What is a Fiduciary Relationship?
A fiduciary relationship is one in which one party, called the fiduciary, has the legal duty to act in another party’s best interests. The fiduciary is expected to put the needs of the other party first. There are many different types of fiduciaries in Florida, including bankers, financial advisers, lawyers, doctors, and accountants. Examples of a fiduciary relationship in estate planning are personal representatives (also known as an executor) and trustees.
What are the Fiduciary Duties of a Personal Representative or Trustee in Naples?
Under Florida law, there are several fiduciary duties that personal representatives and trustees must uphold. Some examples of these duties are listed below.
• The Duty of Good Faith. The fiduciary must make reasonable efforts to fulfill the terms of the will or trust.
• The Duty of Loyalty. The fiduciary must put the estate’s needs before their own interests. They cannot act for their personal gain (besides reasonable payment for their services).
• The Duty of Impartiality. The fiduciary must treat all the beneficiaries or heirs the same. If there are competing interests, the fiduciary must balance them fairly.
• Duty of Prudent Administration. The fiduciary must take reasonable care of the assets in their charge and use reasonable caution when making investment or distribution decisions.
• Duty to Protect Property. The fiduciary must take possession of and conserve the property that makes up the estate or trust.
• Duty to Inform and Account. The fiduciary must communicate with the beneficiaries and keep them informed about the estate or trust.
What Happens When a Personal Representative or Trustee Breaches Their Fiduciary Duty in Naples?
If the personal representative or trustee breaches one of their fiduciary duties and the breach causes a financial loss to the trust, estate, or beneficiaries, they can face penalties. The beneficiaries or heirs can file a petition to remove the trustee or personal representative, and the court can suspend or remove the individual from their position.
In addition to removal, the court may require the trustee or personal representative to financially compensate the beneficiaries for any damage they caused.
Common examples of breach of fiduciary duty include:
• Concealing information from beneficiaries;
• Favoring one beneficiary over another;
• Acting against the trust instructions;
• Failing to keep proper accounting or estate records; and
• Picking preferred vendors or professionals because of a financial benefit to the trustee (kickbacks).
Call Naples Estate Planning Lawyer James Nici
If you have questions about a fiduciary relationship in estate planning, choosing your trustee, or executor/personal representative, you should contact Nici Law Firm. James R. Nici is an experienced Naples estate planning attorney with over 25 years of experience. He is well-versed in estate planning issues and can create an estate plan that fits your needs. Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.
