Is it permissable for a personal representative of an estate to make interest-free loans to himself from the assets of the estate?

The personal representative is also one of the 3 heirs of the estate. The Will does not make any provision for the PR to loan money to himself. He is one of 3 siblings who were each bequeathed 1/3 of the estate. The other 2 heirs did not know he was making these loans to himself. The loans have been repaid, without interest. Should we speak to a probate attorney? In Winter Haven, FL.

Asked on November 30, 2010 under Estate Planning, Florida

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A personal representative has a "fiduciary duty" to an estate and the beneficiaries. And it appears that he has breached this duty.  Basically, a fiduciary duty is a legally implied duty which imposes the highest standard of care under the law.  Accordingly, a fiduciary is expected to put the best interests of the entity/person they owe the duty to above all else. This relationship is highlighted by good faith, loyalty and trust. Therefore a fiduciary must not put their personal interests before their duty, and must not profit from their position as a fiduciary.  The failure of a fiduciary to properly perform their duties may give rise to a claim.  

In your case, the fiduciary (PR) has engaged is self-dealing (making loans to himself without proper approval) and has wasted estate assets (not paying interest).  At this point, you need to contact an attorney.  You should also notify the probate court of his breach and request his removal as PR.  Additionally, you will then need to have someone else appointed who can challenge any transfers and transactions that may have been made which were not in the best interests of the estate (and get the money refunded), and move to have an accounting of the estate.  If the PR, in his capacity as executor, is bonded (insured) you may also be able to go after any insurance money to recoup losses, if any. Again, a probate lawyer can best guide you in this.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.