When Your Trustee Is Also a Beneficiary, Conflicts Need Careful Review

Short Answer: Can a Trustee Also Be a Beneficiary in Florida?

Yes. How the roles of trustee and beneficiary are arranged depends on the terms of each trust document. A trustee who is also a beneficiary is not automatically in breach. The problem starts when the trustee’s personal interest drives a decision that should serve all the beneficiaries. That question sits at the center of most trustee is also a beneficiary conflict Florida disputes.

Under Fla. Stat. § 736.0802, a trustee must administer the trust solely in the interests of the beneficiaries. A violation of a duty owed to a beneficiary is a breach of trust under Fla. Stat. § 736.1001.

Trust Counsel, PL is a trusts and estates law firm with its only office in Coral Gables, Florida. Leslie V. Marenco is the responsible lawyer for this page.

Who This Page Is For and What the Conflict Looks Like

This page is for beneficiaries, heirs and co-beneficiaries who believe a trustee is putting personal gain first. It also helps trustees who are beneficiaries and want to know the limits on their own conduct.

Common conflict patterns include:

• Buying trust property at a price the other beneficiaries never approved.
• Leasing trust property to the trustee or to a business the trustee owns.
• Paying the trustee more than the trust allows or more than is reasonable.
• Delaying distributions to other beneficiaries while the trustee keeps receiving payments.
• Choosing investments that help the trustee’s own holdings.

If the trust does not set a fee, a trustee gets reasonable pay for the work. A fee problem is a separate issue from the loyalty question.

Trust Counsel’s attorneys can serve individually as trustee or personal representative. The firm advises and represents trustees, personal representatives and beneficiaries.

The Florida Duties of Loyalty and Impartiality

A trustee must act for the beneficiaries alone and treat them fairly. These duties apply even when the trustee also takes a benefit from the trust.

• Loyalty. The trustee must administer the trust solely in the interests of the beneficiaries (Fla. Stat. § 736.0802).
• Impartiality. With two or more beneficiaries, the trustee must act impartially and give due regard to each beneficiary’s interests (Fla. Stat. § 736.0803).
• Information. The trustee must keep qualified beneficiaries reasonably informed. Upon reasonable request, the trustee must provide a complete copy of the trust instrument (Fla. Stat. § 736.0813).
• What an accounting shows. It must show all significant transactions, including compensation paid to the trustee and the trustee’s agents (Fla. Stat. § 736.08135).

Here is a simple test. Would this decision look the same if the trustee were not also a beneficiary? A trustee may believe a choice is fair.

Remedies Available to Beneficiaries Under Florida Law

A court can order a trustee to account, repay losses, or lose the role. The court’s options appear in Fla. Stat. § 736.1001.

• Accounting. The court may order the trustee to account.
• Restoration. The court may compel the trustee to redress a breach by paying money or restoring property.
• Voiding an act. Subject to s. 736.1016, the court may void an act of the trustee, impose a lien or constructive trust on trust property, or trace trust property wrongfully disposed of and recover the property or its proceeds.
• Damages. Under Fla. Stat. § 736.1002, a trustee who commits a breach of trust is liable for whichever is greater: the amount needed to restore the trust property and trust distributions to the value they would have had if the breach had not occurred, including lost income, capital gain or appreciation that proper administration would have produced, or the profit the trustee made by reason of the breach.
• Compensation. The court may reduce or deny the trustee’s compensation.
• Removal. The court may remove a trustee for a serious breach or persistent failure to administer the trust. The settlor, a cotrustee or a beneficiary may request removal (Fla. Stat. § 736.0706).
• Fees and costs. In all 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 as in chancery actions, including attorney fees and guardian ad litem fees (Fla. Stat. § 736.1004).

Constructive trust example: a trustee sells a trust building to the trustee’s own company at a price the beneficiaries never approved.

Steps to Take Before Filing a Lawsuit

Start with records and a written request. Court is not always the first step.

• Gather the trust instrument, any amendments, and every statement or accounting you received.
• List each questioned transaction with the date, the amount, and who benefited.
• Ask for the accounting and trust documents in writing.
• Keep your messages and records. Avoid confrontations that could be used against you.
• Watch the clock. Under Fla. Stat. § 736.1008, a claim about a matter adequately disclosed is barred unless a proceeding starts within 6 months after you receive the disclosure or a limitation notice, whichever is later.
• Ask whether a demand letter or mediation could resolve the issue before court.

How a Trust Conflict Dispute Typically Proceeds

A trust dispute usually moves from document review to a written demand. Court comes only if needed.

1. Free first consultation. The first consultation is free, confidential, and carries no obligation to continue.
2. Document review. The trust, accountings, bank records and disputed transactions get reviewed.
3. Written demand. A demand for information and an accounting goes out, along with an assessment of settlement options.
4. Court petition. If needed, a petition asks the court for the remedies that fit the facts.
5. Discovery and resolution. The case may move through discovery and mediation, then settlement or trial. The timeline depends on the facts.

If a matter may be referred to another lawyer or firm, we will tell you so.

Frequently Asked Questions

Talk With a Coral Gables Attorney About Your Trust

If a trustee is selling or leasing trust property to themselves, or your distributions have stopped or shrunk, you face a real decision. You may need to demand an accounting or decide what to file. Leslie V. Marenco, the responsible lawyer for this page, can review the trust and the transaction with you at the firm’s Coral Gables office.

Book a free strategy call, schedule online through the same page, or call (305) 707-7126.