Trustee Misconduct: Should You Sue The Trust Or The Trustee?

The more alarmist corners of the Internet attract clicks by flying into a panic every time a court makes a decision. They consider the precedent that the new court decision sets and how other court decisions, in the same state or elsewhere, might follow it, and then how legislators and voters might respond. To gain perspective, it helps to think about the word jurisdiction, a vocabulary word that you probably learned in fifth grade social studies class, but which you never understood, because you had never been in a situation where it affected you. A court’s jurisdiction is the geographic area or subject matter where a court can make decisions. The decisions of Florida courts only apply in Florida. Sometimes in probate cases, the parties disagree over whether the courts of Florida or another state should administer the state; disputes like this are common in cases where the decedent owned property in more than one state. Furthermore, probate courts can only make decisions about estates, not about bankruptcy, divorce, or liability for personal injuries, even though decisions by courts that have jurisdiction in these matters sometimes affect probate cases. Likewise, a court order only applies to the parties named in the case. If your enemy sues, your friend, and the court rules in favor of your enemy, the court order can require your friend to pay damages, but not you. For questions about jurisdiction in trust litigation, contact an Orlando estate planning lawyer.

Miller v. Moore and the Personal Liability of Trustees for the Financial Affairs of the Trust

The purpose of a trust is to enable the beneficiaries to receive payment without the involvement of the courts, but the parties to a trust, namely the trustees and the beneficiaries, have the right to bring their disputes before the court. In a recent case, Miller v. Moore, the beneficiaries of a trust sued the trustee for paying himself excessive fees. They asked the court to order the trustee to return the extra money he had taken from the trust as his own payment, plus a surcharge to account for the interest that the trust missed out on because of the additional money that the trustee had withdrawn.

The court ordered the trustee to pay, and the trustee appealed. He claimed that, since the lawsuit only named him in his capacity as trustee, and did not name him personally as an individual, the court could not order him to use his personal assets to repay the trust. The appeals court sided with the beneficiaries. It reasoned that, based on the precedent set by the Kozinski case, a trustee is personally liable for financial losses that he or she causes to a trust, because a trustee is a fiduciary.

Contact Gierach and Gierach About Trust Disputes

An estate planning lawyer can help you resolve disputes between the trustees and beneficiaries of a trust.  Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.

Source:

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