Understanding Trustee Obligations Under Florida Trust Law
Trustees have several obligations under the Trust code and also additional obligations as set forth in the Trust Agreement. Some of these obligations can be distilled into general concepts or general obligations of the Trustee to the beneficiaries.
Fundamentally understand that the relationship between Trustee and beneficiaries is a fiduciary relationship. That is the highest form of care under Florida law and requires all actions to be done for the benefit of the beneficiaries.
The duties and powers of a trustee are usually derived from the terms of the trust itself. However, in addition to the terms of the trust, the Florida Trust Code states the enumerated duties and powers of a trustee. Florida Statutes §736.0801-736.0817 highlight the duties and powers that a trustee owes to beneficiaries of a trust.
Core Fiduciary Duties of Florida Trustees
736.0801: Duty to Administer the Trust
Tras la aceptación de un fideicomiso, el fiduciario deberá administrar el fideicomiso de buena fe, de conformidad con sus términos y propósitos y los intereses de los beneficiarios, y de acuerdo con este código.
A trustee, upon accepting their role as trustee, shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this code. As discussed earlier, oftentimes the trust will have provisions as to how the trust shall be administered and what duties and obligations the trustee is empowered with.
But as the statute states, a trustee must always follow the trust code upon administering the trust.
736.0803: Imparcialidad
Si un fideicomiso tiene dos o más beneficiarios, el fideicomisario deberá actuar con imparcialidad en la administración de los bienes fideicomitidos, teniendo debidamente en cuenta los intereses respectivos de los beneficiarios.
If a trust has two or more beneficiaries, the trustee shall act impartially in administering the trust property, giving due regard to the beneficiaries’ respective interests. This means that the trustee must act fairly towards all of the beneficiaries and treat them equally.
However, a settlor of a trust can put provisions into the trust to give trustees discretion as to how much trust income to give to each beneficiary. But if a trust, for example, says that all beneficiaries shall receive trust income equally, then the trustee must honor the intent of the settlor of the trust and treat the beneficiaries equally, fairly, and impartially.
736.0804: Prudent Administration
El fideicomisario administrará el fideicomiso como lo haría una persona prudente, teniendo en cuenta los fines, las condiciones, los requisitos de distribución y otras circunstancias del fideicomiso. Para cumplir esta norma, el fideicomisario deberá actuar con diligencia, pericia y precaución razonables.
El fideicomisario deberá administrar el fideicomiso como lo haría una persona prudente, teniendo en cuenta los fines, las condiciones, los requisitos de distribución y otras circunstancias del fideicomiso. Para cumplir esta norma, el fideicomisario deberá actuar con diligencia, pericia y cautela razonables.
The Critical Duty of Loyalty: Florida’s Highest Fiduciary Standard
736.0802: Duty of Loyalty
(1) Entre el fideicomisario y los beneficiarios, el fideicomisario administrará el fideicomiso exclusivamente en interés de los beneficiarios.
(2) Subject to the rights of persons dealing with or assisting the trustee as provided in s. 736.1016, a sale, encumbrance, or other transaction involving the investment or management of trust property entered into by the trustee for the trustee’s own personal account or which is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction unless:
- (a) La transacción estaba autorizada por los términos del fideicomiso;
- (b) La transacción fue aprobada por el tribunal;
- (c) The beneficiary did not commence a judicial proceeding within the time allowed by s. 736.1008;
- (d) The beneficiary consented to the trustee’s conduct, ratified the transaction, or released the trustee in compliance with s. 736.1012;
- (e) La transacción se refiere a un contrato celebrado o a un crédito adquirido por el fideicomisario cuando esa persona no había llegado a ser fideicomisario ni tenía previsto serlo;
- (f) La transacción fue consentida por escrito por un fideicomitente del fideicomiso mientras el fideicomiso era revocable;
- (g) The transaction is one by a corporate trustee that involves a money market mutual fund, mutual fund, or a common trust fund described in s. 736.0816(3); or
- (h) With regard to a trust that is administered by a family trust company, licensed family trust company, or foreign licensed family trust company operating under chapter 662, the transaction is authorized by s. 662.132(4)-(8).
Presumptively Invalid Transactions
(3)(a) Se presume que una venta, gravamen u otra transacción que implique la inversión o gestión de bienes fideicomitidos está afectada por un conflicto entre intereses personales y fiduciarios si la venta, gravamen u otra transacción es realizada por el fiduciario con:
- 1. El cónyuge del fideicomisario;
- 2. Los descendientes, hermanos, padres o cónyuges del fideicomisario;
- 3. Un funcionario, director, empleado, agente o abogado del fideicomisario; o
- 4. Una sociedad u otra persona o empresa en la que el fideicomisario, o una persona que posea un interés significativo en el fideicomisario, tenga un interés que pueda afectar al buen juicio del fideicomisario.
So transactions entered into for the Trustee for his or her own benefit are voidable unless these five set of contingencies occurred which is generally some prior authorization or ratification. The duty of loyalty is arguably the most important fiduciary duty that a trustee owes to the beneficiaries of a trust.
It has been said that this duty is the duty that all other fiduciary duties of the trustee stem from. A trustee shall administer the trust solely in the interests of the beneficiaries. This means that a trustee cannot engage in self-dealing behavior or create a conflict in any way between the trustee’s fiduciary duties and the trustee’s own personal interests.
In broad terms, if the self-dealing or benefit was not authorized by the beneficiaries, the trust agreement or the Court, it may very likely be a breach of trust which would allow the transactions to be voidable.
Some transactions are so beyond what a trustee is supposed to undertake they are presumed to be invalid. See 3(a) above. Those transactions are presumed to be invalid which is a critical shift in the burden required when litigating these issues.
When examining the validity of presumptively voidable transactions the Court will analyze whether the fairness of the transaction is such that it would have also occurred at similar terms with an independent party. In other words, whether it was an arm’s length transaction.
As set forth by the 4th DCA in Bronstein v. Bronstein:
“A trustee’s powers, however, are constrained by a duty of loyalty. Section 736.0802(1), Florida Statutes (2019), provides that “[a]s between a trustee and the beneficiaries, a trustee shall administer the trust solely in the interests of the beneficiaries.” While a trustee may pay from the trust costs and attorney’s fees incurred in any proceeding the beneficiaries may contest those fees and costs. See § 736.0802(10), Fla. Stat. (2019). “A trustee has the burden of proving the necessity of all expenses incurred by him or her, including attorneys’ fees.” In re Guardianship of Bloom, 295 So. 3d at 1259 (quoting Ortmann v. Bell, 100 So. 3d 38, 46 (Fla. 2d DCA 2011)). “When a trustee seeks to charge a trust corpus with an expense incurred by him, including attorney fees, the burden of proof is upon the trustee to demonstrate that the expense was reasonably necessary and that such expense was incurred for the benefit of the trust, and not for his own benefit nor the benefit of others.” Barnett v. Barnett, 340 So. 2d 548, 550 (Fla. 1st DCA 1976) (emphasis added); accord Ortmann.”
332 So. 3d 510.
Critical Information and Transparency Requirements
736.0813: Duty to Inform and Account
The trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.
(1) La obligación del administrador de informar y rendir cuentas incluye, entre otras, las siguientes:
This is a big one that we see. The Trustee has a duty to provide information and transparency. If the Trustee has not provided or refuses to provide information it will very likely be a breach of trust. The above referenced statute highlights some requirements of a trustee.
Key Requirements for Trust Information and Accountability
El deber de informar y rendir cuentas incluye:
- (a) Provide notice of the acceptance of the trust, trustee’s full name and address, and the application of the fiduciary lawyer-client privilege within 60 days of accepting the trust.
- (b) Notify qualified beneficiaries of the trust’s existence, identity of the settlor(s), right to request a copy of the trust instrument, right to accountings, and the fiduciary lawyer-client privilege within 60 days of knowledge that a trust has become irrevocable.
- (c) Provide a complete copy of the trust instrument upon reasonable request by a qualified beneficiary.
- (d) For irrevocable trusts, provide trust accounting at least annually, on trust termination, or on a change of trustee, as specified in s. 736.08135. Exception applies to certain family trust companies as defined in s. 662.111.
- (e) Provide relevant information about the trust’s assets, liabilities, and administration upon reasonable request by a qualified beneficiary.
These requirements ensure that beneficiaries remain informed about trust administration and can monitor the trustee’s performance of their fiduciary duties. Understanding these obligations is crucial for both trustees and beneficiaries when dealing with asset protection strategies and Medicaid planning.
Legal Consequences for Trustee Breaches
¿Cuáles son las consecuencias de incumplir las obligaciones de un fideicomisario según la legislación de Florida?
If a Trustee fails to fulfill his or her obligations under the Florida Trust code or the Trust agreement they can have significant liability. This would be in the form of a judgment for damages to the Trust assets and attorney fees.
A claim for breach of fiduciary duty under Florida law has three elements:
- (1) existence of a fiduciary duty;
- (2) breach of that duty; and
- (3) damage proximately caused by the breach.
Gracey v. Eaker, 837 So. 2d 348, 353 (Fla. 2002); Whittington v. Whittington, No. 6:19-CV-1631-Orl-40DCI, 2020 WL 8224607, at 2(M.D. Fla. Dec. 4, 2020).
When trustees breach their duties, the consequences can be severe and may impact estate planning strategies, including those designed for Medicaid planning and Florida probate. Beneficiaries should understand their rights to seek accountability and damages when trustees fail in their obligations.
Getting Legal Help with Trust Administration Issues
Understanding trustee obligations is essential for both trustees seeking to fulfill their duties and beneficiaries who need to protect their interests. These fiduciary relationships are complex and governed by detailed statutory requirements under Florida law.
Proper trust administration is also crucial when coordinating with other estate planning strategies, such as understanding Florida homestead rights or managing assets to comply with deadlines for contesting wills or trusts.
Need Help with Trust Administration or Disputes?
Contact Zoecklein Law for a free consultation about trustee obligations and beneficiary rights.
Si tiene problemas relacionados con la administración de un fideicomiso, llámenos. Estaremos encantados de ayudarle. Nuestra oficina litiga disputas de Fideicomiso en todo el Estado de Florida, y ofrecemos consultas gratuitas y sin compromiso.
-Brice Zoecklein, Esq.
877-206-0022.
Descargo de responsabilidad: La información contenida en este blog/sitio web tiene únicamente fines informativos y proporciona información general sobre la ley, pero no asesoramiento específico. Esta información no debe utilizarse como sustituto del asesoramiento de un abogado competente, ya que las leyes cambian y es necesario analizar los hechos de su caso concreto.
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