Holding a Trustee Accountable for Breach of Fiduciary Duty in Florida

If you think a trustee has mishandled a family trust, you may be asking how to sue a trustee for breach of fiduciary duty. In Florida, a trustee’s violation of a duty owed to a beneficiary is called a breach of trust. This guide covers the trustee’s core duties, common breaches, who the claim targets, what a court can order, and the deadlines that can apply. Trust Counsel, PL is a Coral Gables firm that concentrates in trust litigation and related trust and estate matters.

What Does a Florida Trustee Owe the Beneficiaries?

A Florida trustee must run the trust for the beneficiaries, not for personal gain. The law says it plainly. Under Fla. Stat. § 736.0802, a trustee must administer the trust solely in the interests of the beneficiaries.

The trustee must also act as a prudent person would. Fla. Stat. § 736.0804 requires reasonable care, skill, and caution, while weighing the trust’s purposes and terms.

When a trust has two or more beneficiaries, the trustee must act impartially. Fla. Stat. § 736.0803 requires due regard for each beneficiary’s respective interests.

Records and property matter too. A trustee must keep clear, accurate records and keep trust property separate from personal property. A trustee must keep clear, distinct and accurate records of the trust’s administration, and must keep trust property separate from the trustee’s own property.

A trustee who reasonably relies on the trust instrument is not liable for a breach to the extent it resulted from that reliance. See Fla. Stat. § 736.1009. The trust document sets the trustee’s path. For the broader picture, see our trust litigation attorney page.

What Are Common Ways a Trustee Breaches Fiduciary Duty?

The most common breaches involve self-dealing, mixed funds, weak investing, unequal treatment, and refusing to account. Self-dealing happens when a trustee’s personal interests clash with the trust’s. Under Fla. Stat. § 736.0802, a transaction affected by that conflict is voidable by an affected beneficiary. The exceptions include a transaction the trust terms authorized, a transaction a settlor approved in writing while the trust could still be revoked, and a payment of reasonable compensation to the trustee, among others.

Commingling means mixing trust money with personal accounts. The law requires trust property to stay separate, under Fla. Stat. § 736.0810.

Imprudent investing is measured against the prudence standard in Fla. Stat. § 736.0804. Unequal treatment can violate the impartiality rule in Fla. Stat. § 736.0803.

Refusing information is a breach risk too. A trustee of an irrevocable trust must give each qualified beneficiary a trust accounting at least annually. See Fla. Stat. § 736.0813.

The IRS explains that a trustee owes beneficiaries a fiduciary duty over trust property. See IRS guidance on trustee duties.

Honest error and breach are not the same. A breach is a trustee’s violation of a duty owed to a beneficiary, under Fla. Stat. § 736.1001. Where a mistake lands on that line turns on the facts of each case.

Who Can Be Sued in a Florida Trust Dispute?

In most trust disputes, the claim targets the trustee, because the trustee is the one who owes the duty. A breach is a violation by a trustee of a duty owed to a beneficiary. That makes the trustee’s conduct the thing being tested.

Other people can ask for action too. Under Fla. Stat. § 736.0706, the settlor, a cotrustee, or a beneficiary may ask the court to remove a trustee.

For irrevocable trusts, the accounting and information rights belong to the qualified beneficiaries. Fla. Stat. § 736.0813 limits the trustee’s duties to the settlor only while a trust is revocable.

A court may trace trust property that was wrongfully disposed of.

Trust Counsel’s attorneys can serve individually as trustee or personal representative. The firm advises and represents trustees, personal representatives and beneficiaries. Knowing who plays which role helps you see who is on each side. For more on these roles, read about trustees and co-trustees.

What Steps Come Before Filing a Breach Lawsuit?

Before filing, gather the trust papers, request records in writing, and log each concern with dates. Start with the trust instrument. Under Fla. Stat. § 736.0813, a qualified beneficiary can get a complete copy of the trust instrument on reasonable request. On reasonable request, a qualified beneficiary can also get relevant information about the assets and liabilities of the trust and the particulars relating to administration.

Put every request in writing and keep a copy. Written requests create a record of what you asked for and what the trustee provided. Note each transaction’s date, amount, and source record.

Next, consider a settlement path. The American Arbitration Association describes mediation as an alternative dispute-resolution process. The Florida ADR Resource Handbook notes that court ADR rules and mediation-confidentiality provisions may apply when a dispute is mediated.

What Remedies Can a Florida Court Order?

A Florida court can order a trustee to restore losses, account for the trust, step aside, or give up compensation. Fla. Stat. § 736.1001 lists these remedies. They include compelling payment or restoration, ordering an accounting, suspending or removing the trustee, and reducing or denying compensation.

Under Fla. Stat. § 736.1002, a trustee who commits a breach of trust is liable for the greater of: (a) the amount required to restore the value of the 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 (b) the profit the trustee made by reason of the breach. The other is the profit the trustee made from the breach.

Unequal distributions can be corrected too. Under Fla. Stat. § 736.1001, where a breach of trust results in favoring one beneficiary over another or consists of an abuse of the trustee’s discretion, a court can require the trustee to pay a beneficiary who received too little. Under Fla. Stat. § 736.1001, where a breach of trust results in favoring one beneficiary over another or consists of an abuse of the trustee’s discretion, a court can also require that beneficiary to return some or all of the distribution to the trust, or withhold it from future distributions.

Removal is a separate remedy. Under Fla. Stat. § 736.0706, a court may remove a trustee who has committed a serious breach of trust. While that request is pending, the court can order relief to protect trust property. Which remedy fits depends on the facts of each case.

What Time Limits and Defenses Can Affect a Claim?

Florida time limits for breach claims vary by claim and by how the trust was disclosed, so review the applicable deadline promptly once you suspect a breach. The clock depends on how the trustee disclosed the matter. Under Fla. Stat. § 736.1008, a claim on a matter adequately disclosed must be filed within 6 months after receipt of the disclosure document or a limitation notice, whichever is later. Fla. Stat. § 736.1008 reads: “(2) Unless sooner barred by adjudication, consent, or limitations, a beneficiary is barred from bringing an action against a trustee for breach of trust with respect to a matter that was adequately disclosed in a trust disclosure document unless a proceeding to assert the claim is commenced within 6 months after receipt from the trustee or a trust director of the trust disclosure document or a limitation notice that applies to that disclosure document, whichever is received later.”

A claim based on a matter not adequately disclosed in a trust disclosure document is barred as provided in chapter 95, but when the period starts depends on what the trustee has done. If the trustee has issued a final trust accounting and the written notice described in § 736.1008(1)(b), the limitations period begins on the date the beneficiary receives that accounting and notice. If the trustee has not, § 736.1008(3) provides that the claim accrues when the beneficiary has actual knowledge of the facts upon which the claim is based, or upon the trustee’s repudiation of the trust or adverse possession of trust assets. Under Fla. Stat. § 736.1008, when a trustee has not issued a final trust accounting or given written notice of the availability of trust records, a claim for breach of trust based on a matter not adequately disclosed accrues when the beneficiary has actual knowledge of: (a) the facts upon which the claim is based, if such actual knowledge is established by clear and convincing evidence; or (b) the trustee’s repudiation of the trust or adverse possession of trust assets.

Defenses matter too. Trust terms that authorized a self-interested or conflicted transaction are an exception that keeps it from being voidable by a beneficiary under Fla. Stat. § 736.0802, which covers transactions involving the investment or management of trust property for the trustee’s own personal account or affected by a conflict between fiduciary and personal interests. Reasonable reliance on the trust instrument is a defense under Fla. Stat. § 736.1009.

A beneficiary’s consent, release, or ratification can bar a claim under Fla. Stat. § 736.1012. That bar does not apply if the trustee induced the consent through improper conduct. It also does not apply if the beneficiary did not know their rights or the material facts at the time.

How Can You Talk Through Your Trust Concerns?

A consultation is the place to sort out which of these points fit your family’s situation. If you’re watching a parent’s or relative’s trust being run in a way that worries you, you may also be grieving or dealing with family tension. That is a hard place to make decisions.

Leslie V. Marenco is the responsible lawyer for this page. Trust Counsel, PL’s Coral Gables office concentrates in trust litigation and related trust and estate matters. The first consultation is free, confidential, and carries no obligation to continue.

If you’re weighing a concern about a trust you’re part of, you can contact Trust Counsel or call (305) 707-7126 to start that conversation.