Understanding Fiduciaries in Florida: Duties, Responsibilities & Legal Implications
When someone is entrusted to manage another person’s money, property, or affairs, that responsibility carries significant legal and ethical weight. Fiduciaries carry the weight of expectation to act with integrity and prioritize the needs of those they represent above their own.
In Florida, the law provides clear outlines for these duties and understanding them is crucial. However, the complexities of fiduciary duties can be overwhelming without proper guidance. Missteps, whether accidental or due to misunderstanding, can lead to disputes, legal challenges, and the erosion of trust.
The core of any fiduciary relationship is trust—and with that trust comes a legal duty to act with honesty, loyalty, care, and full transparency. If a fiduciary fails to meet them, the consequences can be serious: civil lawsuits, removal from the role, and even personal liability for financial losses.
If you’re in a fiduciary dispute and need support, contact our capable fudiciary dispute attorneys today at 954-767-6333. We can help.
Key Fiduciary Relationships in Florida
Fiduciary duties are foundational to trust and integrity across various legal and financial relationships. In Florida, fiduciary obligations appear in a variety of contexts. Here are some of the most common:
Trustee & Beneficiary
A trustee is appointed to manage assets held in a trust for the benefit of a beneficiary. In Florida, trustees are held to strict standards of loyalty, prudence, and care. This means they must make decisions solely in the beneficiary’s best interests, manage investments responsibly, and avoid any personal gain or conflict of interest.
Guardian & Ward
When the court appoints a guardian to care for a minor or an incapacitated adult, that guardian steps into a powerful and sensitive role. Guardians must act in the best interests of the ward in all areas of life—financial, medical, and personal.
Florida law requires guardians to be transparent, seek court approval for major decisions, and regularly report on their actions.
Personal Representative (Executor) & Heirs
A Personal Representative (also called an Executor) is charged with managing a deceased person’s estate under Florida’s probate laws. This includes identifying and valuing assets, paying debts and taxes, and ultimately distributing property to the rightful heirs or beneficiaries.
Agent Under a Power of Attorney (POA) & Principal
When someone signs a Power of Attorney, they appoint an Agent to make financial or healthcare decisions on their behalf, often in situations of incapacity. That Agent must act solely in the Principal’s best interests, avoid conflicts of interest, and keep personal and financial dealings separate.
Corporate Officers & Shareholders
Corporate officers and directors have fiduciary duties to the company and its shareholders. This includes a duty of care and a duty of loyalty. Breaches of these duties can lead to shareholder lawsuits, regulatory action, and financial penalties.
Financial Advisors & Clients
Financial advisors, investment brokers, and wealth managers often serve as fiduciaries when managing client portfolios. This means they are legally and ethically bound to act in their client’s best financial interests.
Recommending unsuitable investments, charging hidden fees, or failing to disclose conflicts of interest can all constitute a breach of fiduciary duty.
Types of Fiduciary Duties in Florida
Fiduciaries in Florida are bound by stringent legal and ethical standards designed to protect and advance the interests of those they serve. Here’s a closer look at each of these crucial responsibilities:
- Duty of Care: Fiduciaries must demonstrate competence and diligence in their roles. This entails making well-informed decisions based on thorough research and sound judgment, always prioritizing the beneficiary’s interests.
- Duty of Loyalty: This duty requires fiduciaries to act solely in the interest of the beneficiary, placing those interests above their own at all times. Fiduciaries must avoid any conflicts of interest that might compromise their ability to perform their duties impartially or that could result in personal financial gain.
- Duty of Good Faith: Fiduciaries are expected to conduct themselves with honesty and fairness in all dealings related to their fiduciary role. This means engaging in practices that are not only legally compliant but also ethically sound.
- Duty of Confidentiality: Protecting the privacy and confidentiality of sensitive information is essential for fiduciaries. They must protect all personal, financial, and legal details entrusted to them, using this information solely for the benefit of the beneficiary and never for personal advantage.
- Duty to Disclose: Transparency is crucial in maintaining the trust inherent in fiduciary relationships. Fiduciaries must disclose any potential or actual conflicts of interest that could affect their impartiality.
- Duty of Prudence: When managing assets or making financial decisions, fiduciaries must exercise prudence and caution. This involves a thoughtful and conservative approach to risk assessment, always opting for strategies that safeguard the beneficiary’s assets while seeking reasonable returns.
Breach of Fiduciary Duty in Florida
A breach of fiduciary duty happens when the person in a fiduciary role fails to act in the best interests of the individual or entity they’re responsible for. These situations often arise when personal interest overrides duty or when responsibilities are handled carelessly or without transparency.
1. Self-Dealing
One major red flag is self-dealing, i.e., when a fiduciary enters into transactions that benefit themselves rather than the person or estate they’re supposed to be protecting. This could mean redirecting funds, securing personal gain from a business deal, or using assets for their advantage.
2. Mismanagement of Assets
Another common issue is the mismanagement of assets. Fiduciaries are expected to handle money, property, or investments with diligence. When they don’t—whether by making risky choices, failing to maintain proper records, or simply not paying attention—real damage can occur.
3. Failing to Disclose Conflicts of Interest
Failing to disclose conflicts of interest is also a serious problem. Fiduciaries have a duty to be transparent, especially when personal interests could influence their decisions. Keeping those conflicts hidden erodes trust and can result in unfair or biased outcomes.
4. Negligence
Lastly, negligence can lead to significant harm, even if it does not involve ill intent. Whether it’s ignoring key responsibilities, overlooking important details, or just not doing the job with the level of care required, it’s still considered a breach under Florida law.
What Happens if a Fiduciary Fails in Their Duty?
One of the most immediate outcomes may be financial. The fiduciary could be held liable for monetary damages to compensate for any losses caused by their breach. This could involve mismanaged funds, poor decision-making, or actions taken in their self-interest.
In more serious cases, the court can step in and remove the fiduciary from their role. Whether it’s a trustee, guardian, agent under a power of attorney, or personal representative handling an estate, anyone found to have acted in bad faith or violated their obligations can be replaced to protect the interests of those they were meant to serve.
There are also situations where a fiduciary’s actions cross the line into criminal behavior. Cases involving fraud, embezzlement, or willful misconduct can lead to criminal charges, putting the fiduciary at risk of fines—or even jail time.
For professionals like attorneys, financial advisors, or corporate officers, a breach of fiduciary duty may trigger disciplinary action from licensing boards or regulatory bodies. In some instances, it could even result in the suspension or loss of their professional license, affecting their ability to continue working in their field.
How Our Attorneys Can Help When Your Fiduciary Fails in Their Duty
Cases involving a fiduciary breach can be complicated, to say the least. Here’s how our attorneys can support you during this process:
Step 1. Identify What Went Wrong
The first step in any case involving a fiduciary breach is identifying exactly what went wrong. Was there mismanagement of funds? A failure to disclose important information? Or perhaps decisions were made that benefited the fiduciary at the expense of those they were meant to serve.
Step 2. Review All Actions and Decisions
Our experienced attorneys begin by reviewing all actions and decisions made by the fiduciary to pinpoint all breaches of duty.
Step 3. Evaluate Potential Legal Implications
Once a breach has been identified, we provide a detailed evaluation of its legal implications. We consider not only the direct financial impacts but also the broader consequences—such as the loss of trust and potential long-term effects on your assets or family relationships.
Step 4. Build a Strategy
With this thorough understanding, we develop a strategic plan tailored to your specific situation, whether it involves negotiating a resolution or pursuing litigation.
Armed with a strategy, our attorneys stand ready to advocate on your behalf. This could mean engaging in tough negotiations to recover losses or, if necessary, representing your interests in court.
Step 5. Offer Advice and Strategies
In addition to addressing the current breach, our team at Saavedra-Goodwin is proactive. We provide advice and strategies to prevent future fiduciary failures, such as restructuring fiduciary roles, improving oversight mechanisms, and ensuring thorough and regular reporting procedures.
Contact Our Fiduciary Dispute Lawyers Today
At Saavedra-Goodwin, we’ve worked with clients on all sides of fiduciary relationships for decades.
If you’re looking for clear guidance when it comes to understanding fiduciaries in Florida, contact our attorneys at 954-767-6333 for a free initial telephone consultation.
