FLORIDA LAW REMOVAL OF A TRUSTEE

My office litigates trust disputes throughout the state of Florida. One major recurring topic is the removal of Trustees. We will explore some of the reasons why a Trustee can be removed.

Here are the more common reasons:

1. Breach of Fiduciary Duty: If a trustee violates their fiduciary duties, including mismanaging trust assets or failing to act in the best interests of the beneficiaries, they may be removed. This is probably the most litigated ground for removal. Fiduciary obligations are the highest owed under Florida law.
2. Conflict of Interest: If a trustee has a conflict of interest with the trust or the beneficiaries, such as engaging in self-dealing or using trust assets for personal gain, they may be removed.
3. Incapacity.
4. Willful Misconduct like fraud or theft.
5. Failure to Follow Court Orders.
6. Lack of Qualifications.
7. Conflict among Co-Trustees.

8. Other Good Cause.

A good place to start in the analysis regarding removal under Florida law is Fla. Stat. 736.0706 which provides:

(1) The settlor, a cotrustee, or a beneficiary may request the court to remove a trustee, or a trustee may be removed by the court on the court’s own initiative.

(2) The court may remove a trustee if:

(a) The trustee has committed a serious breach of trust;

(b) The lack of cooperation among cotrustees substantially impairs the administration of the trust;

(c) Due to the unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries; or

(d) There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available.

(3) Pending a final decision on a request to remove a trustee, or in lieu of or in addition to removing a trustee, the court may order such appropriate relief under s. 736.1001(2) as may be necessary to protect the trust property or the interests of the beneficiaries.

Section 736.0706 provides that a trustee may be removed if they have committed a serious breach of trust, there is a lack of cooperation among co-trustees, they are unfit or unwilling to administer the trust, or there has been a substantial change in circumstances.

Several cases have applied and interpreted this statute, providing additional guidance on the grounds for removal of a trustee. In Wallace v. Comprehensive Pers. Care Servs., the court held that the probate court has the power to remove a trustee even if the trust document contains other methods for removal. This case emphasizes that the statutory grounds for removal take precedence over any provisions in the trust document.

In Kountze v. Kountze, the court emphasized that a factual finding must be made as to the trustee’s unfitness, unwillingness, or persistent failure to administer the trust effectively before removal is warranted.

In Parr v. Cushing, the court noted that a trustee may be removed for abuse or wrongdoing in the administration of the trust, mismanagement, or hostility or tension with beneficiaries. However, the court cautioned that hostility or tension alone is not sufficient grounds for removal. Similarly, in Gresham v. Strickland, the court reiterated that removal generally requires a clear showing of abuse or wrongdoing.

Several cases have also affirmed the removal of a trustee for breaching their fiduciary duty. For example, in Demello v. Buckman, the court affirmed the removal of a trustee for a conflict of interest and breach of fiduciary duty. In Brigham v. Brigham, the court discussed the duties of a trustee, including the duty to administer the trust diligently for the benefit of the beneficiaries and to deal impartially with the trust beneficiaries.

The removal of a trustee is a serious matter that requires careful consideration of the specific circumstances and legal procedures involved. The Florida Trust Code provides a framework for trustee removal in Section 736.0706, which outlines the grounds and procedures for removing a trustee in Florida.

Under Section 736.0706(1), a trustee may be removed if the settlor, a co-trustee, or a beneficiary requests the court to remove the trustee, or if the court removes the trustee on its own initiative. This provision recognizes that there may be situations where a trustee is not fulfilling their duties, and someone needs to take action to protect the interests of the trust and its beneficiaries.

Section 736.0706(2) outlines the specific grounds for removal of a trustee. For example, a trustee may be removed if they have committed a serious breach of trust. This could include situations where a trustee has mismanaged trust assets, failed to act in the best interests of the beneficiaries, or engaged in self-dealing.

Another ground for trustee removal is a lack of cooperation among co-trustees that substantially impairs the administration of the trust. For instance, if two co-trustees cannot agree on how to administer the trust, and their lack of cooperation is negatively impacting the trust’s administration, the court may remove one of the co-trustees.

In addition, a trustee may be removed if they are unfit, unwilling, or persistently failing to administer the trust effectively, and the court determines that removal of the trustee best serves the interests of the beneficiaries. For example, in one case I handled, a trustee was unwilling to follow the terms of the trust agreement and was not acting in the best interests of the beneficiaries. The court removed the trustee and appointed a suitable successor trustee to manage the trust effectively.

Finally, a trustee may be removed if there has been a substantial change of circumstances, or if all of the qualified beneficiaries request removal, the court finds that removal best serves the interests of all the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable co-trustee or successor trustee is available. For instance, if a trust is created for the benefit of a minor child, and the trustee is no longer able to effectively manage the trust due to their age or illness, the court may remove the trustee and appoint a successor trustee.

Section 736.0706(3) provides that the court may order appropriate relief under Section 736.1001(2) to protect the trust property and the interests of the beneficiaries while a final decision on the removal request is pending. This provision ensures that the trust property is protected during the removal process and that the interests of the beneficiaries are safeguarded.

TRANSFER OF ASSETS AFTER REMOVAL & ATTORNEY FEES

After removal the former Trustee must deliver Trust property to a new Trustee to protect the Trust assets. Fla. Stat. 736.0707 provides:

736.0707. Delivery of property by former trustee

(1) Unless a cotrustee remains in office or the court otherwise orders and until the trust property is delivered to a successor trustee or other person entitled to the property, a trustee who has resigned or been removed has the duties of a trustee and the powers necessary to protect the trust property.

(2) A trustee who has resigned or been removed shall within a reasonable time deliver the trust property within the trustee’s possession to the cotrustee, successor trustee, or other person entitled to the property, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes. The provisions of this subsection are in addition to and are not in derogation of the rights of a removed or resigning trustee under the common law.

Of critical importance is that Florida law allows for the recovery of attorney fees if you establish a breach of fiduciary obligation which is often the predicate for removal. Fla. Stat. 736.1004 provides the entitlement to fees:

736.1004. Attorney’s fees and costs

(1)(a) In all actions for breach of fiduciary duty or challenging the exercise of, or failure to exercise, a trustee’s powers; and

(b) In proceedings arising under ss. 736.0410–736.0417,the court shall award taxable costs as in chancery actions, including attorney fees and guardian ad litem fees.

(2) When awarding taxable costs under this section, including attorney fees and guardian ad litem fees, the court, in its discretion, may direct payment from a party’s interest, if any, in the trust or enter a judgment that may be satisfied from other property of the party, or both.

So subsection (1) states that in actions for breach of fiduciary duty or challenging a trustee’s exercise or failure to exercise their powers, and in proceedings arising under Sections 736.0410-736.0417, the court shall award taxable costs, including attorney’s fees and guardian ad litem fees.

This means that if a beneficiary or other interested party brings a legal action against a trustee alleging breach of fiduciary duty or challenging the trustee’s actions, the court may award attorney’s fees and other costs to the prevailing party. This provision helps ensure that beneficiaries and other parties are able to pursue legal action against trustees who have acted improperly or breached their fiduciary duties without having to bear the full burden of legal costs.

Subsection (2) provides guidance on how the court may direct payment of taxable costs. The court has the discretion to direct payment from the party’s interest in the trust, if they have one, or to enter a judgment that may be satisfied from the party’s other assets or property. This provision helps ensure that the party responsible for the improper actions or breach of fiduciary duty is held accountable for the costs associated with the legal action.

Chancery actions are legal actions that are typically brought in equity courts, which are separate from the courts that handle criminal and civil matters. Chancery courts are often used to resolve disputes related to trusts, estates, and other complex legal matters. The reference to chancery actions in Section 736.1004 means that the taxable costs awarded in trust-related legal actions will be similar to those awarded in other equity court proceedings.

For example, if a trustee is accused of mismanaging trust assets, a beneficiary may bring a legal action to challenge the trustee’s actions. If the court finds that the trustee did, in fact, breach their fiduciary duty, the court may award attorney’s fees and other costs to the prevailing party. The court may direct payment of these costs from the trustee’s interest in the trust, or from their other assets or property.

The removal of a trustee is a complex legal process that requires careful consideration of the specific circumstances involved. Florida Courts will not allow the removal for petty differences. On the other hand, if there is danger or damage to the assets there are ample grounds from removal under Florida law and once removed a Trustee must deliver trust assets and can be liable for attorney fees and costs for the removal proceedings. Our attorneys litigate Trust disputes throughout the State of Florida. If you have any questions regarding Trusts give call us for a free consultation. 813-501-5071.

• Brice Zoecklein, Esq.

If you found this article useful, you may also be interested in these trust-related articles from our blog:

1. Florida Trust Administration Basics: Learn the fundamentals of trust administration in Florida.

2. Florida Trust Administration Basics 2: Dive deeper into the nuances of trust administration in the state.

3. How to Challenge or Contest a Trust in Florida: Understand the process of contesting a trust in Florida.

4. Jurisdiction and Venue Basics for Florida Trust Litigation: Learn about jurisdiction and venue considerations for trust litigation in Florida.

5. What’s the Difference Between a Last Will and Testament and a Trust under Florida Law?: Discover the key differences between wills and trusts in Florida.

6. Understanding the Differences Between Wills and Trusts Under Florida Law: Gain a deeper understanding of the distinctions between wills and trusts in Florida.

7. Florida Will and Trust Contests Part I: An Overview: Get an overview of will and trust contests in Florida.

8. Probate and Estate Planning Considerations for the Different Forms of Real Property Title Available in Florida: Learn about the various forms of property title in Florida and their implications for probate and estate planning.

Be sure to visit our blog for additional resources and information on estate planning and trust-related topics.

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.