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Even the most experienced probate litigators can sometimes be caught unawares but new laws that have been passed. Litigation is not infrequently referred to as warfare by other means, and, if it is, then there are many mines for the unwary General and her or his troops on the probate litigation battlefield. This post is about one of the new mines.
When a trustee desires defending a claim of a breach of fiduciary duty, breach of trust, or for removal of trustee, and other related claims, the trustee should not hire and pay her or his lawyer from the trust's funds until notice is provided to the court. See: Florida Statute § 736.0802(10)(b). The trustee may still pay the trustee's lawyer without court approval, but only if notice is given to the court first:
...the trustee must serve a written notice of intent upon each qualified beneficiary of the trust whose share of the trust may be affected by the payment before such payment is made. The notice of intent does not need to be served upon a qualified beneficiary whose identity or location is unknown to, and not reasonably ascertainable by, the trustee.
§ 736.0802(10)(b), Fla. Stat.
The details of the notice itself are not lengthy. They are contained in § 736.0802(10)(c), Fla. Stat. But if these provisions are not followed, the consequences can be dramatic. Setting reputation with the judge and your client aside, the consequences include repayment of any legal bills as well as attorney fees, if the beneficiary moves to compel payment back to the trust:
If a trustee has used trust assets to pay attorney fees or costs described in paragraph (b) before service of a notice of intent, any qualified beneficiary who is not barred under s. 736.1008 and whose share of the trust may have been affected by such payment is entitled, upon the filing of a motion to compel the return of such payment to the trust, to an order compelling the return of such payment, with interest at the statutory rate. The court shall award attorney fees and costs incurred in connection with the motion to compel as provided in s. 736.1004.
§ 736.0802(10)(d), Fla. Stat.
Imagine being a client and hearing this from your attoeny: "Hey, sorry, I forgot to tell you that you can't pay me until you file this notice with the Court. Now that you didn't, you have to re-pay the trust, with interest, and oh... here's the opposing lawyer's bill for $3,000.00 that we have to pay too. My bad." That is a malpractice claim waiting to happen.
The best ways to avoid it?
Find an experienced probate litigator who keeps up with the Florida Trust Code and can tell you a detailed plan for how to defend your claim in court. And make sure your attorney feels it personally for you, but does not take it out personally on the opposing lawyers. Someday, your lawyer may need their help to get out of a sticky mess like the one discussed in this article. It has never happened to us, but, unfortunately, we have had to move to compel opposing party's legal bills back to a trust.
At Waugh Grant, you will not have to worry if we know our probate litigation rules.