March 20, 2019
TRUST AND PROBATE LITIGATION – DUTIES OF THE TRUSTEE AND PERSONAL REPRESENTATIVE

The administration of a family trust or the probate of a family member’s estate can create conflict among even the most tight-knit families. Because trust administration and the probate process often strain family relationships and communication, it is important to know your rights as a beneficiary and the duties that Florida law places upon trustees and personal representatives. Knowledge of the basic duties that trustees and personal representatives owe to the trust or estate, respectively, helps you to protect your rights as a beneficiary and helps you avoid litigation if you are the personal representative or trustee. In order to better understand these duties, it you should first know the difference between a trustee and a personal representative.

What is a Trustee?

A trust is a relationship protected by the courts in which one person, the trustee, holds a property interest for the benefit of another person, the beneficiaries. A trust is often created by a living person who wishes to avoid the probate process by moving his/her assets into a trust naming his/her heirs as the beneficiaries. A trust can be created before a person passes away, an inter vivos trust, or it can be created upon the person’s passing pursuant to his/her last will and testament, a testamentary trust. Additionally, a trust can be revocable, meaning the grantor (person creating the trust) retains control of the trust during his/her lifetime, or irrevocable, meaning the grantor does not retain control of the trust during his lifetime. Regardless of what type of trust is created, a trustee is appointed to manage the assets of the trust for the benefit of the beneficiaries.

What is a Personal Representative?

Probate is the legal process through which a deceased person’s debts are paid and assets are distributed. A personal representative of the estate is appointed by the court or by the deceased in his/her will. The representative sees to it that the assets of the estate are appropriately distributed and that the decedent’s debts are paid.

Duties of a Trustee and Personal Representative

Both a personal representative and a trustee owe certain duties to the beneficiaries of the estate or trust and most litigation in this area arises from the mismanagement of trust or estate assets. These duties are called “fiduciary duties” because trustees and personal representatives are acting on behalf of others. The duties of a personal representative and a trustee are largely similar except for few areas. The basic fiduciary duties, among the many other duties, of a trustee and personal representative are as follows:

  • Duty to Administer—a trustee has the duty to administer the trust in good faith according to the terms and purposes of the trust and for the benefit of the trustee. Similarly, a personal representative has the duty to settle and distribute the estate of the decedent according to the terms of the decedent’s will or if no will exists according to state law.[1]

  • Duty of Loyalty—both trustees and personal representatives have a duty to act solely in the interest of the trust/estate. This generally prohibits any transactions that would create a conflict of interest or in the most extreme cases would amount to “self-dealing.” In other words, a trustee/personal representative cannot manage the trust/estate in such a way that it benefits himself over the beneficiaries.[2]

  • Prudent Administration—trustees and personal representatives must act with reasonable care, diligence, and prudence when carrying out their duties. Said a different way, trustees/personal representatives must conduct themselves with the care and skill that an ordinary person would use in conducting his or her own affairs.

  • Duty to Inform and Account—a trustee has the duty to keep beneficiaries of the trust “reasonably informed of the trust and its administration.”[3] A personal representative has the duty to file a final accounting upon completing administration of the estate[4] and may file an interim accounting at any time in order to keep beneficiaries informed.

  • Impartiality—trustees, specifically, have the duty to act impartially in administering a trust with two or more beneficiaries meaning he/she cannot take actions that specifically favor one beneficiary over the other.[5]

  • Duty to Distribute Trust Income/Estate Assets—trustees and personal representatives have a duty to distribute trust income[6] and estate assets[7] A trustee’s duty to distribute income is ongoing for as long as the trust exists. A personal representative is required to distribute the assets of the estate upon the closing of the estate.

  • Other Duties—trustees and personal representatives have many other duties created by statutory and common law. In addition to all other duties, trustees and personal representatives are required to follow any and all duties created by the trust documents or will.

Trust and probate litigation most often arises from a failure of a trustee/personal representative to meet these duties. For example, trustees of family trusts, often fail to provide a regular accounting of the trust to fellow family member beneficiaries. The failure of any trustee or personal representative to properly carry out his/her duties, whether intentional or unintentional, opens him/her up to liability for a breach of fiduciary duty claim.

Whether you are the trustee or personal representative or you are a beneficiary of an estate or trust it is important that you retain an experienced attorney to help you navigate trust and probate disputes. If you need advice regarding serving as a trustee or personal representative or you are concerned that a trustee or personal representative is failing in his/her duties, the Boatman Law Firm can help.

[1] Fla. Stat. § 736.0801 and § 733.602.

[2] Fla. Stat. § 736.0802.

[3] Fla. Stat. § 736.0813.

[4] Fla. Prob. R. 5.400(a).

[5] Fla. Stat. § 736.0803.

[6] Fla. Stat. § 736.08147.

[7] Fla. Prob. R. 5.400(a).

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THIS BLOG IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE. THE READER SHOULD CONSULT WITH KNOWLEDGEABLE LEGAL COUNSEL TO DETERMINE HOW APPLICABLE LAWS APPLY TO SPECIFIC FACTS AND SITUATIONS. BLOG POSTS ARE BASED ON THE MOST CURRENT INFORMATION AT THE TIME THEY ARE WRITTEN. SINCE IT IS POSSIBLE THAT THE LAWS OR OTHER CIRCUMSTANCES MAY HAVE CHANGED SINCE PUBLICATION, PLEASE CALL US TO DISCUSS ANY ACTION YOU MAY BE CONSIDERING AS A RESULT OF READING THIS BLOG.

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Published: March 20, 2019
Author: The Boatman Law Firm