McCormick v. Cox

McCormick v. Cox, 38 Fla. L. Weekly D1723b (Fla. 3d DCA 2103):

Here, McCormick, an attorney, prepared two trusts which owned a single asset- 100 acres in Massachusetts. At the time of the decedent/settlor's death, the property operated as a nine-hole golf course.  Following the decedent's death, McCormick arranged for an appraisal of the property as of his date of death.  The appraiser reported a fair market value of the property, as an operating golf course, of $2,500,000.  McCormick's billing records indicated that almost immediately McCormick began work to convert the property from a golf course to residential property.  Yet the appraisal he used on the decedent's estate tax return did not reflect this "highest and best use" of the property, nor did McCormick communicate with the beneficiaries about the value. The property ultimately sold to the Town of Lynnfield for $12,000,000.  To avoid capital gain tax, McCormick structured a like-kind exchange under section 1031 of the Internal Revenue Code.  The beneficiaries supported the like-kind exchange, but did not waive their right to contest the initial under-valuing of the property.

Ultimately the trial court removed McCormick for breach of fiduciary duties, found that McCormick and his law firm breached their fiduciary duties as attorney's for the trusts, surcharged the trustee and his law firm $2,146,812 in expenses incurred due to their undervaluation of the property, found the legal fees were unreasonable and required disgorgement of $1,348,000 in attorney's and trustee's fees.

The Appellate Court upheld McCormick's removal because the beneficiaries introduced competent substantial evidence of his breaches.  They used an experienced probate and trust attorney as an expert, they presented evidence that McCormick was required to post bond but did not, McCormick conceded that he did not provide the beneficiaries with annual accountings, and he took a seven-figure trustee fee from trust funds.  The Court also upheld the surcharge and disgorgement.

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