## Facts

- Barbara A. Rosenthal’s will placed the residuary estate in a trust, with Little River Bank & Trust Company serving as executor and trustee and Martha Peskin as a remainderman.
- During estate administration, the executor retained an attorney to handle the sale of an estate residence.
- After closing, the net sale proceeds were deposited into the attorney’s trust account rather than an account directly controlled by the executor or estate.
- The executor made repeated efforts on the day of closing to obtain the proceeds, but the attorney embezzled a substantial portion before the funds were recovered.
- The executor promptly discharged the attorney; the attorney died soon afterward, making recovery impracticable.
- Peskin sought a surcharge against the executor for the loss, alleging improper delegation and failure to protect estate funds.

## Issues

1. Whether an executor is liable to the estate for embezzlement of sale proceeds by an attorney-agent retained for an estate real estate transaction, absent negligent selection, negligent supervision, or failure to act promptly to protect the funds.

## Decision

- The appellate court reversed the probate court’s surcharge order.
- The executor was not liable for the embezzled proceeds because the attorney was properly employed and the loss occurred despite the executor’s diligence.
- The court rejected the claim that retaining counsel for the transaction was an improper delegation of fiduciary duties.
- The court found no “supine inaction” because the executor acted immediately and repeatedly to secure the funds.

## Legal Principles

- A fiduciary may be surcharged for losses caused by negligence, improper delegation, or failure to act when action is required.
- Retaining an attorney to assist with estate real estate matters is permissible when selection is reasonable and there is no basis to anticipate dishonesty.
- When a fiduciary uses due care in selecting and overseeing an agent and responds promptly to protect the estate, the fiduciary is not liable for losses caused solely by the agent’s independent wrongdoing.
- Causation matters: the fiduciary is not a guarantor against an agent’s criminal conduct when the loss is not attributable to the fiduciary’s lack of due care.

## Conclusion

The court held that a corporate executor could not be surcharged for an attorney’s embezzlement of estate sale proceeds where the attorney was reasonably retained and the executor acted promptly and diligently to recover the funds, making the loss attributable to the attorney’s wrongdoing rather than the executor’s breach of duty.


Little River Bank & Tr. Co. v. Peskin (In re Estate of Rosenthal), 189 So. 2d 507 (Fla. Dist. Ct. App. 3d Dist. 1966)