Probate litigation is a varied and complex area of law. One question that Samantha J. Fitzgerald is often asked is, what is a surcharge action?
In today’s post, we will briefly answer that question. We’ll take a look at what surcharge actions are, to whom they apply, and who can bring one. As always, for information about your specific situation or if you want to know more about surcharge actions, consult with an estate and probate lawyer near you.
With that said, let’s get started.
Personal Representatives and Surcharge Actions
To fully understand surcharge actions, you must first understand the duties of a personal representative appointed either by a decedent’s Last Will and Testament (“Will”) or by the court, to administer a decedent’s estate.
Florida law requires a personal representative to carry out a number of duties with regard to administering a decedent’s estate. Some of these duties (by no means all of them) include gathering the decedent’s assets, paying the estate’s debts, and distributing assets to the decedent’s beneficiaries.
Generally speaking, a personal representative is not personally liable for the payment of the estate’s debts or to the beneficiaries of the estate.
But that is generally.
There are times when a personal representative can be held personally liable for failing to perform his or her duties to the estate or to the beneficiaries.
A personal representative is a fiduciary who is accountable to the courts and to the beneficiaries. The personal representative must perform his/her duties consistently with his/her obligations as a fiduciary. In other words, he or she must perform his/her duties to the best of his/her abilities and in the best interests of the estate and/or beneficiaries.
The failure to do so can expose a personal representative to personal liability.
For example, if a personal representative fails to pay federal taxes owed by the decedent or decedent’s estate, he or she can be held personally liable for the payment of those taxes.
Or, if a personal representative commits a tort, or mismanages the estate’s assets, or improperly personally benefits from the estate, he or she can be personally liable for any damages.
The legal procedure for holding a personal representative personally liable for a breach of his or her fiduciary duty to the estate or beneficiaries is known as a “surcharge action.”
What is a Surcharge?
“Surcharge” refers to the amount a court can charge a fiduciary for breaching his or her fiduciary duties.
What is a Surcharge Action?
A personal representative has a legal duty to settle and distribute a decedent’s assets in accordance with that person’s Last Will and Testament (“Will”) as quickly and efficiently as possible.
A surcharge action is the legal proceeding that can be brought in Florida to hold a personal representative personally liable for a breach of his or her duties.
A petition must be filed against the personal representative in probate court.
The surcharge potion must be brought by a person with standing to do so. In Florida, this means a person who meets the definition of an “interested person.” Although broad, the definition of “interested person” is not an unlimited one. The person bringing the action must be “reasonably expected” to be affected by its outcome.
In addition, the petition must allege:
(1) the existence of a fiduciary duty
(2) breach of that duty, and
(3) that the breach was the proximate cause of the petitioner’s damages.
A surcharge action can be used to force the personal representative to pay for the damages his/her action or inaction caused the estate or beneficiaries, or it can be used to remove the personal representative from his or her appointment.
Typical Reasons for Bringing a Surcharge Action.
Any number of factual scenarios could lead to the filing of a surcharge petition. However, below are some of the grounds for bringing a surcharge action. (Note: this is not an inclusive list but a mere sample.):
- Intentional misconduct of personal representative
- The personal representative improperly gains personally from decedent’s assets (i.e., self-dealing)
- Improper delegation of all of his/her duties to an attorney or other professional (this must go beyond mere assistance with these duties)
- Improper management of investments during pendency of administration
- Failure to object to creditor’s claims
- Mismanagement of a business operated by the estate
- Overpaying agents or employees hired by the personal representative
The responsibilities of a personal representative are many and not everyone is equipped to properly carry out a personal representative’s duties.
Surcharge actions are difficult and complicated litigations that often require tracing assets. If you think you may need to file a surcharge action, seek the advice of an experienced estate and probate lawyer.
Protecting Your Family is Just One Phone Call Away.
At the Law Offices of Samantha J. Fitzgerald, we work hard to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. When you work with the estate planning attorneys at the Law Offices of Samantha J. Fitzgerald, you get more than just an estate plan: you get peace of mind. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well. Contact us here or email us at: [email protected]