Surcharge Actions

When administering an estate, a personal representative must act solely for the benefit of estate beneficiaries. The personal representative owes a duty to settle and distribute the decedent’s estate in accord with the terms of the decedent’s will efficiently and expeditiously, and in a manner that is consistent with the best interests of the estate. A personal representative doesn’t properly administer an estate, they face the possibility of incurring liability. Similarly, a trustee owes fiduciary obligations to a trust’s beneficiaries. A surcharge action can be brought to hold a trustee or personal representative personally liable where there has been mismanagement of an estate or trust. If you’re concerned about a surcharge action, a seasoned Ocala probate litigation lawyer can answer your questions.

A personal representative who is administering an estate needs to act entirely for the benefit of beneficiaries of the estate. Trustees who administer a trust are fiduciaries and also owe a heightened duty to beneficiaries to not engage in self-dealing or be disloyal. In other words, they aren’t supposed to use the funds within the trust for their own benefit or place the funds at risk.

Mistakes in estate or trust administration include acts or failures to act by a personal representative that cause mismanagement or waste of estate assets. The personal representative may unwisely invest an estate’s assets or engage in self-dealing in the course of making investments, or fail to pay a creditor’s claim.

Where a trustee is put in place, a trust instrument directs a trustee to take care of their fiduciary duties as a trustee. It may be possible to bring a breach of fiduciary duty action against a trustee. In that action, you would need to show; (1) there’s a fiduciary duty, (2) breach, and (3) damages arising from breach of the duty. A trustee cannot be liable to a beneficiary for a depreciation or loss in the value of trust property or for not making a profit unless there’s a breach of trust. Remedies for breach of trust are set forth under Florida Statutes section 736.1001.

A surcharge action is a charge against a fiduciary to compensate for a breach of fiduciary duty that occurs through negligent or intentional conduct. For example, if a trustee wrongfully goes into the principal of a trust for personal benefit, a conflict of interest is generated between the trustee’s fiduciary duties and the trust beneficiaries. The beneficiary of the trust can hire an attorney to try to void the transaction that benefits the trustee and commence a surcharge action. What the court can charge the fiduciary for the breach of fiduciary duty is considered a “surcharge.”

Surcharge actions are brought with the hope that losses incurred because of a breach of fiduciary duty will be restored to an estate or trust. The personal representative must post a bond with the court. If a beneficiary brings a surcharge action, the beneficiary is alleging that the personal representative misappropriated funds in the course of administration. If the surcharge action succeeds, the estate should be reimbursed for whatever amounts were misappropriated. Surcharge actions may require the tracing of assets.

If you suspect a trustee has breached their fiduciary duty, it is wise to hire an experienced attorney to go over the trust instrument and help you seek proper relief. Sometimes relief can be obtained through a surcharge action against a trustee, or by the trustee paying beneficiaries back for a breach of fiduciary duty. It is also important to make sure that trust assets are appropriately maintained.

If you are concerned about bringing or defending against a surcharge action in Ocala, an aggressive estate litigation attorney can help. Michael E. Dean and Timothy S. Dean of the Dean Law Firm, have decades of experience between them. Call us at (352) 387-8700 to set up a free consultation with our attorneys or contact us online.