When you choose to accept the responsibility of becoming the trustee of a trust or the executor of a Florida estate, you become a fiduciary. What this means is that you must work for the benefit of the trust or estate in performing your duties rather in your own interests. In other words, you must follow the wishes of the trust’s grantor or the estate’s decedent.
The beneficiaries of a trust are the people named as such therein. The heirs and/or beneficiaries of an estate are the people named in the decedent’s will. As FindLaw explains, you have a fiduciary duty to act in the best interests of these beneficiaries and/or heirs. Should you breach that duty, they can sue you.
Mistake or breach?
Despite your best efforts, you may occasionally make a mistake while carrying out your fiduciary duties. For instance, you may inadvertently use the wrong figure when making a calculation or make a mathematical error. You likewise may make an unwise investment decision that causes the trust or estate to lose value. Mistakes such as these do not constitute a breach of your financial duties. Rather, a fiduciary breach is a deliberate act on your part, such as one of the following, that negatively impacts the people to whom you owe the duty:
- Acting for your own benefit instead of for the benefit of the heirs or beneficiaries
- Giving the heirs or beneficiaries false or insufficient information
- Deliberately doing something that is not in the best interests of the heirs or beneficiaries
Elements of proof
Should one or more of the heirs or beneficiaries believe that you breached your fiduciary duties, (s)he or they can sue you. To prevail, (s)he or they must prove all four of the following:
- That the trust designates you as trustee or the will or other testamentary document names you as the estate’s executor
- That the trust or estate documents set forth your fiduciary duties
- That you breached your duties by acting contrary to the provisions of the trust or will
- That the trust, estate and/or its heirs and beneficiaries suffered economic damage as a result of your breach
If the heirs or beneficiaries win their lawsuit, the court could hold you personally responsible for the damage amount. In other words, you could have to pay this amount to the heirs or beneficiaries out of your own pocket. Should the court find that your breach amounted to fraud or malice, you could have to pay punitive damages on top of the actual damages.
This is educational information only and not intended to provide legal advice.