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  • The American Lawyer, Adrian Philip Thomas

What are the fiduciary duties of a trustee?

Written by on Apr 1, 2013| Posted in: Trust Litigation

“The trust of the innocent is the liar’s most useful tool.”  Stephen King

Our firm is contacted by many trust beneficiaries who have never received a trust accounting, and they are not aware of the fiduciary duties the Trustee of the trust has to the trust beneficiaries.  Often, the trust beneficiaries place faith and trust in the Trustee to administer the Trust in accordance with the law and what is morally correct.  They are surprised to find that the Trustee of a Trust has specific fiduciary duties to all of the beneficiaries of the trust, which include, but are not limited to the following:

1)     Under Florida law, a trustee has a duty to administer the trust in good faith, in accordance with the terms and purposes of the trust, and in the interests of the beneficiaries pursuant to Fla. Stat. § 736.0801.

2)    The Trustee owes the trust beneficiaries a duty of loyalty to administer the Trust “solely in the interests of the beneficiaries” pursuant to Fla. Stat. § 736.0802.

3)    The Trustee owes the trust beneficiaries a duty to “act impartially in administering the trust property, giving due regard to the beneficiaries’ respective interests” pursuant to Fla. Stat. § 736.0803.

4)    Under Florida law, a trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distribution requirements and other circumstances of the trust, and shall exercise reasonable care, skill and caution.  Fla. Stat. § 736.0804.

5)    Under Fla. Stat. §736.0809, the trustee should take reasonable steps to protect the trust property and assets. 

6)    Under Fla. Stat. § 736.0806, a trustee who has special skills or expertise, or is named trustee in reliance on the trustee’s representation that the trustee has special skills or expertise, shall use those special skills or expertise.

7)    The Trustee owes a duty to keep the beneficiaries of the trust reasonably informed about all monies, funds, assets and personal property that came into his possession as Trustee, and which were distributed, as well as to account for all assets, income, expenses, gains or losses of the Trust pursuant to Fla. Stat. §§ 736.0810, 736.0813 and 736.08135.

8)    The Trustee has a duty to provide the trust beneficiaries with relevant information about the assets and liabilities of the Trust and the particulars relating to the administration of the Trust pursuant to Fla. Stat. § 736.0813(1)(e ).

9)    The Trustee has a duty to enforce claims, to defend actions, to preserve Trust property, and to exercise reasonable care and skill in administration of the Trust pursuant to Fla. Stat. §§ 736.0811 and 736.0816.

10) The Trustee has a duty to take reasonable steps to take control of and protect the trust property pursuant to Fla. Stat. § 736.0809.

11)   The Trustee has a duty to inform each of the trust beneficiaries and account for the assets and liabilities of the trust and for the particulars relating to the trust administration in a trust accounting at least on an annual basis and on the termination of the trust or on change of the Trustee pursuant to Fla. Stat. §§ 736.0813 and 736.08135.

Because the Trust document may include language that specifically states that a trust accounting is to be prepared by the Trustee and given to the trust beneficiaries at certain intervals, and Florida Law also states that the trustee must provide the trust beneficiaries with a trust accounting at least annually, a trust beneficiary should seek competent counsel to review the actual Trust document, in order to ensure that the trust beneficiary is receiving the appropriate trust accountings and information pursuant to the Florida Statutes and possibly the language of the Trust document. 

“A Trustee is held to stricter morals than that of the marketplace; not honesty alone, but the punctilio of an honor the most sensitive, is the standard of behavior.”  Searcy, Denney, Scarola, Barnhart & Shipley, P.A. vs. Scheller, 629 So.2d 947 (Fla. 4th DCA 1993) citing to Meinhard v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545, 546 (1928).  Also, see Fla. Stat. § 736.0806.  The trustee must be impartial when dealing with conflicting equitable interests of beneficiaries; therefore, a trustee must deal impartially with trust beneficiaries, treat them even-handedly, and act in the best interest of the trust as a whole.  Friedman v. Friedman, 844 So.2d 789 (Fla. 4th DCA 2003); Morse v. Stanley, 732 F.2d 1139, 1145 (2d Cir. 1984), Fla. Stat. § 736.0803.

If the Trustee has breached any of their fiduciary duties to the trust beneficiaries, they could be held accountable individually for these breaches of trust through intentional conduct, negligent conduct, or reckless indifference conduct.  Harding v. Rosoff, 951 So.2d 912 (Fla. 4th DCA 2007).  It is imperative that prompt action is taken to retain a competent attorney for their review of the Trust document and estate planning documents to determine if the necessary grounds exist to file an action in a timely manner against a trustee for any breaches of trust committed by the Trustee of the trust.  

If you are a trustee who would like advice about serving as trustee or a beneficiary concerned about a trustee’s duties to you, please call the attorneys at Adrian Philip Thomas, P.A. for a free consultation.

 

 

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