Concerned About a Trustee? Learn How Florida Beneficiaries Can Respond

Yes, a Beneficiary Can Sue a Trustee for Losing Trust Money

Can a beneficiary sue a trustee Florida courts will hear? Yes. A beneficiary can bring a breach of trust claim when a trustee mismanages or loses trust property. Under Fla. Stat. § 736.1001, a violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust.

A breach of trust means a violation by the trustee of a duty the trustee owes to a beneficiary. Claims under the code go to circuit court. Fla. Stat. § 736.0203 gives the circuit court original jurisdiction over all proceedings arising under the code.

A loss does not prove a breach by itself. Trust investments can drop in value even when a trustee acts properly. The real question is what the trustee did, and whether the law required something different. The sections below explain those duties and how a court looks at them.

The Duties a Florida Trustee Owes to Beneficiaries

A trustee’s core duties come from the Florida Trust Code. The trustee must administer the trust solely in the interests of the beneficiaries. That is the duty of loyalty.

The trustee also must act with care. Fla. Stat. § 736.0804 says a trustee must administer the trust as a prudent person would. The trustee must consider the trust’s purposes, terms, and distribution requirements. The trustee must also use reasonable care, skill, and caution.

When a trust has two or more beneficiaries, the trustee must treat them fairly. Fla. Stat. § 736.0803 requires the trustee to act impartially and give due regard to each beneficiary’s interests.

Record-keeping matters too. Fla. Stat. § 736.0810 requires a trustee to keep clear and accurate records. The trustee must also keep trust property separate from the trustee’s own property. Finally, the trustee must keep qualified beneficiaries reasonably informed. That duty to inform and account is covered in its own section below.

What Counts as a Trustee Losing Trust Money

Beneficiaries often raise a few common patterns. The first is an investment that the trustee made without care. The second is a deal that helped the trustee personally. The third is money that left the trust with no clear reason. Other patterns include failing to collect money owed to the trust and keeping poor records.

Self-dealing is a common concern. Under § 736.0802, a sale, encumbrance, or other transaction involving the investment or management of trust property that is affected by a conflict between the trustee’s fiduciary and personal interests can be voidable by an affected beneficiary, subject to the rights of persons dealing with or assisting the trustee under s. 736.1016, unless an exception applies.

Whether a particular loss supports a claim depends on the facts. Courts look at the trust terms, what the trustee did, and what the trustee wrote down along the way. A trustee who acted carefully and kept good records stands on different ground than one who did neither.

Many people spot a problem first in the paperwork. A statement may show a withdrawal with no explanation. A report may skip a period of time. Those gaps are worth noting and dating. They can become the starting point for a beneficiary’s questions.

Trust Accounts and a Beneficiary’s Right to Information

The trust accounting is the main way a beneficiary sees what happened to trust property. Fla. Stat. § 736.08135 says an accounting must show all cash and property transactions and all significant transactions during the period. It must also show compensation paid to the trustee and the trustee’s agents.

The duty to report comes from Fla. Stat. § 736.0813. For an irrevocable trust, the trustee must give each qualified beneficiary an accounting at least annually, unless a family trust company, licensed family trust company, or foreign licensed family trust company (as defined in s. 662.111) is trustee, in which case the trust terms may permit accounting only at termination, when the trustee ceases to serve, or on a qualified beneficiary’s demand. The trustee must also give one on termination of the trust or when the trustee changes. Upon reasonable request, the trustee must provide a complete copy of the trust instrument. The trustee must also share relevant information about the trust’s assets, liabilities, and administration.

Records are central evidence. A beneficiary who lacks a clear picture should make a written request. Keep a copy of the request and note the date it was sent. Keep every statement, report, and notice in one place. Write down when each one arrived. These dates matter later.

Remedies a Beneficiary Can Pursue Against a Trustee

A court has several tools when a breach of trust is proven. Fla. Stat. § 736.1001 lists remedies. The court may order a trustee to account. It may compel a trustee to pay money or restore property to fix the breach. It may suspend the trustee or remove the trustee. It may also reduce or deny the trustee’s compensation. To remedy a breach of trust, the court may, subject to s. 736.1016, void an act of the trustee or trace trust property that was wrongly disposed of.

The money measure is set out in Fla. Stat. § 736.1002. The trustee is liable for the greater of two amounts. One is the amount needed to restore the trust property and distributions to what they would have been without the breach, including lost income, capital gain, or appreciation that proper administration would have produced. The other is the profit the trustee made from the breach.

Removal is another option. Fla. Stat. § 736.0706 says a settlor, a cotrustee, or a beneficiary may ask the court to remove a trustee. The court may remove a trustee who has committed a serious breach of trust, among other grounds.

Which remedy fits a case is for the court to decide. A trustee who is also a personal representative raises extra questions, which are a separate topic.

Time Limits for a Breach of Trust Claim in Florida

Deadlines can be the most important part of a trust claim. Fla. Stat. § 736.1008 sets a short window for some matters. For a matter adequately disclosed in a trust disclosure document, the beneficiary must start the proceeding within 6 months. The window runs from receipt of the disclosure document or a limitation notice, whichever is received later.

The statute also covers matters that were not adequately disclosed. For those, when the trustee has not issued a final trust accounting or has not given the required written notice, the claim is barred as provided in chapter 95 and accrues when the beneficiary has actual knowledge of the facts or of the trustee’s repudiation of the trust or adverse possession of trust assets. The statute says that knowledge must be shown by clear and convincing evidence.

When a beneficiary shows by clear and convincing evidence that a trustee actively concealed facts, any existing statute of repose is extended by 30 years. A statute of repose is an outer time limit.

Because of these rules, a reader should not wait. Write down the date of each report, accounting, and notice. Keep the envelopes or emails. The dates may decide which time limit applies.

The Litigation Path: From Document Review to Court

Most trust disputes follow a rough order. First, the beneficiary reviews the trust instrument and the trustee’s reports. Next, the beneficiary makes a written request for information or an accounting. A demand letter often follows if the answers are missing or unclear.

If the matter is not resolved, a petition or complaint can be filed in circuit court. Some disputes settle through negotiation or mediation before trial. The right path depends on the trust terms and the people involved. Probate matters are different, and the American College of Trust and Estate Counsel explains how probate administration works and when disputes need court involvement.

Who may bring the claim matters. Under Fla. Stat. § 736.0813, the duties run to qualified beneficiaries, except that while a trust is revocable the trustee’s duties extend only to the settlor. Under Fla. Stat. § 736.0706, a settlor, a cotrustee, or a beneficiary may request removal. A person who is not in one of these roles may have a different path.

Each step should be documented. Keep copies of every request, reply, and filing. A clear paper trail helps whoever reviews the matter.

Talk With a Coral Gables Trust Litigation Attorney About Your Trustee

If the statements do not add up, or a request for an accounting went unanswered, you may be facing a hard choice. You may need to decide whether to send a demand or file suit. Trust Counsel, PL focuses on probate and trust litigation. The responsible lawyer for this page is Leslie V. Marenco. The firm’s only office is in Coral Gables, Florida. Trust Counsel’s attorneys can serve individually as trustee or personal representative, and the firm advises and represents trustees, personal representatives and beneficiaries.

The first consultation is free. It is confidential and carries no obligation to continue. To talk about your situation, call (305) 707-7126 or schedule online.

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