In Florida, trust litigation often revolves around the rights of beneficiaries, and one of the most critical rights is the right to a trust accounting. Trust accounting ensures transparency in trust administration, allowing beneficiaries to monitor how trust assets are managed and used. Under Florida law, trustees are required to keep qualified beneficiaries informed of the trust’s activities, a process governed by statutes like F.S. 736.08135 and F.S. 736.0813. These laws provide beneficiaries with critical tools to ensure trustees meet their obligations.
The Trustee’s Duty to Inform and Account
Under Florida Statute 736.0813, trustees must keep qualified beneficiaries reasonably informed about the trust and its administration. This obligation ensures that beneficiaries have access to the necessary information to protect their interests. A trustee’s duty to account includes several key obligations:
- Initial Notification: Within 60 days of accepting a trust, the trustee must notify qualified beneficiaries of their appointment, provide their contact information, and inform the beneficiaries of their rights, including the fiduciary lawyer-client privilege under Florida law.
- Irrevocable Trusts: For irrevocable trusts, or trusts that become irrevocable, trustees must inform qualified beneficiaries within 60 days of the trust’s existence, the identity of the settlor, and the beneficiaries’ right to request a copy of the trust document and receive accountings.
- Annual Accounting: Trustees of irrevocable trusts are required to provide trust accountings annually, detailing the trust’s financial activities, assets, and significant transactions, unless the beneficiaries waive this right in writing.
- Upon Request: Beneficiaries are entitled to request relevant information about the trust’s assets and liabilities and, if needed, a complete copy of the trust instrument. This ensures transparency and promotes accountability in trust administration.
The Importance of Trust Accounting
Trust accounting plays a pivotal role in trust litigation because it ensures beneficiaries are kept informed of the trust’s management. Florida Statute 736.08135 outlines the specific requirements for a valid trust accounting. Let’s break down what must be included in a proper accounting:
- Trust Identification and Time Period: Each accounting must start by identifying the trust and trustee, as well as the time period covered.
- Financial Transactions: Trustees are required to provide a detailed report of all cash and property transactions, including any compensation paid to the trustee or agents. This level of detail ensures beneficiaries can track trust expenses and income.
- Asset Valuation: The accounting must include the value of trust assets, both at the time of acquisition and their current estimated value. This helps beneficiaries understand how the trust’s assets are performing over time.
- Liabilities and Allocation: The accounting must also disclose known non-contingent liabilities and provide information on how the trustee is allocating receipts and disbursements between income and principal. This allocation can significantly impact the interests of different beneficiaries, particularly in trusts where beneficiaries have varying interests in income and principal.
- Final Accounting and Plan of Distribution: When the trust terminates, the trustee must provide a final accounting, which includes a plan for distributing any remaining assets.
Beneficiary Rights and Waivers
Beneficiaries have significant rights under Florida law, but they also have the option to waive some of those rights. For instance, under F.S. 736.0813, a qualified beneficiary may choose to waive the trustee’s duty to provide annual accountings. This waiver must be in writing and can be withdrawn, but any withdrawal only affects future accountings.
Waivers may be practical in cases where beneficiaries fully trust the trustee, but they can also lead to complications if beneficiaries later feel the trust has been mismanaged. For this reason, beneficiaries should carefully consider whether waiving their right to an accounting is in their best interest.
Remedies in Florida Trust Litigation
When trustees fail to meet their obligations to inform and account, beneficiaries may have legal recourse through trust litigation. Beneficiaries can petition the court to compel a trustee to provide a proper accounting or even seek to remove a trustee for failing to fulfill their duties. The right to accounting is a powerful tool, ensuring trustees remain transparent and accountable in their fiduciary role.
Key Takeaways for Beneficiaries
- Beneficiaries have a clear right to receive trust accountings under Florida law, ensuring transparency in how trust assets are managed.
- Trustees must provide annual accountings for irrevocable trusts, unless waived, and beneficiaries have the right to request additional information as needed.
- Detailed accountings, as outlined by F.S. 736.08135, must include all relevant financial transactions, asset values, and liabilities.
- Beneficiaries can waive their right to accountings, but this should be done with caution as it can limit oversight over the trustee’s actions.
Trust accountings are a cornerstone of fiduciary transparency. Whether you are a beneficiary seeking to ensure that a trustee is acting in your best interest or a trustee trying to navigate your legal obligations, understanding these accounting requirements is essential in avoiding disputes and litigation.
If you’re involved in a trust dispute or want to ensure your rights as a beneficiary are protected, contact our team of experienced Florida probate and trust litigation attorneys for a consultation. We handle cases statewide in Florida and we can guide you through the complexities of trust law and help secure the best possible outcome for your case.
-Brice Zoecklein, Esq.
813-501-5071
Relevant Statutory Authority:
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.
736.08135 Trust accountings.—
(1) A trust accounting must be a reasonably understandable report from the date of the last accounting or, if none, from the date on which the trustee became accountable, that adequately discloses the information required in subsection (2).
(2)(a) The accounting must begin with a statement identifying the trust, the trustee furnishing the accounting, and the time period covered by the accounting.
(b) The accounting must show all cash and property transactions and all significant transactions affecting administration during the accounting period, including compensation paid to the trustee and the trustee’s agents. Gains and losses realized during the accounting period and all receipts and disbursements must be shown.
(c) To the extent feasible, the accounting must identify and value trust assets on hand at the close of the accounting period. For each asset or class of assets reasonably capable of valuation, the accounting shall contain two values, the asset acquisition value or carrying value and the estimated current value. The accounting must identify each known noncontingent liability with an estimated current amount of the liability if known.
(d) To the extent feasible, the accounting must show significant transactions that do not affect the amount for which the trustee is accountable, including name changes in investment holdings, adjustments to carrying value, a change of custodial institutions, and stock splits.
(e) The accounting must reflect the allocation of receipts, disbursements, accruals, or allowances between income and principal when the allocation affects the interest of any beneficiary of the trust.
(f) The trustee shall include in the final accounting a plan of distribution for any undistributed assets shown on the final accounting.
(3) Notwithstanding subsections (1) and (2), 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 the trust, such trustee may elect, for any accounting period, to provide the qualified beneficiaries with all of the following information:
(a) A notice stating that the trustee has made an election to provide the information described in this subsection.
(b) The information required by paragraph (2)(a) and, if applicable, the information required by paragraph (2)(f).
(c) A financial statement for the trust which summarizes the information provided pursuant to paragraphs (2)(b)-(e). The financial statement must contain sufficient information to put the beneficiary on notice of the trust’s comprehensive assets and liabilities as well as of the transactions occurring during the accounting period. A financial statement that reports a summary of the comprehensive assets and liabilities at the beginning and end of the accounting period and the aggregate amounts of all cash and property transactions, gains, losses, receipts, expenses, disbursements, distributions, accruals, or allowances occurring within the accounting period for each category of assets and liabilities meets the requirements of this paragraph.
For the purposes of this chapter, a financial statement that a trustee provides to a beneficiary of a trust under this subsection is deemed to be a trust accounting. Any trustee that makes the election provided in this subsection shall, upon request of any beneficiary made within the limitations period under s. 736.1008, make available the detailed information necessary for preparation of the financial statement to the beneficiary within 30 days after the date of such request, including providing copies of the requested information. A request by a beneficiary for the detailed information necessary for the preparation of the financial statement tolls the running of any applicable limitations period until the detailed information is made available to the beneficiary.
(4) Subsections (1) and (2) govern the form and content of all trust accountings rendered for any accounting periods beginning on or after January 1, 2003, and all trust accountings rendered on or after July 1, 2018. The election provided in subsection (3) for trusts for which a family trust company, licensed family trust company, or foreign licensed family trust company, as defined in s. 662.111, is a trustee is available for any accounting periods beginning on or after July 1, 2022. This subsection does not affect the beginning period from which a trustee is required to render a trust accounting.
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.
