Probate, trust, guardianship and inheritance litigation
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Can a Florida Court Restrict a Defendant’s Assets To Ensure Collection Of a Potential Money Judgment?

States » Florida » Can a Florida Court Restrict a Defendant’s Assets To Ensure Collection Of a Potential Money Judgment?

In Trombino v. Echeverria, a September 21, 2022 opinion from the Florida Fourth DCA, the court reversed an order entered in a trust dispute restricting  assets (the sale proceeds of real property) prior to the entry of a judgment.

The Facts of Trombino v. Echeverria

Jose and Dorothy Echeverria created two revocable trusts and an irrevocable family trust.  The trust agreements provided that, upon the death of the first spouse, certain assets of that spouse’s individual trust would be distributed to the other spouse, and the remainder would be held in the family trust. Upon the death of the second spouse, the assets of that spouse’s individual trust would be added to the family trust, and the family trust would then be distributed to Suzanne and Dale, the Echeverria’s two adult children, as specified.

Jose died in 2009. One asset of Dorothy’s trust after Jose’s death was a residential property in Highland Beach, Florida.  In 2016, Dorothy deeded a life estate in the property to herself, with the remainder in fee simple absolute to Suzanne.  A few weeks later, Dorothy resigned as trustee of all of the trusts, and Suzanne became successor trustee.  Dorothy died in 2021.  Suzanne listed the Highland Beach property for sale.

Shortly after Dorothy’s death, Dale filed a petition against Suzanne for breach of fiduciary duties alleging mismanagement of assets and demanded an accounting of Dorothy’s individual trust and the family trust.  His claims were not related to the ownership of the Highland Beach property.

After Dorothy listed the Highland Beach property for sale, Dale filed a series of motions asking the court to require her to deposit the net proceeds of the sale into a restricted depository pending the outcome of his petition. He alleged that she did not have any other assets in Florida and planned to move to North Carolina, and he did not want to have to “chase her down” to collect a judgment if he prevailed on his petition. He argued that the court could restrict the sale proceeds under either section 69.031(1), Florida Statutes (2021), or section 736.1001(2)(c), Florida Statutes (2021).

The court granted Dale’s motions and entered an order requiring Suzanne to deposit the net proceeds from the sale of the Highland Beach property into a restricted depository. The court did not state the legal basis for its order.

Can a Florida Court Restrict a Defendant’s Assets To Ensure Collection Of a Potential Money Judgment?

Generally, no, a court cannot restrict a defendant’s assets solely to ensure collection of a potential money judgment under Florida law, even when its alleged that the assets may be dissipated before the judgment is entered.

Can a Florida Court Restrict Estate Assets?

Yes, a court may order the personal property of an “estate in process of administration” to be placed with a “bank, trust company, or savings and loan association” when “the size of the bond required of the officer is burdensome” or “for other cause.”  See section 69.031, Fla. Stat.

In this case, the Highland Beach property, and the proceeds from the sale thereof, were not the personal property of an estate in process of administration, and the statute did not apply. The property passed to Suzanne in fee simple absolute upon Dorothy’s death and never became an asset of the family trust. See BankAtlantic v. Estate of Glatzer, 61 So. 3d 1222, 1223 (Fla. 3d DCA 2011) (holding that section 69.031(1) did not support an order in a probate case restricting funds that were not part of the estate).

Can a Florida Trustee Be Ordered To Restore Assets To a Trust?

Yes, as a remedy in a breach of trust case. Section 736.1001(2)(c), provides that the court may order a trustee, as a remedy for a breach of trust, to pay money or otherwise restore the assets of the trust.  The Court determined this statute also did not apply to permit the court to restrict defendant’s assets to ensure collection of a possible money judgment, stating:

This statute only describes the type of judgment that may be entered if Dale prevails on his claims that Suzanne breached her fiduciary duties as trustee; it does not provide any basis for the restriction of Suzanne’s personal assets before a judgment has been entered.

In summary, the court did not have any legal authority to require Suzanne to deposit the proceeds from the sale of the Highland Beach property into a restricted depository prior to the entry of a judgment against her.  The judgment was reversed.