When Can A Florida Court Do To Remedy A Trustee’s Breach Of Fiduciary Duty

The beneficiary of a trust may take legal action against the trustee if they believe there has been mismanagement of the trust’s assets. If the court finds the trustee has breached their fiduciary duty to the beneficiary, a judge can hold the trustee personally liable for any financial damages. But can the court restrict the trustee’s use of their personal assets while pending resolution of a trust dispute?

Florida Appeals Court: No Legal Basis for Restricting Trustee’s Personal Assets Before Judgment

A Florida appeals court recently addressed this very question. The case, Trombino v. Echeverria, involved litigation between two adult siblings, a brother and sister. The siblings’ parents previously created multiple trusts as part of their estate planning. Basically, each parent had their own separate revocable trust, and upon each of their deaths the assets from their respective trusts would be given to an irrevocable family trust.

After the father died in 2009, the mother became the trustee of all three trusts. The mother’s separate trust included her home in Highland Beach, Florida. In 2016, the mother granted herself a life estate in the property and specified that after her death, the house would go to the sister outright. The mother subsequently resigned as trustee and the sister assumed responsibility for all three trusts.

The mother passed away in 2021. The sister subsequently decided to sell the Highland Beach property. Meanwhile, the brother sued his sister, alleging she had mismanaged the assets in their mother’s separate trust, which in turn negatively affected his interest “as a beneficiary of the family trust.” Although the Highland Beach property was no longer part of the mother’s trust, the brother asked the court to require his sister to deposit the sale proceeds into a restricted account pending the resolution of his lawsuit. Essentially, the brother was afraid that his sister–who had no other assets in Florida–would try and avoid paying any potential judgment against her.

Although a circuit court judge granted the brother’s request, the Florida Fourth District Court of Appeals reversed. The appeals court noted that while Florida law does permit a judge to order a trustee “to pay money or otherwise restore the assets of the trust,” this only applies after a judgment for breach of trust is entered against the trustee. There is no basis for restricting the use of a trustee’s personal assets “before a judgment has been entered.” Nor was this a case where a probate court can restrict the distribution of a trust or estate asset pending resolution of a claim, as the Highland Beach property was distributed to the sister directly upon the mother’s death. That is to say, it was neither a trust nor a probate asset.

Speak with Florida Trust Litigation Attorney Mark R. Manceri Today

A breach of trustee or personal representative’s duties is a serious matter. Especially when the breach involves a family member, emotions can run high. That is why it is important to work with an experienced Pompano Beach breach of fiduciary duties lawyer who can advise and guide you through this difficult time. Contact the offices of Mark R. Manceri, P.A., today to schedule a consultation.

Source:

scholar.google.com/scholar_case?case=12638635416519270642