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How The Rules For Compensating Personal Representatives And Trustees Can Differ Under Florida Law

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A person serving as the personal representative of a probate estate or the trustee of a trust is normally entitled to reasonable compensation for their services. In some cases, a person may serve in both roles and be entitled to compensation in each capacity. But the rules governing such compensation may differ depending on the circumstances.

Florida Appeals Court: Homestead Exemption Only Applies to Probate, Not Trusts

A recent decision from the Florida Fifth District Court of Appeals, Lanford v. Phemister, provides a case in point. The legal dispute in this case centered on a home that was owned by a woman named Dillard, who died in 2016. Dillard’s will left her homestead–her primary residence in Florida–to a testamentary trust, i.e., a trust created under the will itself.

The probate court appointed a woman named Phemister as both personal representative of Dillard’s probate estate and trustee of the testamentary trust. Dillard’s sister was the primary beneficiary of the trust, with a separate charitable trust designated as the contingent remainder beneficiary.

Phemister later sold the homestead property with the court’s permission. The sister died in 2018, which meant the remainder of Dillard’s estate went to the charitable trust. This still left the proceeds from the sale of Dillard’s home. Phemister wanted to use those proceeds to pay for her work as both personal representative and trustee. The probate court granted that request.

On appeal, however, the Fifth District said there was a problem. Since the sale involved Dillard’s homestead, special rules applied. Florida’s Constitution provides specific protections for designated homestead properties. Specifically, when a homestead property passes to certain heirs, it does so outside of the normal probate process and cannot be used to pay the “administrative expenses” of the estate.

In this case, the transfer of the home from Dillard to her sister via the testamentary trust qualified for these homestead protections. As such, Phemister was not entitled to use the proceeds from the sale to pay her fees as personal representative.

That said, Phemister could recover her fees for serving as the trustee from the sale proceeds. The Fifth District noted that homestead protections do not apply against a trustee in this situation. But since the probate court’s order failed to distinguish between Phemister’s compensation as trustee versus that as personal representative, it was necessary for the lower court to revise its original fee order. 

Speak with a Florida Estate and Trust Litigation Attorney Today

It is not uncommon for the same person to serve as personal representative and trustee of a revocable or testamentary trust. But each role is legally distinct and often subject to different requirements under Florida law. An experienced Pompano Beach trustee disputes lawyer can advise you on these issues and represent you should litigation become necessary. Contact the offices of Mark R. Manceri, P.A., today to schedule a consultation.

Source:

scholar.google.com/scholar_case?case=12657307755996766703

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