If you would like to have a trustee removed from a trust or a personal representative removed from the estate for not doing a good job, you may be able to do so under Florida law. ShuffieldLowman can assist with fiduciary issues such as self-dealing, favoring one beneficiary over another, failing to give an accounting at least once a year or to keep you reasonably informed. If the trustee is not fulfilling their fiduciary duties, you may be able to recover your attorneys’ fees as well. Watch as fiduciary litigation attorney, Alex Douglas, explains how to get rid of bad trustees or personal representatives.
One of the most important decisions you will make when you do your estate planning is choosing who will be in charge of your estate or your trust to administer your affairs after you’re gone. Whether that person is your child or children, trusted friend, or a bank, ShuffieldLowman can assist with your planning decisions in order to avoid unnecessary potential legal fees and litigation. Watch as ShuffieldLowman fiduciary litigation attorney, Alex Douglas, explains the importance of choosing a fiduciary for your estate planning documents.
In honor of Elder Abuse Awareness Day on June 15th, ShuffieldLowman’s Alex Douglas was recently featured on The Florida Bar Podcast to speak about different forms of elder abuse and what people can do to protect themselves and their loved ones. Listen to this episode to hear about the different resources available, including the elder abuse hotline, and to learn about the complexities of guardianship. Alex practices in the area of fiduciary litigation with extensive experience in trust, probate and guardianship litigation.
This morning, ShuffieldLowman partner Alexander Douglas is a featured speaker at the Collier County Bar Association 2017 Ethics Seminar. His topic is “Who’s on First: Dealing With Conflict Issues and Representing Fiduciaries in Probate Administrations”.
Trustees are required to administer a trust in good faith, in accordance with the terms and purposes of the trust, and the interests of its beneficiaries. There are, however, many aspects of trust administration that can leave even sophisticated trustees searching for advice. The Florida Legislature recognized there are situations in which a trustee must rely on an expert in order to fulfill his or her fiduciary duty when it enacted the Florida Trust Code. Florida Statute Section 736.0816(20) provides that:
A trustee may: Employ persons, including, but not limited to, attorneys, accountants, investment advisers, or agents, even if they are the trustee, an affiliate of the trustee, or otherwise associated with the trustee, to advise or assist the trustee in the exercise of any of the trustee’s powers and pay reasonable compensation and costs incurred in connection with such employment from the assets of the trust, and act without independent investigation on the recommendations of such persons.
Because it provides that a trustee may act on an advisor’s recommendation without independent investigation, Section 736.0816(20) should provide a trustee with immunity from mistakes made by his or her advisors. Indeed, prior to the enactment of the Florida Trust Code, the Third District Court of Appeals found that a substantively identical provision of the Florida Probate Code, Florida Statute Section 733.612(21), shielded personal representatives from liability resulting from errors made by their accountants. See Wohl v. Lewy, 505 So.2d 525 (Fla. 3rd DCA 1987). Personal representatives and trustees are held to the same standard of care and, as a result, Section 736.0816(20) should shield a trustee from liability for a mistake made by an advisor.
Nevertheless, a recent decision by the Fifth District Court of Appeals casts doubt on whether a trustee can rely on an advisor’s recommendation. In Harrell v. Badger, 171 So. 3d 764 (Fla. 5th DCA 2015) a trustee hired an attorney to decant a testamentary trust into a special needs trust. The trustee’s attorney did not, however, follow the requirements of Florida Statute Section 736.04117 in decanting the original testamentary trust. The Trustee argued that, like the personal representative in Wohl, he relied on his professional advisor’s recommendations and therefore should not be liable for the improper decanting. The court rejected that argument.
In light of the decision in Harrell, it is unclear to what extent a trustee may rely on Section 736.0816(20) for protection from liability for erroneous legal, accounting and other negligent professional advice. Unlike personal representatives who are protected by Section 733.612(21), the Harrell decision suggests that trustees are “de facto” insurers of the professionals they hire. Accordingly, trustees should carefully consider who they hire to render them legal and other professional advice.
ShuffieldLowman’s four downtown offices are located in Orlando, Tavares, DeLand and Daytona Beach. The firm is a 34 attorney, full service, business law firm, practicing in the areas of corporate law, estate planning, real estate and litigation. Specific areas include, tax law, securities, mergers and acquisitions, intellectual property, estate planning and probate, planning for families with closely held businesses, guardianship and elder law, tax controversy – Federal and State, non-profit organization law, banking and finance, land use and government law, commercial and civil litigation, fiduciary litigation, construction law, association law, bankruptcy and creditors’ rights, labor and employment, environmental law and mediation.
We live in one of the most popular retirement states in our nation. The Baby Boomers have reached retirement age and the “great wealth transfer” has begun. According to a study from consulting firm Accenture, when this transfer is complete, some $30 trillion (yes, with a t) will be transferred from one generation to the next.[i]
With aging comes physical and mental impairment. According to the Alzheimer’s Association, there are approximately five million Americans who have some type of dementia. A person with mild dementia may be impaired but not to the degree they would be considered legally incompetent. We all know friends and family that, due to mild physical or mental infirmities, are susceptible to being taken advantage of financially, either through intentional acts of fraud by salespersons, a breach of trust (fiduciary duty) by caregivers or trustees, or acts of undue influence by neighbors, friends or even family members. Even if a senior is competent, they can still be susceptible to exploitation. Fortunately, they have the protection of Florida law.
Florida has enacted an Elder Exploitation statute. Florida Statute section 415.1111 gives “vulnerable adults” a civil cause of action for damages, punitive damages and attorney fees and costs when they have been financially exploited. (There are also criminal penalties that the State can pursue, although these penalties will not be discussed here.) Under the law, a “vulnerable adult” is anyone older than 18 years who, due to mental, emotional or infirmities of aging, cannot provide for his or her own care or protection. “Exploitation” means a person of trust and confidence who knowingly, by “deception or intimidation,” permanently deprives the vulnerable adult of money or property.
The statute covers a broad range of conduct that could result in exploitation. Basically, if an elderly person is dependent upon you, relying upon you for advice or care, or you are serving in any other fiduciary role for a person suffering from the infirmities of aging, and you take money or property from them through “deception or intimidation,” you have committed elder abuse. The statute does not make exceptions for relatives. As a result, a son or daughter who obtains money from mom or dad by lying or acts of undue influence that rises to the level of intimidation, violates the statute.
In order to bring an action under the statute, the vulnerable person, or the vulnerable person’s guardian (or if the vulnerable adult has passed, his or her personal representative) must bring the action. Practically speaking, the requirement that the vulnerable adult or his or her legal representative bring the action against the exploiter can limit the effectiveness of the statute. Often, it is the very person who is exploiting the vulnerable adult who has the person isolated from family and friends. The exploiter is often the vulnerable adult’s power of attorney. If the vulnerable adult is isolated and cut off from family or friends, access to the vulnerable adult away from the suspected exploiter is difficult, if not impossible.
Remember, a “vulnerable adult” is not necessarily a person who is legally incompetent. If the person is incompetent, then any interested person can swear to such facts under oath and file a guardianship action to force the person to be examined. In Florida, a guardianship court appoints a three member panel, including at least one doctor, that examines the alleged incompetent person and reports to the court whether the individual is indeed incapacitated, in whole or in part. If the court determines the alleged incapacitated adult is in fact incapacitated, then a guardian is appointed unless there are other reasons why one is not required.
However, if the vulnerable adult is not known or believed to be incompetent, the options for a concerned family member or friend are limited. Under section 415, the vulnerable adult or his or her guardian may sue the alleged exploiter for elder abuse. “Guardian” is defined as not only a court appointed guardian, but also a health care surrogate, or “pre-need” guardian (an instrument that a person signs to state who he or she wishes to act as their guardian in the event of incapacity). The vulnerable adult’s power of attorney can also bring the action on behalf of the vulnerable adult.
Unfortunately, there is a “flaw” in the statute. Often, the person believed to be the exploiter holds a position of fiduciary authority for the vulnerable adult. For instance, it would not be unusual for the exploiter to be the vulnerable adult’s health care surrogate, or pre-need guardian. In these cases, the fox is guarding the hen house and there is little a concerned family member or friend can do to save the vulnerable adult from the exploiter. Under the statute, only a few persons beside the vulnerable adult have legal “standing” to sue for the vulnerable adult.
However, the statute may contain the preverbal Achilles’ heel for an exploiter. A very common but powerful instrument in estate planning is the durable power of attorney and this instrument can be irresistible for an exploiter. Florida recently overhauled the laws governing powers of attorney that makes the attorney in fact (also known as an agent) more accountable. Under Florida’s new Power of Attorney Act, section 709.2116(1), a court may review any act of a power of attorney, and may remove the agent or grant any other appropriate relief if the court finds that the agent breached his or her fiduciary duty. Furthermore, the statute provides for a wide range of persons who may petition the court to review the acts of an agent, including the guardian, trustee, and in some cases the health care surrogate, and most importantly “any other interested person if the person demonstrates to the court’s satisfaction that the person is interested in the welfare of the principal and has a good faith belief that the court’s intervention is necessary.”
If the exploiter has a power of attorney for the vulnerable adult, the power of attorney statute gives standing to others for the purpose of taking action against the exploiter. If you are a close friend or family member, you likely could go to court and show “standing” inasmuch as you are interested in the welfare of the principal and that you have a good faith belief that court intervention is needed. However, a “good faith” belief needs to be more than just a guess. It is likely going to require you swear under oath to certain facts that show the actions of the principal are not consistent with his or her normal actions, or the exploiter has taken actions to isolate the vulnerable adult from family and friends, to the point the vulnerable adult’s true status cannot be determined.
If you believe someone is being exploited, take action immediately. If you are not a close family member or friend, contact someone who is. Under Florida law, there is a legal obligation to report anyone who is exploiting a vulnerable adult to the Department of Children and Families. The hot line number is 1-800-962-2873. If you are a family member and believe your loved one is being exploited, take action immediately with competent legal counsel to review your options. Sometimes, family members wait too long and the exploiter is able to drain the vulnerable adult’s bank accounts and waste other resources. This is most often true when the exploiter is another family member. If the exploiter is not quickly stopped, the result can be devastating. The money is gone forever, and/or the cost of recovering the money is economically unfeasible.
If action is taken as soon as exploitation is discovered, there are many remedies a court can impose to recover the money or property taken. If the money taken from the elder can be traced to property bought with such funds, such as real estate, a “constructive trust” can be imposed. A constructive trust is a legal remedy the law imposes on property that is bought with funds from the victim whereby the property is essentially being held “in trust” by the wrongdoer for the victim. Other remedies include filing a lis pendens, which is essentially placing a lien on real property taken from the vulnerable adult, as well as the remedy of rescission or the unwinding of a transaction where fraud was involved in causing the transaction to take place. Ultimately, a judgment will be rendered against the wrongful person which will allow collection efforts to begin. Common collection remedies include garnishment of bank accounts, foreclosure of real property to pay a judgment, and writs of execution on personal property.
Florida is a wonderful place for retirement. Fun, sun and waves, this state has it all. Unfortunately, there are those in society that will prey on unsuspecting vulnerable adults. Sadly, such persons are not limited to strangers. Often, and more likely, the exploiter will be a friend, caregiver, fiduciary or family members. If you suspect a loved one is being exploited, take action immediately by contacting an attorney to determine the best course of action.
For more information:
Contact Alexander Douglas, Esquire
Phone: (407) 581-9800
[i] http://www.cnbc.com/2014/07/22/great-wealth-transfer-will-be-30-trillionyes-thats-trillion-with-a-t.html by Cam Marston