Defending Florida Trustees: why don’t Palm Beach trustees have this simple paragraph in their trust documents?
Trusts which are administered according to Florida law must follow the Florida Trust Code. So why don’t Florida trustees have a simple paragraph in their trust document which can help them defend a trust lawsuit if a trustee is sued by a Florida trust beneficiary? Or, to put it another way: if you are a trustee, did anyone ever tell you that if you get sued by a beneficiary, the beneficiary can prohibit you from using trust funds to pay your lawyers? That’s right: if you are defending a trustee lawsuit, and you are the trustee, youmight have to pay your trust litigation law firm from your OWN MONEY to defend yourself against a trust beneficiary’s accusations that you committed a breach of fiduciary duty or abreach of trust. Do you, the trustee of the Florida trust, know the way around this?
How Do You Protect a Florida Trustee From Being Sued by a Beneficiary?
- The general rule is that most of the Florida Trust Code can be “drafted around” in a trust document, though.
- That is to say, while a Florida trust document cannot contain provisions which arecontrary to public policy, a trust document may, nonetheless, have trust language which “opts out” of certain provisions of Florida Trust law.
- So, why doesn’t each Florida trustee who serves as trustee of a Florida trust insist on language in a trust document which “drafts around” Florida Statute 736.0802(10)(b)?
Florida Trust Code 736.0802 (10) Can Help Beneficiaries/Harm Trustees When Trust Lawsuits Start
- Florida Trust Code 736.0802 deals with a trustee’s duty of loyalty, which we all agree is very important.
- After all, by agreeing to serve as a trustee, the trustee agrees to be a fiduciary and to place the interests of their trust beneficiaries above everyone else’s, including the trustee’s own.
- But what if I told you, a trustee, that if you were sued by a trust beneficiary, for breach of trust, that the trust beneficiary could prohibit you from using trust funds to pay for your defense? What?…… that’s right.
A Trustee May Have To Pay To Defend a Trust Lawsuit With Their Own Money
- If you are a trustee, and don’t want to dip into your own pocket to pay for trust litigation law firms and costs of defending yourself, you should read 736.0802(10).
- And you should talk to your trust counsel about why the following provision is NOT in your trust document.
- If you are already serving as trustee, and the trust is irrevocable, do you know how you can modify the Florida trust to insert the following language into a Florida trust?
- To be clear, this language does not alter a Florida Trustee’s duty of loyalty.
- It does alter the Florida Trust Code and the use of trust funds by a trustee in defense of a trust lawsuit where there are allegations of breach of trust, or breach of fiduciary duty.
Florida Statute 736.0802(10) shall not be applicable to my trustee. Should a trust beneficiary or other interested person sue my trustee for breach of trust, the trustee may not use trust funds to pay the trustee’s attorneys fees and costs in defense of the breach of trust allegation, only if a court of competent jurisdiction finds, by clear and convincing evidence, at an evidentiary hearing, not a proffer, that my trustee may have committed a breach of trust. If the court does not make such a finding, my trustee may use trust funds to pay for attorneys fees and costs related to such suit, but shall account and provide relevant information to all beneficiaries. This provision in no way disrupts a court of competent jurisdiction, at or after trial, from determining whether or not my trustee actually committed a breach of trust, and from assessing damages, costs and attorneys fees pursuant to the governing law, and determining who, or what sources, shall be liable for such, including my trustee individually or personally. This provision in no way limits my trustee’s potential personal liability for wrongs, and in no way alters the burden of proof applicable at trial.