broker so that the spouse will earn the brokerage commission. This is improper. The money should be invested to benefit the beneficiaries, not the trustees’ family.
  • A personal representative decides to sell estate property to a friend at a discounted price, using another friend who is a real estate broker. This is improper. Estate property should be managed and sold for the maximum benefit of the beneficiaries, not merely to enrich friends and family of the personal representative.
  • A trustee chooses to invest trust assets with a broker who pays a “referral fee” to the trustee for referring the account to him. This is also improper. The trustee is required to invest the money wisely and prudently, not in the way that makes the most money for the trustee. If the broker was really willing to repay a portion of his fees back to the trustee, that money should go for the benefit of the beneficiaries.

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