The personal representative (PR) or trustee of an estate has a fiduciary duty to the beneficiaries. He or she has a duty to manage the estate with reasonable care, loyalty, and impartiality. When a PR or trustee fails to distribute the estate to the beneficiaries in a timely manner, that failure may be found in a court of law to constitute a breach of fiduciary duty.
Delay in Distribution of Estates Can Lead to Litigation
If you have been named personal representative or trustee of an estate, you should be aware that unwarranted delay in distribution of the estate could possibly result in probate litigation. Failure to timely distribute the estate of Sonja Eiteljorg was the issue of a case before the Indiana Court of Appeals. The case concerned a large trust containing approximately $13 million in assets. The co-trustees filed an estate tax return and paid the hefty taxes ($6.2 million), but refused to distribute the remaining assets and close the estate thereafter for fear that the IRS might disagree with their calculations and impose further tax liability.
The beneficiaries requested a distribution of $2 million, which the trustees declined. The beneficiaries subsequently sued for removal of the co-trustees and judgment against them for breach of fiduciary duty. The probate judge found that the delay was in fact a breach of fiduciary duty and awarded $268,748 in damages to the plaintiffs plus a substantial portion of their attorney fees, which the co-trustees were required to pay out of their own pockets. Although the award was reduced significantly on appeal, the appellate court upheld the ruling that the delay in distribution was a breach of the co-trustees’ fiduciary duty to the beneficiaries.
Recourse for Failure to Timely Distribute an Estate
A personal representative or trustee has a fiduciary duty to act in the best interests of the beneficiaries of the estate. Under the U.S. legal system, fiduciary duty is the strictest duty of care.
Certainly, a personal representative or trustee must give notice to creditors, pay all the debts of the estate, and pay all taxes due and owing before the estate is distributed and closed. However, unwarranted delay in distributing an estate can create hardship for beneficiaries and loss of potential income from investment of estate assets. Beneficiaries may be entitled to file claims for damages for breach of fiduciary duty against PRs and trustees who fail to timely distribute estates.
Legal Help in Florida Estate Distribution Conflicts
Whether you are a personal representative or trustee or a beneficiary, you will need skilled legal representation when disputes arise over the timely distribution of an estate. At Stern Zwelling, LLC, we represent beneficiaries as well as trustees and PRs in probate litigation matters.
Our founding attorney, Ido Stern, has devoted his practice exclusively to estate planning, wills and trusts, probate, and probate litigation. He has helped countless individuals in Boca Raton and South Florida resolve issues concerning estates, both out of court and at trial. If you are dealing with a conflict regarding delayed distribution of an estate, contact our office for sound legal guidance and skilled and dedicated representation.