Should Florida Estate Planning Attorneys Be Drafting Around 736.0802(10) For Family Trustees of Florida Trusts?

Uncategorized • Oct 1, 2015

Are you the trustee of a Florida trust? If you are, do you want to use trust funds to defend yourself if you are sued in a Palm Beach trust lawsuit by a trust beneficiary? Well, you may not be allowed to use trust funds to defend yourself. If you are the trustee of a Florida trust, and you need a Florida defense attorney or a Florida trust lawyer or litigator, you should read this commentary and discuss it with your litigation team. Consider a Florida trust law firm with a big practice of defending Florida trustees in trust lawsuits from beneficiaries. Read on and read Florida Trust Code section 736.0802 (10).

Florida Trust Code Permits Beneficiaries to Handcuff Trustee: no money for you ! ….Or your trust lawsuit defense attorney

There is a specific Florida Trust law which PROHIBITS–prohibits !– a trustee in Florida from using trust funds to pay your Florida trust litigator if you are sued by a trust beneficiary in a Florida trust law suit.
Are you serious?
Here is the link to the Florida Trust Code which I am talking about, namely Florida Statute 736.0802: http://www.leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0802.html
Everyone knows that a trustee owes a duty of loyalty to all trust beneficiaries
That’s not only basic Florida trust law, but it’s also in that Florida Trust Code law which I mentioned above, 736.0802
But look at paragraph (10) in 736.0802
Read Florida Trust Law 736.0802(10)(b)
This is the mechanism which beneficiaries of Florida trusts can use to handcuff a Florida trustee

Does Anyone Explain That You Can Get Sued as a Florida Trustee and You May Have to Pay $$$$$ of Your Own Money to Defend Yourself?

What if I told you that a trust beneficiary in Florida could sue a trustee and that the probate court judge could make the trustee pay the trustee’s lawyers out of the trustee’s own personal money and savings?
Thousands and thousands of dollars in Florida trust defense attorney fees paid out of the trustee’s own pocket?
If most trustees knew this, they would not agree to be a trustee !
So, you have to ask yourself, does any Florida probate lawyer who writes trusts explain this to a person who is going to be a trustee?
Or, does anyone explain this to your mom or dad who creates a revocable living trust and then names a loved one, heir, or son or daughter to serve as trustee of the Florida trust?
Does this make sense if the trustee does not get along with trust beneficiaries?

How Do Florida Trust Beneficiaries Use 736.0802 to Handcuff Palm Beach Trustees From Defending Themselves in a Florida Trust Lawsuit by a Beneficiary?

But what if a trust beneficiary sues a Florida trustee for breach of trust?
Normally, most Florida trust documents like your mom or dad’s Florida revocable trust or living trust, have a provision in the trust language or trust document which permits the trustee to hire a trust lawyer
A Florida trustee may hire a trust lawyer, even a Palm Beach trust litigator, and pay that trust lawyer Florida from the trust’s money
In fact, good Florida trust litigators who defend trustees will tell you that such a trust provision is not even necessary, because the Florida trust code permits attorneys to be hired by a Florida trustee.
BUT, a trust beneficiary who sues a Florida trustee for breach of trust, or breach of fiduciary duty, may file a motion, or petition, with the Palm Beach probate court, asking the judge to prohibit the trustee from using trust funds to pay the trustee’s lawyers, including the very trust litigation law firm who the trustee hired to defend the trustee in this beneficiary lawsuit !
Wait a minute !
Do you mean that a trustee who is sued by a beneficiary of a Florida trust may have to pay their trust litigation law firm West Palm Beach out of the trustee’s own pocket and savings ?
Yes, maybe
What?

What Every Florida Trustee Needs to Know About Their Beneficiaries

Consider this: you are the loving husband of a very rich woman living in Boca Raton with a $10 Million revocable living trust
This wealthy Boca Raton wife is her own trustee of her revocable trust during her life, but she passes away and her husband, you, in this example, is named as the successor trustee of the $10 Million
Her daughter from a prior marriage hates you and is jealous
Step daughter sues you, step-father, individually & as trustee of the $10 Million trust claiming that you breach your fiduciary duty to her and that you engaged in acts of self dealing and trustee conflicts of interest and that you mis-spent trust money, or worse that you as trustee took trust money wrongly
Step daughter asks a probate court to not let you use trust funds to pay your trustee defense law firm
The Step Daughter has to make a reasonable showing from the record, or proffer evidence, or otherwise demonstrate that a reasonable basis exists to show that you committed a breach of trust as trustee.
Unless the probate court judge finds good cause or defers his or her ruling under 736.0802(10), the probate court could order you NOT to use trust funds to pay your defense team in this stepdaughter trust beneficiary lawsuit

Can Florida Estate Lawyers Write Trusts to Better Protect Florida Trustees?

Can estate planning lawyers in Palm Beach draft around 736.0802(10)?
Perhaps
What if you inserted the following language into a Florida trust to protect your trustees?
Florida Statute 736.0802(10) shall not be applicable to my trustee. Should a trust beneficiary 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, 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 as 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. 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.
So, you’ve got to ask yourself: why doesn’t every corporate trustee like a Florida trust company or bank demand that such language be inserted in trust documents if a client wants the trust company to serve as trustee?
Can’t such suggested trust language protect a Florida trustee who you know won’t get along with his or her beneficiaries?