Articles Posted in Trust Disputes

What happens when the personal representative of an estate is not performing his or her duties or is not acting in the best interest of the estate? The Florida Probate Code lists causes for removal of a Personal representative. In addition to a physical or mental incapacity that would prevent a personal representative from performing his or her duties, the following are other circumstances and conditions under which the pesonal representative of an estate may be validly removed:

  1. Failure to comply with a court order;
  2. Failure to account for the sale of property or provide an inventory;
  3. Wasting the assets of an estate;
  4. Failure to post bond;
  5. Conviction of a felony;
  6. Insolvency of a corporate personal representative;
  7. Except for a surviving spouse, acquiring a conflict of interest that may or will interfere with the administration of the estate;
  8. Revocation of the will naming the person as personal representative;
  9. Removal of Florida as a Domicile, unless domicile is not a requirement; or
  10. If the personal representative would not now be entitle to appointment.

Any interested person may petition for the removal of a personal representative. The petition must allege an interest and facts comprising a statutory ground for removal. Fla. Prob. R. 5.440. Furthermore, the removal of a personal representative appointed by a decedent is a last resort. See In re Estate of Murphy’s, 336 So.2d 697 (Fla. 4th DCA 1976).
Continue Reading

A recent Florida Case…

Florida statutes allow for the modification of trust documents when the beneficiaries and trustees enter into a settlement agreement. The proposed changes have to further the grantor’s intent, meet the best interests of the beneficiaries or stem from another appropriate reason. But what if the trust specifically prohibits the proposed changes? Then, only in unique circumstances the will the court modify the trust as allowed by Fla. Stat. s. 736.0414 if the trust instrument forbids such changes.

For example, in a very recent Miami-Dade County District Court of Appeals decision, the Court decided it would not approve a settlement agreement entered into between the co-trustees (the two adult daughters of the settlors) and the corporate trustee. The settlement agreement would have allowed the corporate trustee of the trust to resign, release it from liability, and replace it with a corporate custodian to hold the trust’s securities and cash. A fourth co-trustee appealed the trial court decision which allowed the modification. The fourth co-trustee relied on language from the trust which provided: “If the corporate Trustee fails or ceases to serve, the remaining individual Trustees or Trustee shall choose a successor corporate Trustee, so that there shall always be a corporate Trustee after the Settlor ceases to serve.”

Furthermore, a later paragraph of the same trust provided: “[T]o the extent permitted by law, I prohibit a court from modifying the terms of this Trust Agreement under Florida Statutes s. 737.4031(2) or any statute of similar import.” Section 737.4031 of the Florida Statutes (2002), which is currently found in section 736.04113 of the Florida Statutes, allowed for the judicial modification of a trust under certain circumstances.
Continue Reading

Once again a recent court case reminds us how important it is to have up-to-date and very clear estate planning documents. A case out of Broward County could have happened anywhere in Florida. The Broward County Court decided a case wherein a lady created a trust. Pursuant to the terms of the trust if the settlor wanted to change or revoke the trust after she had been adjudicated incapacitated she would either need to be restored by the court or provide letters from two “licensed physicians” indicating that she was competent. As chance would have it, the settlor was later adjudicated incompetent due to her deteriorating mental health state. However she then wanted to amend her trust to change the amount the beneficiaries would receive under the trust. She obtained a letter of capacity from a licensed physician who had met with her many times. She obtained a second letter from a nursing home administrator with expert experience and medical schooling-but without a physician’s license.

The court would not allow the amendment. The letter from the nursing home administrator was not good enough. The trust unambiguously stated what the requirements are for allowing her to amend after incapacity. It required two letters from “licensed physicians”. The court refused to change what was clearly required in the instrument. She did not meet her own requirements to restore capacity and therefore the court did not uphold the amendment. Her ability to amend her own trust would have been different if she had used different language. It is important when creating estate instruments to use language that will clearly express the goals you wish to achieve. If you need help creating or updating estate documents please feel free to contact the experienced attorneys at Chepenik Trushin to help. If you are living in the West Palm Beach, Broward, Miami-Dade area you can reach us at 305.981.8889 or 866.626.9898.

Resources:

A trustee has many important duties. They have obligations to beneficiaries and to the trust. Their duties may be altered by the trust, by the creator of the trust or even by the beneficiaries. A trustee should be chosen carefully to ensure they can fulfill the purposes of the trust. According to the Florida Statutes section 736.0801, the trustee has the duty to administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with the laws of Florida. A settlor (trust creator) may choose anyone they wish to serve as trustee. It could be a family member trustee located locally in Miami, Ft. Lauderdale, or West Palm Beach. A trustee could also be a corporate trustee located within Miami-Dade County, Broward County or somewhere else.

653499_couple_lisen_music
The trustee also has a duty of loyalty, required by the Florida Statutes section 736.0802. The trustee has to administer the trust solely in the interests of the beneficiaries. A conflict between the trustee’s fiduciary obligation to the beneficiary and the trustee’s own personal interests may make a transaction voidable by a beneficiary affected by a transaction. Some transactions which presume a conflict between a beneficiary and trustee involves situations when the transaction is entered into by the trustee with the trustee’s spouse, the trustee’s children, siblings, or parents.

For example, if a trustee sells $500,000 worth of trust assets to her husband at a lower price of $400,000 there is a potential for a conflict between the obligations the trustee owes to the beneficiary and the trustee’s own personal interests. The beneficiary has remedies available. However, if the transaction may have been authorized by the terms of the trust; approved by the court; or if the beneficiary does not commence a judicial proceeding in time, the beneficiary may loose the relief available to her. It is important that a beneficiary of a trust contact an attorney in this situation to see what relief is available to them. Even a transaction not concerning trust property may involve a conflict between personal and fiduciary interests if the transaction concerns an opportunity that properly belonging to the trust.
Continue Reading

No matter how good a person’s intention may have been in creating a trust, as with any matter involving money and property, disputes often occur. Beneficiaries in Fort Lauderdale may contest the actions of the Trustee located in Miami. As with other legal disputes, it is often desirable to resolve a dispute over a trust without dealing with the time, expense, and burdens of the court system. This is why Florida Statute section 736.0111 permits people to enter into non-judicial settlement agreements. A non-judicial settlement agreement allows people to resolve a dispute themselves, without the court, and then enter into a contract that lays out whatever agreement was reached. Then, if a future dispute arises about the trust, a court can step in and enforce the terms of the non-judicial settlement agreement.

Non-judicial settlement agreements can be used to resolve a wide variety of issues that often cause problems when dealing with a trust. For example, non-judicial settlement agreements can be used to resolve disputes over (1) how the wording of a trust should be interpreted, (2) a trustee’s report or accounting of the money or property in the trust, (3) whether to direct a trustee to take or not to take a certain action, (4) granting power to a trustee to take certain actions, (5) appointing or removing a trustee, and (6) determining a trustee’s compensation.

There are some things people should be aware of before entering into a non-judicial settlement agreement. Settlement agreements can only be valid if the terms of the agreement could have been approved by a court if the dispute had actually been filed in court. Also, a non-judicial settlement agreement will not be valid if it causes a result that is prohibited by the Florida Trust Code. For example, an agreement cannot modify or terminate a trust in a way or manner prohibited by the Trust Code. Because the Florida Trust Code is complex and because there is often a lot of money and/or valuable property at stake in a dispute over a trust, it is important that someone with experience helps negotiate and write a non-judicial settlement agreement or there is a risk that a settlement agreement will not be valid. If a settlement agreement is not valid, it will have absolutely no effect on a trust and the individuals affected by the trust. In other words, an invalid non-judicial settlement agreement is not worth the paper it is printed on.

Super Lawyers
Florida Legal Elite
Florida Legal Elite
AV Preeminent