USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz, Christine Tsai and Maria Williams, Pillsbury Winthrop Shaw Pittman LLP
decedent will leave such an heir a smaller bequest or devise to incentivise the heir not to challenge the will or trust. Florida does not recognise no contest provisions and so they cannot be used effectively in Florida. This eliminates a useful planning mechanism for deterring potential will or trust challenges. Numerous additional scenarios can lead to wealth disputes. These include the multiple marriage fact pattern (disputes between the children from a prior marriage and the current spouse), conservatorship proceedings, and intestate estates. 5.2 Mechanism for Compensation There are numerous forms of damages or other rem - edies in Florida for wealth disputes. These can take the form of injunctions, money damages, and trust reformation, among others. Litigation unique to a dis - crete fact pattern is common, and compensation can include compensatory damages, award of attorney’s fees, and possibly punitive damages. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The use of corporate fiduciaries is prevalent. Florida law allows certain entities, including trust companies and banking institutions, to act as corporate fiduciar - ies, exercise fiduciary powers, and serve as personal representatives of estates. Certain fiduciaries may be held to the standard of their specialised skills or expertise. A personal representative must be either a resident of Florida or a family member. 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 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 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 to invest assets prudently. 6.4 Fiduciary Investment
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