When it comes to managing trusts in Florida, trustees have a paramount responsibility to uphold the best interests of beneficiaries. This includes maintaining accurate records, supporting disbursements made from the trust, and acting in a transparent and accountable manner. Failure to meet these obligations can result in trust litigation, where beneficiaries may challenge the actions of the trustee. In this blog post, we will explore the necessity of proper accounting, objections to accounting, and available remedies for breach of trust in Florida. By examining relevant court cases, we will highlight the importance of maintaining comprehensive records, justifying expenses, and the potential consequences trustees may face for inadequate accounting.
I. The Importance of Proper Accounting
Trustees are legally obligated to maintain accurate records of trust transactions. In Florida, any doubts or obscurities are resolved against the trustee, emphasizing the importance of clear and thorough accounting practices. The case of Bravo v. Sauter (727 So.2d 1103, Fla. 4th DCA 1999) serves as a prime example. In this case, an estate beneficiary challenged certain expenses made by the personal representative, who also served as the successor trustee of an inter vivos trust. The appellate court reversed the ruling, as the trustee’s accounting failed to meet the burden of proving that certain miscellaneous expenses were incurred for the estate. Insufficient supporting evidence and the failure to include income earned by the estate’s assets weakened the trustee’s position.
Similarly, the case of In re Strickler Estate (47 A.2d 134, Pa. 1946) emphasizes the need for proper accounting and supporting vouchers. The court affirmed a lower court’s decision to disallow a trustee’s credits for alleged expenditures due to the trustee’s failure to justify them adequately. Unsupported testimony is generally insufficient to justify disbursements, underscoring the importance of proper documentation.
II. Objections to the Accounting
Beneficiaries in Florida have six months to challenge and object to an accounting after receiving it alongside a limitation notice. To address concerns effectively, beneficiaries must file an action in the circuit court, seeking a review and settlement of the accounting (F.S. 736.0201(4)(d)). It is crucial to initiate a formal legal action instead of solely voicing objections to the trustee. According to F.S. 736.1008(2), beneficiaries are generally barred from bringing an action for breach of trust if the matter was adequately disclosed in a trust disclosure document, unless the claim is asserted within six months of receiving the trust disclosure document or a limitation notice.
Predicating a legal action on a breach of fiduciary duty claim becomes viable when the accounting reveals improper handling of trust assets or a breach of fiduciary duty by the trustee. Beneficiaries must demonstrate that a breach of trust occurred due to inadequate disclosure or improper accounting.
III. Burden of Proof and Remedies for Failure to Account or Improper Accounting
When objections are raised against acts or transactions presented in the accounting, the burden of proof lies with the trustee. However, if the trustee establishes a prima facie case, the burden of proving contrary evidence may shift to the objecting party (Baker v. Lake Lorraine, Inc., 562 S.W.2d 374, Mo. App. 1978).
Florida law provides various remedies for breach of trust under F.S. 736.1001. The court has the authority to compel the trustee to perform their duties, enjoin the trustee from committing further breaches, order the trustee to redress a breach by repayment or restoration of property, and require the trustee to account. Other potential remedies include the appointment of a special fiduciary, suspension or removal of the trustee, reduction or denial of compensation, voiding of trustee acts, imposition of liens or constructive trusts, and any other appropriate relief as determined by the court.
IV. Consequences of Inadequate Accounting
Trustees who fail to maintain proper records and account for trust transactions may face significant consequences. Keye v. Gautier (684 So. 2d 210, Fla. Dist. Ct. App. 1996) demonstrates the repercussions of mismanaging and misappropriating trust funds. In this case, the trustee lent funds from the trust corpus to themselves without properly documenting the transaction, which exposed the trust to unnecessary risks.
Another case, Beaubien v. Cambridge Consolidated, Ltd. (652 So. 2d 936, Fla. Dist. Ct. App. 1995), emphasizes the duty of a trustee to render an accounting to beneficiaries. Failure to do so can lead to allegations of breach of trust, as seen when the trustee mismanaged trust business and failed to account for specific trust assets.
Additionally, the case of Brigham v. Brigham (11 So. 3d 374, Fla. Dist. Ct. App. 2009) highlights the consequences of self-dealing and improper transfers of trust property by a trustee. The court emphasized that such actions require prior court approval and failure to obtain it can lead to voidance of the transaction.
Proper accounting is essential for trustees in Florida to fulfill their fiduciary duty and avoid trust litigation. Trustees must maintain accurate records, justify expenses with supporting documentation, and provide clear and distinct accounts of trust transactions. Beneficiaries have the right to object to inadequate accountings and seek remedies for breach of trust. Through legal precedents, it is evident that courts expect trustees to fulfill their obligations. Failure to do so can result in personal liability, removal as a trustee, and potential damages.
If you find yourself involved in a trust dispute or require assistance with trust litigation, our experienced legal team at Zoecklein Law is here to help. With our expertise in Florida trust litigation, we can navigate the complexities of your case and advocate for your rights. Contact us today to schedule a consultation and let us guide you through the legal process with professionalism and dedication.
Disclaimer: The information contained in this blog/website is for informational purposes only and provides general information about the law but not specific advice. This information should not be used as a substitute for advice from competent legal counsel as laws change and the facts in your specific case need to be analyzed.