In Rosenkrantz v. Feit, 2011 Fla. App. LEXIS 19915 (Fla. 3rd DCA 12/14/11), sister brought a declaratory judgment action against her brother/co-agent[1] under their mother’s durable power of attorney. [2] Sister sought a declaration of her rights as a co-agent and an accounting. Sister alleged that she was unable to issue subpoenas to her mother’s bank to obtain bank account information, but could not issue the subpoenas, or obtain this information, without her brother’s concurrence which he refused to give. She alleged that her brother was not fulfilling his fiduciary role and refused fully to account for their mother’s assets. Sister sought declaratory relief to determine: 1) the extent to which she could act without the concurrence of a co-agent who could be acting in derogation of his fiduciary duty; and 2) whether she was entitled to an accounting from the co-agent.

HOLDING: The court held that if the allegations are proven as pled, sister acted properly and prudently in seeking to fulfill her fiduciary role. As a co-agent, sister had both the right and the duty to seek an accounting from her brother based upon her allegations of improper disbursements of their mother’s property.

REASONING: The court reasoned that co-agents under a durable power of attorney are liable “for failure either to participate in the administration of assets subject to the power or for failure to attempt to prevent a breach of fiduciary obligations thereunder.” §709.08(9)(d), F.S. Under §709.08(9)(a), “concurrence of both is required on all acts in the exercise of power.” Further, §709.08(8) provides that an agent is a fiduciary who must observe the standards of care applicable to trustees as described in s. 737.302. If the exercise of the power is improper, the agent is liable to interested persons as described in § 731.201 for damage or loss resulting from a breach of fiduciary duty by the agent to the same extent as the trustee of an express trust. Thus, those acting as co-agents must be guided by the same fiduciary principles applicable to co-trustees.

It goes without saying that co-trustees owe to each other, as well as to the beneficiaries of the trust, the duty and obligation to so conduct themselves as to foster a spirit of mutual trust, confidence, and cooperation to the extent possible. At the same time, the trustees should maintain an attitude of vigilant concern for the proper administration or protection of the trust business and affairs.

Although the court’s reasoning is based on §709.08, F.S. (2006), the court noted that the same reasoning applies to a durable power of attorney executed after the effective date of the new Florida Power of Attorney Act, i.e., 10/1/11. The new Act provides in part that:

– A principal may designate two or more persons to act as co-agents, and unless the power of attorney otherwise provides, each co-agent may exercise its authority independently. § 709.2111(1), Fla. Stat. (2011).

– If a power of attorney requires that two or more persons act together as co-agents, one or more of the agents may delegate to a co-agent the authority to conduct banking transactions pursuant to the power of attorney. § 709.2111(6).

– An agent may be required by a co-agent to disclose receipts, disbursements, or trans-actions conducted on behalf of the principal. § 709.2114(6).

– An agent (including a co-agent) may petition a court to construe or enforce a power of attorney, review the agent’s conduct, terminate the agent’s authority, remove the agent, and grant other appropriate relief. § 709.2116(1).

– An agent’s exercise of power may be challenged in a proceeding brought on behalf of the principal on the grounds that the exercise of the power was affected by a conflict of interest. § 709.2116(4).

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PRACTICE TIPS: Pursuant to §709.2111, F.S. (2011), an agent who does not participate in or conceal a breach of fiduciary duty committed by another agent, including a predecessor agent, is not liable for the actions or omissions of the other agent. However, an agent who has actual knowledge of a breach or imminent breach of fiduciary duty by another agent, including a predecessor agent, must take any action reasonably appropriate in the circumstances to safeguard the principal’s best interests.

[1] The term “agent” and “attorney in fact” are synonymous under the new Act. See §709.2102(1), F.S. (2011).

[2] The durable power of attorney was executed prior to the effective date of the new Florida Power of Attorney Act, i.e., 10/1/11.