REMEDIES FOR BREACH OF TRUST

A trustee of a trust has several duties and obligations to the beneficiaries in administering a trust, including but not limited to: administering the trust in good faith, in accordance with its terms and purposes (Fla.Stat. §736.0801); a duty of loyalty and to administer the trust solely in the interests of the beneficiaries (Fla.Stat. §736.0802); the trustee shall act impartially in administering the trust property giving due regard to the respective interests of multiple beneficiaries (Fla. Stat. §736.0803); in administering a trust, the trustee shall only incur expenses that are reasonable in relation to the trust property, the purposes of the trust and the skills of the trustee (Fla. Stat. §736.0805); a trustee shall keep clear, distinct, and accurate records of the administration of the trust (Fla. Stat. §736.0810); a trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration (Fla. Stat. §736.0813). A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust. In the event a breach of trust occurs, or may occur, the court has several actions it may take to remedy a breach of trust.

Florida Statute §736.1001(2), “Remedies for breach of trust,” provides a non-exclusive list of those actions the Court may take to remedy a breach of trust. The Court may:

a) Compel the trustee to perform the trustee’s duties;

b) Enjoin the trustee from committing a breach of trust;

c) Compel the trustee to redress a breach of trust by paying money or restoring property or by other means;

d) Order a trustee to account;

e) Appoint a special fiduciary to take possession of the trust property and administer the trust;

f) Suspend the trustee;

g) Remove the trustee as provided in s. 736.0706;

h) Reduce or deny compensation to the trustee;

i) Void an act of the trustee, impose a lien or a constructive trust on trust property, or trace trust property wrongfully disposed of an recover the property or its proceeds; or

j) Order any other appropriate relief.

            In addition to the above list of actions a court may use to remedy a breach of trust, it may also find that a trustee who commits a breach of trust is liable for the greater of the amount required to restore the value of trust property and trust distributions to what they would have been if the breach had not occurred including lost income, capital gain, or appreciation that would have resulted from proper administration; or the profit the trustee made by reason of the breach. (Fla. Stat. §736.1002).

            If you as a beneficiary of a trust have been damaged by a breaching trustee, do not despair as there are several remedies at the court’s disposal. The Court has full discretion when fashioning the appropriate relief based upon the unique facts of your case and the specific damages you have incurred. An experienced trust litigation attorney can present your facts and the necessary evidence the Court will require to determine what specific relief is most appropriate to remedy the specific breaches committed by your trustee.

Florida Trust Decanting:  Phipps v. Palm Beach Trust Co., 196 So. 299 (Fla. 1940) and Florida Statute §736.04117

“Decanting” is the legal term used to describe the distribution of trust property from one trust to another trust pursuant to the trustee’s discretionary authority to make distributions to or for the benefit of one or more beneficiaries.  Common law provides authority for trust decanting, but several states – including Florida – have codified the common law.  Florida Statute §736.04117 became effective on July 1, 2007.

Under common law, a trustee with absolute power to invade principal is the equivalent of a donee of a special power of appointment.  Restatement (Second) of Prop.: Donative Transfers §11.1  Absent a contrary provision in the governing document, a donee of a power of appointment may exercise such power in a manner which is less extensive than authorized by the instrument creating the power.  Thus, “the rationale underlying decanting is that if a trustee has the discretionary power to distribute property to or for the benefit of one or more current beneficiaries, then the trustee, in effect, has a special power of appointment that should enable the trustee to distribute the property to a second trust for the benefit of such beneficiaries.”  William R. Culp, Jr. & Briani Bennett Mellen, Trust Decanting: An Overview and Introduction to Creative Planning Opportunities, Real Property, Trust and Estate Law Journal, Spring 2010, p. 3. The theory is that if there is authority to distribute outright, then there is authority to distribute in further trust. Alan Halperin and Michelle R. Wandler, Decanting Discretionary Trusts:  State Law and Tax Considerations, 29 Tax Management Estates, Gifts & Trusts Journal, 219, 221 (2004).

In 1940, the Supreme Court of Florida considered whether a trustee, who was specifically authorized by the trust document to appoint the trust property among beneficiaries in whatever proportions he desired in his sole discretion, could create a second trust for the benefit of the beneficiaries funded with property distributed from the first trust.  Phipps v. Palm Beach Trust Co., 196 So. 299 (Fla. 1940).  In Phipps, the settlor, Margarita Phipps, created a trusts for the benefit of her four children.  She named Palm Beach Trust Company and her husband as co-trustees.  Her husband was given a personal power of appointment, exercisable during life by written instrument delivered to the corporate trustee or at death in his Last Will & Testament, in favor of the four children and/or their descendants in whatever proportions as he shall determine.  In compliance with the express terms of the trust, Mr. Phipps provided written directions to the corporate trustee to create a second trust for the descendants.  The corporate trustee, in an abundance of caution, brought a suit in equity praying for construction of the original trust. 

The Phipps court held that the creation of the second trust was permissible because the trustee had both a lifetime and a specific testamentary power to direct distributions to trust beneficiaries.  Ergo, the trustee’s power was a power of appointment instead of a discretionary power to distribute trust property.  The Phipps holding does not provide authority for the position that a trustee with a purely discretionary power held in a fiduciary capacity can transfer assets to a new trust.  Florida Statute §736.04117 codifies the principal holding in Phipps. 12 Fla.Prac., Estate Planning §6:41 (2010-2011 ed.).  In summary, the statute provides that a trustee who has absolute power under the terms of the trust to invade principal may make distributions to a second trust if those beneficiaries include only those beneficiaries of the first trust without reducing any fixed income interest.  The exercise of the decanting power is to be done by an instrument in writing, signed and acknowledged by the trustee and filed with the records of the first trust.  Additionally, the trustee shall notify all qualified beneficiaries of the first trust, in writing, at least 60 days prior to the effective date of the trustee’s exercise of the power to invade the principal and must set forth the manner in which the trustee is planning to exercise the power.  The trustee’s notice under this section shall not limit the right of any beneficiary to object to the exercise of the trustee’s power to invade the principal.  Fla.Stat. §736.04117.

Procedurally, the documents employed for a trust decanting should be similar to those used with respect to a resolution to distribute property.  A written document providing the terms of the trustee’s discretionary exercise of the power to decant should set forth the terms of the exercise of the power to appoint trust property further in trust.  It should set forth background information or recitals identifying (1) the current trustees of the original trust and the trustees that are exercising the decanting power (2) when the original trust was formed and by whom (3) the relevant terms of the original trust (4) the trustee’s authority for the decanting, whether pursuant to statute or the trust instrument, and (5) the appointee trust that will receive trust property from the original trust.  The decanting document should also include trustee resolutions designating and appointing assets of the original trust to the appointee trust and directing the appointed assets be held in accordance with the appointee trust.  William R. Culp, Jr. & Briani Bennett Mellen, Trust Decanting: An Overview and Introduction to Creative Planning Opportunities, Real Property, Trust and Estate Law Journal, Spring 2010, p. 43.

A potential client said, “you’re the lawyer who busts trusts.”  Busting a Florida trust was her non-lawyer way of describing trust termination/modification.  Florida law has three major trust code sections that allow a person to “bust a trust” (trust modification is the term lawyers use) in the event certain events or conditions occur.

For example, 736.04113 of the Florida Trust Code provides for judicial modification of irrevocable trusts when modification is not inconsistent with settlor’s purpose.

Some of the grounds that will allow judicial modification of an irrevocable trust include:

(1) Upon the application of a trustee of the trust or any qualified beneficiary, a court at any time may modify the terms of a trust that is not then revocable in the manner provided in subsection (2), if:

(a) The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill;

(b) Because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust; or

(c) A material purpose of the trust no longer exists.

(2) In modifying a trust under this section, a court may:

(a) Amend or change the terms of the trust, including terms governing distribution of the trust income or principal or terms governing administration of the trust;

(b) Terminate the trust in whole or in part;

(c) Direct or permit the trustee to do acts that are not authorized or that are prohibited by the terms of the trust; or

(d) Prohibit the trustee from performing acts that are permitted or required by the terms of the trust.

As you can see, the bolded section above allows for a trust to be terminated in whole or in part.  So can Florida lawyers bust a trust?  The answer is clearly yes.

Florida Court Suggests Withdrawals from Revocable Trust Principal During Settlor’s Live Can Be Viewed as Revocation of Trust and Subject to Challenge After Death by Remainder Beneficiaries

 ”When things change very rapidly, we have a fiduciary responsibility to review what are the circumstances.”

–Jozef Strauss

Florida is home to many elderly persons with dementia who are vulnerable to financial exploitation by others.  Unfortunately, the elderly who are susceptible to undue influence are often victimized by their own family members.   All too often, the safeguards that were presumably put in place through estate planning documents are thwarted by unbridled greed.  Sometimes, even the placement of trust by the elderly in a national financial institution will not immunize the elderly from abuses.

A recent Florida appellate opinion details a family scenario frequently encountered by Florida probate lawyers who practice in the field of inheritance disputes involving wills, guardianships, estates and trusts.  Siegel v. Novak –So.3d–, 36 Fla.L.Weekly D2329 (Fla. 4^th DCA October 19, 2011) involves a dispute between the children of Dorothy H. Rautbord (“Mrs. Rautbord”).   Several years ago, Mrs. Rautbord created a will and trust that generally provided that she could use her assets during her life as needed and upon her death, the assets were to be shared among her children and grandchildren.   Specifically, the trust contained a provision that during Mrs. Rautbord’s life, the trustee (a corporate trustee) should manage the trust property for the benefit of Mrs. Rautbord, and “at any time…apply so much or all of the net income and principal [of the Trust property] as the Trustee, in its sole discretion, shall deem appropriate or advisable for the support, maintenance, health, comfort or general welfare of [Mrs. Rautbord]. 

Several years later, Ms. Rautbord developed severe dementia.  A power of attorney was signed by Mrs. Rautbord in favor of one of her children.  Using the power of attorney, Ms. Rautbord’s child then made withdraws of over $3.3 million from the Trust during Mrs. Rautbord’s life.  The corporate trustee approved all of the withdraws, even though it recognized that “Mrs. Rautbord [was] in her nineties [and] quite frail [.]”  The corporate trustee concluded that the withdrawals and distributions of trust principal were “questionable” but decided to “ratify” the principal distributions.  These approvals were contrary to the practice of the predecessor trustee, who refused to make distributions as gifts because Mrs. Rautbord had been taken advantage of because of her generosity.

After Mrs. Rautbord died and her other children (“the brothers”) discovered the $3.3 million dollars in withdrawals of trust principal, the corporate trustee sought court approval of its conduct in approving the principal distributions.  Two of Mrs. Rautbord’s children (“the brothers”) claimed that the corporate trustee’s and the other child’s (who had the power of attorney) conduct was inappropriate and inconsistent with the terms of the trust.  According to the brothers challenging the conduct, the language of Mrs. Rautbord’s trust instrument did not permit the large withdrawals, which were equivalent to a revocation of trust, which was permitted only upon the existence of certain circumstances.  The trial court told the brothers that they did not have standing to contest any distributions made prior to their mother’s death.  The court reasoned that before Mrs. Rautbord’s death, the trust was revocable, so that the brothers had “no present interest in the trust during the time that the decedent was alive.”  The decision was appealed and the Fourth District Court of Appeals reversed and remanded the case holding that the brothers were entitled to their day in court.  Siegel v. Novak (“Siegel I”) 920 So.2d 89 (Fla. 4^th DCA 2006).

After the appellate court’s decision, the corporate trustee again requested the trial court’s judicial endorsement of its decision to ratify the $3.3 million of “questionable” withdrawals and principal distributions from the trust.  Once again, the trial court found that the brothers did not have standing the challenge certain distributions made prior to Mrs. Rautbord’s death.  However, on appeal, the Fourth District said that

“the trial court and parties did not interpret Siegel I  correctly.  Our opinion in Siegel I determined that the Siegels did have standing to challenge the trustee’s actions, because they had a direct interest in the corpus of the trust after their mother’s death.”

The Court stated that “the trial court incorrectly treated the question of whether the withdrawals were appropriate and authorized as a question of standing.”  The Court of appeals examined the trust language and emphasized the fact that Mrs. Rautbord reserved to herself the power to revoke the trust.  The brothers argued that the withdrawals of principal were in fact revocations of the trust, and that the trial court’s ruling on standing prevented the issue from being litigated.

The appellate court agreed with the brother’s argument.  In its analysis the Fourth District Court of Appeals looked at the language of the trust and analogized the facts of the Siegel case to another case where it was held:

“In creating a trust, the settlor was not merely designating trustees as conduits through whom a gift could be made to the daughter whenever it would be to her advantage.  The trust represented a plan of the settlor that included not only the beneficiary Margaret, but also remaindermen.  In adding a flexible provision for the invasion of principal for the “best interest” of the beneficiary, the settlor was not injecting a facile means for destroying the trust. “

* * *

By limiting the invasion of principal to those instances where it will be for the “best interest” of the beneficiary, the settlor was, in effect, restricting the power of the trustees, and imposing duty on them to limit such invasion for such objects and purposes as, in their judgment, would be beneficial to the cestui que trust.”

Important also in the Fourth District’s analysis was their holding that the withdrawals of trust principal were the equivalent of a partial revocation of the trust.  The Court turned to the Commonwealth of Pennsylvania and adopted that court’s reasoning:

“We are not prepared to recognize a distinction between settlor’s right to withdraw principal from the trust and his right to revoke the trust in whole or in part.  Both cause an amendment or partial revocation, and with the same legal effect.   For example:  If  settlor placed $100,000 in an inter vivos trust, with all the reservations hereinbefore discussed, and subsequently concluded to reduce the trust to $50,000, there would seem to be no difference in principle if settlor by written instrument revoked or modified the trust by reducing it by one-half, or exercised his right to withdraw one half from the operation of the trust.”  A determination of whether these withdrawals of principal constitute partial revocations of the trust should await the full development of the evidentiary record on each transaction.” 

Unfortunately, the court did not discuss the application of Fla.Stat. §736.0603, which provides that while a trust is revocable, the duties of the trustee are owed exclusively to the settlor.   However, the Court did remand the case to the trial court again with directions to hold an evidentiary hearing and the brothers must be given the opportunity to present evidence to support their claims of breach of fiduciary duty by both the corporate trustee and their sister.

Florida Trust Litigation – Personal Jurisdiction

It is not uncommon in South Florida for individuals to be beneficiaries of Florida trusts that have a trustee located in a state other than Florida.  There is no rule that the trustee of a Florida trust must be a Florida resident, or even have a presence in Florida.  However, prior to the enactment of the Florida Trust Code there was no specific provision of the Florida Statutes which conferred personal jurisdiction over parties who were not within the geographical boundaries of Florida.  Instead jurisdiction was obtained on out of state trustees and beneficiaries under the general long-arm statutes found in chapter 48.  This lead to substantial litigation in the form of Motions to Dismiss for Lack of Personal Jurisdiction.    

In trust litigation (as in all lawsuits), it is necessary for the Court to have personal jurisdiction over the trustee(s) and beneficiaries.  Otherwise, the Court is unable to hear and remedy wrongs that have been committed.  By enacting the Florida Trust Code (and specifically section 736.0202), the legislature included a long-arm statute specifically tailored to trust litigation matters.  Under Florida Statute 736.0202, with respect to a trust having its principal place of administration in Florida, a trustee submits to the jurisdiction of Florida courts either by accepting the trusteeship or by moving the principal place of administration to this state; the beneficiaries are subject to the jurisdiction of Florida courts with respect to any matter involving the trust; and recipients who accept a distribution from a trust submit personally to the jurisdiction of Florida courts regarding any matter involving the distribution.

This addition to Florida law is very important in trust litigation as it expressly confers jurisdiction upon out of state trustees of Florida trusts.  This helps protect both the grantor’s intent and the rights of a beneficiary, and allows a court to hear and adjudicate controversies regarding trusts.

The Trustee’s Duty to Inform and Account

The trustee is the person with legal title to trust assets; however, the trust beneficiaries are the true owners of the trust assets.  The trustee has a legal duty to inform and to account to the beneficiaries and the trust beneficiaries are entitled to inspect all documents and papers relating to the trust. The existence of a legal duty is important because it gives beneficiaries rights and remedies and exposes a trustee to liability for breach of those duties. 

In Florida, the trustee’s duty to inform and to account is found in the Florida Statutes (Florida Trust Code) at §736.0813, which states that the trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.  This duty includes notifying the beneficiaries of the trustee’s name and address, notifying the beneficiaries of an irrevocable trust that the trust exists and that they have certain rights, providing a copy of the trust instrument upon request, providing a trust accounting (F.S. §736.08135), and disclosing assets and liabilities.

All too often, this office is contacted by beneficiaries who have no idea what is going on with the administration of a trust and the trustee refuses to provide the information requested, even after a demand for an accounting has been filed with the courts.  Sometimes it is because there is a contentious relationship and the trustee is being spiteful, but sometimes it is because the trustee is trying to hide misappropriation or mishandling of trust assets.  If you are the beneficiary of a trust and have not received full disclosure from the trustee, you should contact a skilled trust attorney to protect your rights and to compel a trustee to perform his or her duties.

Section 736.0415 of the Florida Trust Code expressly provides that unambiguous provisions of a trust may be reformed where clear and convincing evidence shows that the language of the trust does not reflect the settlor’s intent, even where the evidence regarding the settlor’s intent is contrary to the trust itself:

Upon application of a settlor or any interested person, the court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intent if it is proved by clear and convincing evidence that both the accomplishment of the settlor’s intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement. In determining the settlor’s original intent, the court may consider evidence relevant to the settlor’s intent even though the evidence contradicts an apparent plain meaning of the trust instrument. See § 736.0415, Fla. Stat. (2010) (emphasis added).

The express purpose of section 736.0415 is to permit reformation of an otherwise clear, unambiguous written trust signed by a settlor where evidence exists that the “plain meaning of the trust instrument” does not evidence the settlor’s intent. A trust with testamentary aspects may even be reformed after the death of the settlor for a drafting mistake so long as the reformation is not contrary to the interest of the settlor. Reformation under the section is available for mistakes of law and of fact. Florida case law also supports reformation to cure scrivener’s or drafting errors. [See In re Estate of Robinson, 720 So.2d 540 (Fla. 4th DCA 1998)]. The party seeking reformation of a trust with testamentary aspects has the burden to prove, by clear and convincing evidence, that the trust, as written, does not reflect the settlor’s intent.

Can I fire my trustee?

We receive numerous inquiries from clients asking, “How can I fire my Trustee?”  In Florida, “firing a Trustee” is called a trustee removal action, through which an interested party may seek to remove a trustee of a trust, sometimes for reasons other times for no cause.  Florida Trust law contains specific statutes which address the removal of trustees.

According to Florida Statute §736.0706, removal of a trustee may be sought by the settlor, a co-trustee, or any beneficiary. In addition, a court may remove a trustee on its own. Grounds for removal include a serious breach of trust, lack of cooperation among co-trustees, and unfitness, unwillingness, or persistent failure to effectively administer the trust. Any action to remove a trustee on these grounds would be considered a removal “for cause.”

Florida Statute §736.0706, also permits the removal of a trustee without cause at the request of all of the qualified beneficiaries, or upon a showing of substantial change in the circumstances. Removal on these grounds does not require proof of any breach of fiduciary duty, malfeasance or other grounds for removal. It requires only that the removal of the trustee (or firing of the trustee as some like to say) best serves the interests of all beneficiaries, that it not be inconsistent with a material purpose of the trust, and that a suitable co-trustee or successor trustee be available.

So whether your trustee is treating the trust like his own personal checking account, repeatedly failing to provide accountings or reasonable information regarding the assets of your Trust, failing to invest prudently, or any other grounds which could constitute a serious breach of trust, or you just don’t feel the trustee is providing any benefit and a suitable replacement trustee is ready and willing to take over at a lower cost, you as a beneficiary, co-trustee, or settlor, has the ability to seek removal through the Court.

What Is a Reasonable Trustee’s Fee?

 Under the Florida Trust Code, “A Trustee is entitled to compensation that is reasonable under the circumstances.”  F.S. §736.0708(1).  Unfortunately, the statutes are devoid of any reference to what amounts to “reasonable” compensation or how to determine whether fees sought by a trustee are per se reasonable. Generally, compensation of a Trustee may be established in the Trust instrument or by separate agreement with the Trustee.  In the absence of either, the circuit court has jurisdiction to review and determine a trustee’s fees.  F.S. §736.0201(4)(c), (4)(g).  Even in certain situations in which the trust does specify the trustee’s compensation, the court may adjust that compensation if the trustee’s duties are substantially different from those contemplated when the trust was created or if the compensation specified is unreasonably low or high.  F.S. §736.0708(2).  As a result, whether or not the trust instrument provides for the basis, amount, and form of compensation, the amount or rate of a trustee’s compensation or commission is not determined by any inflexible rule, but rests within the sole discretion of the appropriate court in which discretion is to be recognized in accordance with certain established principles as set forth in prior case law. As a result of the lack of a statutory guideline for determining the reasonableness of trustee fees, the court is left with the task of determining the reasonableness of the trustee’s compensation and in doing so will often look to the duties and responsibilities of the trustee under the particular trust at issue.  See, for example, Osius v. Miami Beach First Nat. Bank, 74 So.2d 779 (Fla. 1954).

In 1958, the Supreme Court in West Coast Hospital Ass’n v. Florida National Bank of Jacksonville, 100 So.2d 807 (Fla. 1958), established factors for the court to consider in determining a reasonable fee.  Some of those factors used in determining the reasonableness of a fee include:

• The amount of capital income received and disbursed by the trustee
• The wages or salary customarily granted to agents for performing light work in the community
• The success or failure of the trustee’s administration
• Any unusual skill or experience the trustee brought to the trust administration
• The loyalty or disloyalty of the trustee to the beneficiaries
• The amount of risk and responsibility assumed by the trustee
• The time involved in administering the trust
• The custom in the community as to compensation of trustees by settlors or courts and as to compensation paid trust companies and banks serving as trustees
• The character of the work performed by the trustee
• Any estimate the trustee has given of the value of his or her own services
• Payments made or allowed by the beneficiaries to the trustee intended to be applied toward the trustee’s compensation

The factors listed above are not all inclusive and the court may use other factors in determining the amount of reasonable compensation due a trustee.  The fundamental criteria is reasonableness, determined in the light of the facts and circumstances of each individual case. 

Despite Florida having no statutory schedule for trustee’s fees, a standard range of trustee’s fees is generally recognized by corporate or professional Florida fiduciaries.  While there are numerous variations stated by corporate trustees in their fee schedules, there is a common range.  Similar to the fixing of the compensation for a personal representative, the trustee is also entitled to additional compensation for extraordinary services.  There is a significant amount of competition currently existing in the fees for services charged by trust departments, and rates generally decrease as the value of the trust assets increase.

Additional issues complicating the decision on the reasonable compensation of trustees also arise when there are multiple trustees, and in determining the allocation of a trustee’s fee from principal versus income.  Should multiple trustees receive a greater amount in total of fees then a single trustee would receive for having done the same job?  The answer appears to be “no” unless the trust provides otherwise, there is a separate agreement with the settlor providing otherwise, or a trustee is providing a special service that warrants an additional fee.  See Westcoast Hospital Association v. Florida National Bank of Jacksonville, 100 So.2d 807 (Fla. 1958).  Generally, the multiple trustees must agree on how the fee will be divided among them, otherwise the court will do so.  With regard to the allocation of a trustee’s fee, the first question involves whether the fee should be taken from principal or income.  The second issue becomes whether a particular beneficiary should pay more than other beneficiaries.  With regard to the principal and income question the trust controls and absent language in the trust addressing this issue then Florida Statute §738.701 and §738.702 govern.  Based upon these statutes, one-half of the ordinary compensation is to be paid out of trust income, the other from principal.

Despite the Florida Legislature’s failure to provide uniform measures for the reasonableness of trustee fees, it is clear that a trustee is entitled to reasonable compensation for his or her services rendered in administering the trust.  Despite the absence of a statutory fee schedule, certain factors are applicable despite factual differences in each case. First and foremost, in seeking compensation for their services, the controlling duty of a trustee is the faithful and efficient conservation of the trust assets.  It is also clear that in seeking compensation for their services, the burden of proof is on the trustee to show that money expended was a proper disbursement and reasonable.  If the trustee fails to keep clear, distinct and accurate accounts, all presumptions are against him and all insecurities and doubts are to be taken adversely to him.  If he loses his accounts, he must bear any resulting damage.  See Troub v. Troub, 135 So.2d 243 (Fla. 2^nd DCA 1961).  Therefore, any compensation to be paid to a trustee must be contained within trust accountings, unless waived by all interested parties. 

Any interested parties may seek a court order on the reasonableness of the trustee’s compensation.  In making its decision, whatever elements of proof are acceptable to a court in awarding trustee compensation, it is fundamental that the compensation must be supported by evidence, be it testimony, documentation, or both.  See Hood v. Marvin and Kay Lichtman Foundation, 832 So.2d 941 (Fla. 3^rd DCA 2002). Beneficiaries must be conscious of the amount of compensation a trustee is receiving. The only certainty about the reasonableness of such compensation is that there is no certainty and it is the trustee’s responsibility to account for his or her efforts and the amount of compensation they are paid must be in line with the services they have provided. Trustees are not entitled to compensation simply by virtue of their appointment as trustee, but must provide a service and/or benefit that is supported by adequate proof. If you have any questions about the amount of compensation being paid to the trustee of a trust for which you are a beneficiary, please contact a trust litigation attorney to discuss the specific facts of your case and whether such compensation is reasonable.

Does the Florida Trust Code allow for freezing of trust assets without the burden of proving the traditional elements for an injunction?

In short the answer is “sort of.”  Historically, if you want an injunction, the moving party must prove:

1. She will suffer irreparable harm for which there is no adequate remedy at law unless injunctive relief is granted;
2. She has a clear legal right to request injunctive relief; and
3. The entry of this injunctive relief will not disserve the public interest.  

“No adequate remedy at law” is the insurmountable obstacle to injunctive relief because many court rules that if you can get a money judgment (whether or not it is  collectable),then there is an adequate remedy at law therefore you are not entitled to an injunction.  Think of injunctions as the appropriate remedy for the hippie who doesn’t want the developer to cut down a 500 year old tree- no legal remedy can replace that tree if it is cut down so the hippie gets the injunction.   (more…)