USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz and Christine Tsai, Pillsbury Winthrop Shaw Pittman LLP
6.2 Fiduciary Liabilities In Florida, a fiduciary can be personally liable for a breach of fiduciary duty. For example, a personal representative is responsible to interested parties for harm caused by bad faith, self-dealing, conflicts of interest, or breaches of fiduciary duty. Conversely, an agent acting in good faith is generally shielded from certain liability for failure to preserve the intent of the trustor. Additionally, absent a breach of trust or a con - flict of interest, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit. However, there are mechanisms to protect fiduciaries from certain liabilities, including exoneration, indem - nification, or exculpatory causes and the delegation of authority for specific aspects of administration to third-party professionals. For example, a fiduciary can delegate investment functions to an investment agent, provided that the fiduciary exercises care in selecting and monitoring the agent’s actions. 6.3 Fiduciary Regulation Florida regulates a fiduciary’s investments of assets. For example, an agent with power of attorney must preserve the principal’s estate plan to the extent that it aligns with the principal’s best interest, considering factors such as property value, foreseeable needs, tax minimisation and gift history. Under the prudent per - son investment rule, a personal representative must manage investments like a prudent investor, consider - ing risk and return objectives within an overall strat - egy. A particular investment or action is not inherently prudent or imprudent, but the duty to diversify assets remains a central tenet of prudent investing. Trustees have the flexibility to invest in various assets but are judged on their reasonable judgment and the overall portfolio’s anticipated impact. The prudent investor rule evaluates behaviour, not just outcomes. Moreo - ver, testators can grant beneficiaries or a protector the power to dismiss or replace fiduciaries as they deem fit, which can create an incentive for fiduciaries
beneficiaries and furthers the purposes of the trust, guardianship, or estate not to diversify. Even where a will or trust exonerates a trustee from liability for the failure to diversify, case law shows that a trustee could still be liable for this, so diversification remains important. Their decisions should balance income production and capital safety, considering the trust’s objectives and impartiality duty. To avoid conflicts of interest, trustees must annually disclose investments and compensation from controlled instruments to beneficiaries. Subject to certain exceptions, the trus - tee must inform all qualified beneficiaries about: i) the investment in trustee-owned or controlled instru - ments; ii) the specific investment instruments; and iii) the relationship between the trustee and any affiliate that controls these instruments. However, effective 1 January 2025, Florida trustees and personal representatives administering trusts and estates will operate under the new rules established by the Florida Uniform Fiduciary Income and Principal Act, which, among other items, provides fiduciaries with greater discretion in investment strategies and payout strategies to beneficiaries. 7. Citizenship and Residency 7.1 Requirements for Domicile, Residency and Citizenship To establish domicile in Florida, an individual must generally show, through clear and convincing evi - dence, the intent to remain indefinitely in the state. An individual’s intent to indefinitely remain in Florida is generally demonstrated through a facts and circum - stances analysis, which includes, but is not limited to, filing a Florida Declaration of Domicile. Typically, an individual can establish new ties to Florida by severing ties with the individual’s old state. The old state can have additional factors and considerations, which can be more onerous than Florida’s domicile requirements in order for the individual to severe ties. For example, New York has a statutory test and several factors that it weighs up when considering whether an individual is domiciled there. Terminating ties to the old state and establishing ties in the new state include taking action such as updating: voter registration, driver’s licence, clubs, church or synagogue, veterinarian,
to invest assets prudently. 6.4 Fiduciary Investment
A fiduciary generally has a duty to diversify invest - ments unless, under the circumstances, the fiduciary believes reasonably that it is in the interests of the
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