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David Di Pietro
Managing Partner, Probate Attorney

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Breach of Fiduciary Duty

The probate process in Florida can name personal representatives of an estate, guardians and trustees as fiduciaries of an estate. Those who are tasked with carrying out these roles are legally obligated to act within the highest legal and ethical standards in order to avoid the financial liabilities associated with breach of fiduciary duty lawsuits. Per Florida law, fiduciary duty exists when an individual places their confidence in another person to handle a specific transaction or financial matter on their behalf.

There are several specific circumstances in which a breach of fiduciary duty can occur:

  • When a fiduciary relationship has been established
  • A breach of fiduciary duty can clearly be shown
  • The breach in question can be shown to be the cause of the plaintiffs claimed damages

In Florida, breach of fiduciary duty lawsuits can proceed in court as long as the plaintiff can show that one party has accepted the responsibility to protect the interests of the weaker party, as outlined in the 1927 case Quinn v. Phipps.

Common Situations Involving Breach of Fiduciary Duty

There are several situations in which an interested party may be concerned about the possibility of a breach of fiduciary duty. Generally this is when the following situations arise:

  • It is suspected that the trustee, guardian or personal representative is self-dealing. This includes the selling or renting of property to friends or family members at a discounted or below market rate, as well as taking assets of the estate such as vehicles, electronics or recreational equipment for personal use.
  • The trustee, guardian or personal representative is paying themselves an unreasonable amount. Even though they are legally allowed to receive payments for their work, the amounts should not be excessive. Overpayment is considered a breach of fiduciary duty.
  • It is believed that the trustee, guardian or personal representative is making improper decisions concerning investments
  • It is suspected that the trustee, guardian or personal representative is intentionally stealing assets from the estate

How to Defend Against Breach of Fiduciary Duty Claims

The main defense against breach of fiduciary duty cases is to provide clear proof that the fiduciary’s actions are within the bounds of Florida law and the foundation documents establishing their role, such as a will or trust. As an example, beneficiaries of the trust may argue that the accused fiduciary made improper investments, while a judge may examine the facts of the case and deem the investments to be prudent and risk-averse.

There are several other defenses available to fiduciaries outside the confines of the factual breach claim itself. One of these is the equitable defense of laches, which is essentially exposing tardiness in asserting the claim. Another is if the case is beyond the statute of limitations, making it time-barred by law. Situational specific defenses are also a common and effective defense, utilizing exculpatory clauses as well as executing accounting release provisions.

In many trusts, self-executing accounting release provisions are found which excludes any bad acts of the fiduciary or trustee if after a set account period there has been no objection from a beneficiary. Similarly, other provisions such as exculpatory clauses set limitations on the liability of the fiduciaries unintentional mistakes or errors in judgment, protecting them from breach of fiduciary duty claims.

Because the careful wording of fiduciary agreements can potentially protect trustees, guardians and personal representatives from liability in a claim, it is strongly advised that any agreements are handled through an experienced probate attorney. This will allow for the best possible defense in the event that they are accused of breaching their fiduciary responsibilities.

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