January 28, 2015
Authored by: Luke Lantta
There is a difference between a person acting in her individual capacity and acting in her representative capacity. We have seen that this difference may matter when signing documents. And we have seen that it may also matter when filing a lawsuit that involves trust property. Now, in Kozinski v. Stabenow, a Florida appellate court tells us that it may also matter when seeking to surcharge a trustee and personal representative.
In this case, after the trustor died, the trustee of a trust created by the trustor filed a notice of trust. The trustee was also the representative of the trustor’s estate and filed a separate petition for administration of the estate. The two cases were consolidated and a petition was filed by two beneficiaries of the will and trust to review the compensation of the trustee/personal representative. Those beneficiaries also objected to accountings based on the payment of allegedly excessive fees from trust and estate assets. The beneficiaries requested that the court determine the reasonableness of the compensation and to enter a surcharge or disgorgement order.
The petition for review of compensation was not formally served on the trustee/personal representative. The trustee/personal representative sought to dismiss the petition on the grounds that, where the beneficiaries sought surcharge and disgorgement, such relief was against the trustee/personal representative in her individual capacity which required naming and serving her in that capacity.
The appellate court agreed with the trustee/personal representative. A petition in a probate case filed pursuant to Fla. Stat. 733.7175 and 736.0206 (which permit proceedings for review of compensation of a trustee and employees of a trustee and permit a court to make an appropriate “refund” if there is excessive compensation) was considered an adversary proceeding that required service by formal notice under the Florida Probate Rules. The reason was that a “refund” ordered pursuant to either of these statutes was tantamount to a surcharge. Thus, there must be personal service on the fiduciary in an individual capacity, and not in any representative capacity.