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FLORIDA TRUST OVERPAYMENT? GET TOO MUCH FROM THE FLORIDA TRUST? you have to give it back if the Florida trustee asks you

Uncategorized Dec 29, 2013

Are you the beneficiary of a Florida trust?

Did you recently receive a distribution of Florida trust money? If you received too much, you have to give it back to the Florida trust. Here’s why.

Florida trusts are governed by the Florida trust code. The Florida trust code is chapter 736 of the Florida statutes. The Florida trust code is a set of statutes, and laws, which tell us the rules, procedures, and, for lack of a better term, regulations, regarding Florida trusts, Florida trustees, and the rights of Florida beneficiaries.

There is a specific Florida statute which deals with improper distributions, or overpayments of trust money, to trust beneficiaries, or any person, for that matter. The Florida statute is Florida Trust Code § 736.1018. You can read this portion of the Florida trust code online for free. Here is the link which you can look up on the Internet, or cut and paste in your Internet browser:


I’m also cutting and pasting the complete Florida trust code statute § 736.1018 at the end of this commentary for you to review if you care to read it right now.

Here’s a little background of Florida trust law. First of all, when a trustee is about to make a trust distribution to a Florida trust beneficiary, it is very common for the Florida trustee to ask the trust beneficiary to acknowledge, in writing, that the trust beneficiary has received the trust distribution. Nothing up the trustee’s sleeve here. No hide and seek, and no bait and switch.

I know that a lot of Florida trust beneficiaries get very nervous, or experience anxiety, when they get written documents from their Florida trustee. Let’s face it, a lot of Florida trust beneficiaries don’t trust their Florida trustee. Regardless, a trust beneficiary should retain a Florida trust lawyer who has experience in beneficiary rights, and representing beneficiaries against trustees, if you are uncertain about your rights what to do if a Florida trustee communicates with you asked you to take some action. This way, an experienced trust lawyer whose practice is in Florida will be able to advise a trust beneficiary about their rights, and about what documents a trustee may be asking the beneficiary to sign.

So, for example, if the trustee of a Florida trust is about to distribute $1 million to you, a trust beneficiary, you should expect to get a standard document in the mail, or by email, which is often referred to in Florida as a “receipt and release.” This is a standard trust document which is used during the course of Florida trust administration. It’s asking you, the trust beneficiary, to do two things: first, simply acknowledge receipt of a distribution of trust money. This could also include a distribution of specific trust property, such as real estate or, 10,000 shares of Walmart stock. Second, a Florida receipt and release trust document is also asking you, the trust beneficiary to release the trustee from any liability. This is common.

A Florida trustee is not going to make a distribution, a complete distribution from a Florida trust, to a trust beneficiary unless the trustee knows that the beneficiary is not going to come back, at a later date, and then sue the trustee. This is your opportunity to review the books and accounts of the Florida trust, to review and examine the administration of the trust by the Florida trustee, and raise an objection, if you believe that you need to. If you think a trustee has done nothing wrong, if you reviewed everything that has been disclosed to you by the Florida trustee and everything looks fine, then you have to ask yourself: why wouldn’t you sign the receipt and release?

If, however, you believe that your Florida trustee has not served you well, or, if you believe the trustee has committed a  breach of trust, or, a breach of the trustee’s fiduciary duties to you, then this is serious, and you need to get serious: you need to file a lawsuit against your trustee. The Florida trust code, section 736.0201 provides that an action regarding a trust must be commenced by the filing of a civil action: that means a lawsuit. This is a defining moment in the trust administration, and for you as a trust beneficiary. You need to put up or shut up. If you want to receive your inheritance and don’t want to spend money on attorneys fees, or spend time fighting the trustee, you are probably going to be advised to sign a receipt and release. If, however, you believe that something has gone seriously wrong with the trust administration, file a lawsuit, after retaining competent Florida trust litigation counsel.

There is one thing the you should know: a trustee is entitled to a release in Florida. A Florida trustee is entitled to a declaration from someone, either the beneficiary, or a Florida probate court which hears trust cases, that says that the trustee has done a fine job of administering the trust and that the trustee has done nothing wrong, and there is no liability. If you don’t want to sign a receipt and release, and acknowledged that you are releasing the trustee from any liability, that’s okay. That is your right. But understand, you’re inaction, really constitutes action. Your refusal to sign a receipt and release trust document is a decision that you are making, and it may be a costly decision.  In that case, the trustee is probably going to go to court, and initiate a Florida trust lawsuit, asking that a Florida trust judge review that trustee’s tenure.  The trustee will also ask the Florida probate court to release, or discharge, the trustee from further service and liability under Florida trust law. You should also know that if you make a trustee do this, that the attorneys fees attributable to this trust action in a Florida trust court will probably be charged against your trust inheritance. In other words, if you fight a trustee, and lose, or if you don’t sign a release, when a release is appropriate, and if you make the trustee go to court to get a release, your trust inheritance will probably be reduced by the trustee’s lawyers fees, as well as additional compensation to the trustee for having to file this lawsuit. It’s your choice. I can’t provide any advice to you as a Florida trust beneficiary other than the following: if this is not an area that you are comfortable with, if you do not have a complete understanding of Florida trust administration, beneficiary trust distributions, or Florida trust law for that matter, pay a few bucks and hire an experienced Florida trust lawyer.

But remember, if money is distributed to you for a Florida trust, Florida trust law says that if you have received an improper distribution, or an overpayment, you need to give it back.   What’s fair is fair. You can’t keep something that’s not yours. Even if it was distributed to you by mistake, or in good faith. You can’t keep what is not yours. Think of it this way: if, by some fluke, or error, the bank where you have your checking account reflects on your most recent bank statement that you have $10 million in your checking account, and you know that you only have $1000 in your checking account, it’s not fair for you to keep the $10 million. Or, if you are due, say $1000, from your employer, and you receive a check for $100,000, you don’t get to keep the extra $99,000.

If you, the recipient of the Florida trust distribution, do not have the trust money that was distributed to you, then you have to distribute back to the trust the value of what was distributed to you plus the income, if any, from the trust assets which were distributed to you and any gain attributable to you regarding those distributed trust assets. Here’s the short of it: if the trustee distributes too much money to you, or distributes the wrong asset to you, you have to give it back to the Florida trust when you’re asked. You have to also give it back plus any income, such as rental payments if it was real property, or any distributions, such as in the case of a partnership interest which is distributed to you, or dividends, if, for example shares of stock were distributed to you. If you sell the property, even for substantially more than the value it was distributed to you at, a Florida legal question becomes whether you need to give back just the value of the property at the time it was distributed to you, or the total value of what you sold it for.

Here is the complete copy of the Florida Statute which deals with Florida trust overpayments or improper distributions:

The Florida Trust Code: Florida Statute §736.1018 Improper distribution or payment; liability of distributee.- Any person who received a distribution or was paid improperly from a trust shall return the assets or funds received and the income from those assets or interest on the funds from the date of distribution or payment unless the distribution or payment cannot be questioned because of adjudication, estoppel, or limitations. If the person does not have the assets or funds, the value of the assets or funds at the date of disposition, income from the assets or funds, and gain received by the person from the assets or funds shall be returned.