FLORIDA TRUST ACCOUNTING
Black’s Law Dictionary defines a trustee as someone who stands in a fiduciary or confidential relation to another, especially one who, having legal title to property, holds it in trust for the benefit of another and owes a fiduciary duty to that beneficiary. For example, Decedent creates a revocable trust (sometimes called an inter vivos trust) to own Decedent’s assets and provides by the terms of the trust that upon Decedent’s death, Trustee will be in charge of managing the trust property for the benefit of Beneficiary. The Trustee is the legal owner of the trust property and Beneficiary is the beneficial owner. It is because Trustee is merely holding the trust property for the benefit of Beneficiary that the law imposes duties – known as fiduciary duties – on Trustee. It seems obvious that one of the most fundamental duties owed by a trustee to a qualified beneficiary is the duty to inform and account, yet trustees often fail to provide adequate information to the qualified beneficiaries.
The Florida Trust Code provides that “the trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.” Fla.Stat. §736.0813. The trustee’s duty to inform and account includes, but is not limited to, providing each qualified beneficiary of an irrevocable trust with a trust accounting from the date on which the trustee became accountable to each qualified beneficiary at least annually and on termination of the trust or upon change of the trustee. Fla.Stat. §736.0813(1)(d).
The Florida Trust Code also specifically details the requirements for a trust accounting. “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 following information:
- The accounting must begin with a statement identifying the trust, the trustee furnishing the accounting, and the time period covered by the accounting.
- 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.
- 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 non-contingent liability with an estimated current amount of the liability if known.
- 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.
- 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.
See, Fla. Stat. §736.08135.
A trustee who is not adequately informing and accounting to a beneficiary is said to be in “breach of trust” and can be compelled by the courts to provide information and accountings to a qualified beneficiary.
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If you have a Florida Trust Accounting matter you would like to discuss with an attorney, whether you are the trustee or the beneficiary, please call the Law Offices of Adrian Philip Thomas, P.A. to schedule your free initial consultation.