Trusts are a crucial component of estate planning, offering a means for individuals to ensure their assets are managed and distributed according to their wishes. In Florida, beneficiaries of an irrevocable trust have several rights, but it’s imperative to understand and exercise these rights to avoid being taken advantage of. This article will delve into the intricacies of Florida trust litigation, focusing on the rights of beneficiaries and the responsibilities of trustees.
Trustee to Beneficiary: IT’S A FIDUCIARY RELATIONSHIP
Before delving into the intricacies of beneficiary rights under Florida trust law, it’s crucial to understand the fundamental relationship that exists between trustees and beneficiaries. This relationship, known as a fiduciary relationship, is the cornerstone of trust law and sets the stage for the rights and responsibilities that are involved in trust administration and litigation.
Defining the Fiduciary Relationship
A fiduciary relationship is a legal relationship of trust between two or more parties. In the context of a trust, the fiduciary relationship exists between the trustee and the beneficiaries. The trustee, as the fiduciary, is entrusted with the responsibility of managing the trust’s assets for the benefit of the beneficiaries.
Under Florida law, the trustee is obligated to act in the best interests of the beneficiaries, exercising the same level of care, skill, prudence, and diligence that a reasonable person would use in managing their own affairs. This includes a duty of loyalty, a duty of impartiality, and a duty to administer the trust according to its terms and purposes.
The Trustee’s Role as a Fiduciary
As a fiduciary, the trustee has a legal obligation to act solely in the best interests of the beneficiaries. This means the trustee must avoid conflicts of interest, not profit from their position unless expressly permitted by the trust document or by law, and not commingle trust assets with their own.
The trustee is also responsible for managing the trust’s assets in a prudent and responsible manner. This includes making sound investment decisions, protecting the trust’s assets, and ensuring the proper distribution of the trust’s income and principal according to the terms of the trust.
The Beneficiary’s Rights in a Fiduciary Relationship
In a fiduciary relationship, the beneficiaries have the right to expect the trustee to act in their best interests at all times. They have the right to be informed about the trust and its administration, to receive accountings from the trustee, and to receive distributions according to the terms of the trust.
If a trustee breaches their fiduciary duties, beneficiaries have the right to take legal action to protect their interests. This can include petitioning the court to remove the trustee, to recover lost assets, or to correct actions taken by the trustee that are contrary to the terms of the trust or the trustee’s fiduciary duties.
Now that we have a foundational understanding of the fiduciary relationship between trustees and beneficiaries, let’s delve into the specific rights of beneficiaries under the Florida Trust Code
- The Right to Contest the Trust
Beneficiaries have the right to contest the validity of the trust. However, Florida law stipulates that a revocable trust cannot be contested until it becomes irrevocable. This principle is rooted in the understanding that the settlor has the absolute right to terminate the trust at any time, making beneficiaries merely potential devisees until the trust becomes irrevocable. This was highlighted in the case of Ullman v. Garcia, 645 So. 2d 168 (Fla. Dist. Ct. App. 1994), where it was noted that a revocable trust cannot be contested until the death of the settlor.
- The Right to Be Informed – AKA Full Transparency
This is a big one, and one that I see abused the most. Beneficiaries are entitled to transparency and information from the Trustee because of that fiduciary relationship. Beneficiaries have the right to receive accountings from the trustee. As per Florida law, trustees of irrevocable trusts are required to provide annual accountings to each qualified beneficiary. This duty is in addition to the trustee’s general duty to keep beneficiaries reasonably informed about the trust and its administration. This is a critical right that beneficiaries should be aware of and exercise to ensure transparency and accountability in the management of the trust.
This right is codified in the trust code which provides;
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) The trustee’s duty to inform and account includes, but is not limited to, the following:
(a) Within 60 days after acceptance of the trust, the trustee shall give notice to the qualified beneficiaries of the acceptance of the trust, the full name and address of the trustee, and that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.
(b) Within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, the trustee shall give notice to the qualified beneficiaries of the trust’s existence, the identity of the settlor or settlors, the right to request a copy of the trust instrument, the right to accountings under this section, and that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.
(c) Upon reasonable request, the trustee shall provide a qualified beneficiary with a complete copy of the trust instrument.
(d) A trustee of an irrevocable trust shall provide a trust accounting, as set forth in s. 736.08135, from the date of the last accounting or, if none, from the date on which the trustee became accountable, to each qualified beneficiary at least annually and on termination of the trust or on change of the trustee. Notwithstanding s. 736.0105(2)(s) or the duties under this paragraph, if a family trust company, licensed family trust company, or foreign licensed family trust company, as defined in s. 662.111, is a trustee of an irrevocable trust, the terms of the trust may permit for accounting to the qualified beneficiaries only at the termination of the trust; upon the removal, resignation, or other event resulting in a trustee ceasing to serve as a trustee; or upon demand of a qualified beneficiary or the representative of a qualified beneficiary. This paragraph may not be construed to prohibit a trustee that is a family trust company, licensed family trust company, or foreign licensed family trust company from voluntarily accounting to the qualified beneficiaries annually or at other times selected by such trustee.
(e) Upon reasonable request, the trustee shall provide a qualified beneficiary with relevant information about the assets and liabilities of the trust and the particulars relating to administration.
Paragraphs (a) and (b) do not apply to an irrevocable trust created before the effective date of this code, or to a revocable trust that becomes irrevocable before the effective date of this code. Paragraph (a) does not apply to a trustee who accepts a trusteeship before the effective date of this code.
(2) A qualified beneficiary may waive the trustee’s duty to account under paragraph (1)(d). A qualified beneficiary may withdraw a waiver previously given. Waivers and withdrawals of prior waivers under this subsection must be in writing. Withdrawals of prior waivers are effective only with respect to accountings for future periods.
(3) The representation provisions of part III apply with respect to all rights of a qualified beneficiary under this section.
(4) As provided in s. 736.0603(1), the trustee’s duties under this section extend only to the settlor while a trust is revocable.
(5) This section applies to trust accountings rendered for accounting periods beginning on or after July 1, 2007.
Under Florida Trust Code 736.0813, the trustee has an obligation to keep the qualified beneficiaries of the trust reasonably informed about the trust and its administration. This duty encompasses several responsibilities:
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Acceptance of the Trust: Within 60 days of accepting the trust, the trustee must notify the qualified beneficiaries about the acceptance of the trust, the full name and address of the trustee, and the application of the fiduciary lawyer-client privilege.
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Creation of an Irrevocable Trust: Within 60 days of the creation of an irrevocable trust, or when a formerly revocable trust becomes irrevocable, the trustee must inform the qualified beneficiaries about the trust’s existence, the identity of the settlor, the right to request a copy of the trust instrument, the right to accountings, and the application of the fiduciary lawyer-client privilege.
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Provision of Trust Instrument: Upon reasonable request, the trustee must provide a qualified beneficiary with a complete copy of the trust instrument.
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Trust Accounting: A trustee of an irrevocable trust must provide a trust accounting at least annually and on termination of the trust or change of the trustee. However, the terms of the trust may permit accounting to the qualified beneficiaries only at the termination of the trust, upon the removal, resignation, or other event resulting in a trustee ceasing to serve as a trustee, or upon demand of a qualified beneficiary.
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Information about Assets and Liabilities: Upon reasonable request, the trustee must provide a qualified beneficiary with relevant information about the assets and liabilities of the trust and the particulars relating to administration.
Waiver of Trustee’s Duty to Account
A qualified beneficiary has the right to waive the trustee’s duty to account. This waiver must be in writing. A qualified beneficiary may also withdraw a waiver previously given, effective only with respect to accountings for future periods.
- The Right to Receive Distributions
Beneficiaries have the right to receive distributions according to the terms of the trust. However, this right may be limited by the terms of the trust itself. For instance, a spendthrift provision may prevent a beneficiary from anticipating, pledging, selling, transferring, or encumbering their interest in the trust. Additionally, a spendthrift provision may protect the beneficiary’s interest from creditors. This principle was discussed in the case of Darian v. Weymouth, 76 So. 3d 15 (Fla. Dist. Ct. App. 2012), which noted that a beneficiary’s interest in a trust vests upon the death of the settlor.
The Importance of Legal Guidance
Navigating the complexities of Florida trust litigation can be challenging. Beneficiaries need to be aware of their rights and trustees need to ensure they are fulfilling their duties. Understanding the intricacies of trust law and staying updated with the latest case law is crucial for anyone involved in trust administration or litigation in Florida.
If you’re a beneficiary and you’re unsure about your rights or if you believe they’re being violated, it’s essential to seek legal guidance. Our firm specializes in Florida trust litigation. Our attorneys take cases throughout the State of Florida and we can help you understand your rights, guide you through the process, and ensure your interests are protected. If you’re a beneficiary and you suspect wrongdoing we would love to speak with you. We offer free, no obligation consultations.
-Brice Zoecklein, Esq.
813-501-5071
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.
