Breach of Fiduciary Duty by a Trustee in Florida

A breach of fiduciary duty claim asks a Florida court to hold a trustee responsible for failing to meet duties owed to beneficiaries. A beneficiary who suspects a trustee has mishandled trust property can bring a breach of fiduciary duty trustee lawsuit in Florida. This guide covers the duties, common problems, court remedies, time limits and records that matter early on.

What a Breach of Fiduciary Duty Claim Against a Trustee Is

A breach of fiduciary duty claim says a trustee broke a duty owed to the beneficiaries. Florida law treats any violation of a duty a trustee owes a beneficiary as a breach of trust (Fla. Stat. § 736.1001).

The main duties come from several sections of the Florida Trust Code:

• Loyalty: The trustee must run the trust solely in the beneficiaries’ interests (§ 736.0802).
• Prudence: The trustee must act as a prudent person would, with reasonable care, skill and caution (§ 736.0804).
• Impartiality: With two or more beneficiaries, the trustee must act impartially (§ 736.0803).
• Records: The trustee must keep trust property separate and keep clear, accurate records (§ 736.0810).

A beneficiary can bring a claim for breach of trust. A settlor, a cotrustee or a beneficiary may also ask a court to remove a trustee (§ 736.0706). Whether anyone else can sue depends on the trust terms and the facts.

Common Breaches of Fiduciary Duty by Trustees

Most trust disputes involve self-dealing, poor reporting, careless management, mixed funds, unequal treatment or unexplained delay. Each problem ties back to a specific duty.

• Self-dealing: A transaction involving trust property that the trustee enters for a personal account, or that is affected by a conflict of interest, can be voidable by an affected beneficiary. Exceptions apply (§ 736.0802).
• Poor reporting: Qualified beneficiaries must be kept reasonably informed. An accounting must show all significant transactions, including compensation paid to the trustee (§ 736.0813; § 736.08135).
• Imprudent management: Losses from careless or poorly documented investing can break the prudence standard.
• Commingling: Mixing trust money with personal funds breaks the rule that trust property stays separate.
• Unequal treatment: Favoring one beneficiary without authority under the trust conflicts with the duty of impartiality.
• Delay: Holding assets without a valid reason can also fall short of the prudence standard.

One problem alone may have a simple explanation.

Remedies a Florida Court Can Order

A Florida court can order a trustee to pay money, restore property, account, reduce or deny compensation to the trustee, or suspend or remove the trustee. Under § 736.1001, the court may compel the trustee to redress a breach of trust by paying money or restoring property or by other means. It may also order an accounting, suspend or remove the trustee, or reduce or deny compensation.

Damages follow a formula. Under § 736.1002, a trustee who commits a breach of trust is liable for the greater of: 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 the profit the trustee made by reason of the breach. One is the amount needed to restore the trust to where it would have been, including lost income and appreciation. The other is the profit the trustee made from the breach.

A trustee who commits a breach of trust is liable for the greater of 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, or the profit the trustee made by reason of the breach (§ 736.1002). If a breach of trust favors one beneficiary over another or is an abuse of the trustee’s discretion, and a beneficiary received a distribution that was too large, the court may require the trustee to withhold an amount from one or more future distributions to that beneficiary, or require that beneficiary to return some or all of the distribution to the trust (§ 736.1001).

A court may remove a trustee for a serious breach of trust. It may also remove a trustee due to the unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, if the court determines that removal best serves the interests of the beneficiaries (§ 736.0706). Which remedy fits depends on the facts, the trust terms and the evidence. No one can promise a particular outcome.

How a Trust Breach Lawsuit Typically Moves Forward

Some trust disputes begin with gathering records and making a written request, and filing in court may follow if needed. Here are the usual steps in a breach of fiduciary duty trustee lawsuit in Florida:

1. Review the trust instrument, any amendments, and every statement, inventory and report the trustee has issued.
2. Tie each act or omission to a specific duty.
3. Send a written request for information or an accounting.
4. If the matter does not resolve, file a petition or complaint in the proper Florida circuit court.
5. Use discovery, including document requests, depositions and subpoenas for bank and brokerage records.
6. Pursue settlement talks, mediation or a hearing. A court rules if no agreement is reached.

Timing varies with the trust’s complexity, the records involved and whether the trustee contests the claims. In actions for breach of fiduciary duty or challenging the exercise of, or failure to exercise, a trustee’s powers, the court shall award taxable costs, including attorney fees and guardian ad litem fees, and in its discretion may direct payment from a party’s interest in the trust, other property, or both (§ 736.1004).

Time Limits and Why Early Action Matters

Florida sets time limits for claims against trustees, and the rules depend on what the trustee disclosed. A beneficiary may be barred from suing on an adequately disclosed matter unless the case starts within a set period. For a matter adequately disclosed in a trust disclosure document, a beneficiary must commence a proceeding 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 (§ 736.1008).

Matters not adequately disclosed follow the general limitations rules in chapter 95 of the Florida Statutes. Timing can turn on when the trustee has issued a final trust accounting and has given written notice to the beneficiary of the availability of the trust records for examination (§ 736.1008).

Because a report can start the clock, note the date you receive each one. Preserve evidence now. Keep emails, texts, account statements and check images, and don’t delete or edit anything.

Getting the Information You Need First

Under Florida law, when a qualified beneficiary makes a reasonable request, the trustee must provide a complete copy of the trust instrument. Upon reasonable request, the trustee must also give a qualified beneficiary relevant information about the trust’s assets and liabilities and the particulars relating to its administration (§ 736.0813).

Under § 736.0813(1)(b), within 60 days after the trustee acquires knowledge of the creation of an irrevocable trust, or that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, the trustee must give qualified beneficiaries notice of the trust’s existence, the identity of the settlor or settlors, the right to request a copy of the trust instrument, the right to accountings under this section, and that the fiduciary lawyer-client privilege applies to the trustee and any attorney employed by the trustee. These notice requirements do not apply to an irrevocable trust created before the effective date of this code (§ 736.0813). Under § 90.5021, a communication between a lawyer and a client acting as a fiduciary is privileged and protected from disclosure to the same extent as if the client were not acting as a fiduciary, and only the person or entity acting as a fiduciary is considered the client of the lawyer.

If a trustee refuses or fails to account, a court may order the trustee to account (§ 736.1001). Gather these records first:

• The trust document and every amendment
• Inventories, account statements and any trust reports
• Bank and brokerage statements
• Tax returns for the trust
• Invoices for trustee fees and expenses
• Letters and emails with the trustee

Build a timeline of distributions, sales, loans and transfers. Then compare the trustee’s explanations with the records.

Why Work With Trust Counsel, PL on a Trust Breach Matter

Trust Counsel, PL is a Coral Gables, Florida trusts and estates law firm. Its only office is in Coral Gables, and we serve clients in Florida. The firm concentrates in probate litigation, trust litigation and trust administration.

• The firm advises and represents trustees, personal representatives and beneficiaries.
• Trust Counsel’s attorneys can serve individually as trustee or personal representative.
• Leslie V. Marenco is the responsible lawyer for this page. Tanya Vega is also a lawyer at the firm.
• If a matter may be referred to another lawyer or firm, the firm says so.

Frequently Asked Questions

Talk Through Your Trust Concern With Trust Counsel, PL

If a trustee’s silence, unexplained withdrawals or a confusing report has you worried, you don’t have to sort it out alone. Many people reading this are looking into a trust for a parent, sibling or other relative.

Bring the trust document, any amendments and every report you have. The attorneys can review them with you and explain the options under Florida law. Call (305) 707-7126 or schedule online.