Pankauski’s Florida Trust Beneficiary’s Bill of Rights
If you are the beneficiary of a Florida trust, you have more rights than perhaps you realize. You may be an adult child of a parent who had accumulated a modest ($2Million – $5 Million) estate in Florida, and left the estate in trust for your benefit, and also the benefit of your parent’s latest spouse. What should you, as a trust beneficiary, know about Florida trusts and your rights? In Florida, most people have a basic estate plan which includes a revocable trust, also called a living trust. Often, parents use a revocable living trust to leave money & property to their spouse, husband or wife, and then, after the spouse or widow dies, on to the adult children or heirs at law. In other words, as an adult child or heir, your inheritance from your parent may not be outright to you, it may be in trust. And you may not receive your inheritance until years afterthat parent passes away: after the passing of the widow or surviving spouse. Many times, the Florida trust may be for so called second or split families: your parent’s widow or spouse is a2nd or 3rd spouse, and you, the trust creator’s children, are adult children from a prior marriage or relationship. In other words, the trust first operates for your parent’s latest husband or wife, who is not your parent. When the creator of the trust, called the grantor or the settlor, (in our example, your parent) passes away, the trust becomes irrevocable and may often be referred to as a family trust or a by-pass trust. Many times, a widow or suriviving spouse is the lifetime beneficiary of that trust, with adult children, or heirs of the settlor, being the remainder beneficiaries. Often, to the great surprise of adult children and heirs at law, the Florida trust may NOT distribute any money (not a dime !) to the adult children or remainder beneficiaries until the surviving spouse or widow passes away: which could be years or decades in the future. So, how do you know that there will be trust money left for you ? How do you know your trust inheritance is safe? Are you entitled to know how the Florida trustee is running the “family” trust? Spouses and widows, you have a lot of rights to that irrevocable Florida trust, too. And so do you adult children and heirs. Yes, that’s right: even though you may not inherit from the trust until years from now. So, consider the following: Pankauski’s Florida Trust Beneficiary’s Bill of Rights.
As a Beneficiary of a Florida Trust, You Have the Following Rights:
(references to “F.S.” refer to Florida Statutes, that section of the Florida laws which governs trusts, beneficiary rights and trustees, often called the Florida Trust Code)
- The right to have your trustee administer the trust in good faith. F.S. 736.0801.
- The right to have your trustee administer the trust according to the trust document andFlorida law, which is referred to as the Florida Trust Code:http://www.leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/0736ContentsIndex.html&StatuteYear=2015&Title=%2D%3E2015%2D%3EChapter%20736. F.S. 736.0801.
- The right to have your trustee administer the trust solely for the interests of the beneficiaries. F.S. 736.0802. This is referred to as the trustee’s duty of loyalty. It includes the obligation or duty of the trustee to place the interests of the trust beneficiaries above every one else’s, including the trustee’s own.
- The right to have your trustee avoid acts of self dealing and conflicts of interest. F.S. 736.0802. If there is a conflicted transaction regarding the trust or trust property, there is a mechanism or legal procedure to follow. No hiring of the trustee’s son in law or golf buddy to invest the trust money or give the trust a margin loan.
- The right to have your trustee invest trust assets in a prudent manner. F.S. 518.11.
- The right to have your trustee act impartially. F.S. 736.0803 A trustee in Florida can’t play favorites between or among the trust beneficiaries. The trustee has to be even-handed and fair with ALL trust beneficiaries.
- The right to have your trustee administer the trust prudently. F.S. 736.0804. Perfection is not required but ineptness will not be tolerated. This includes a right to have your trust distribution given to you in a reasonable manner and in a reasonably timely manner. If the trust is terminating, or you are to receive an outright distribution, the trustee should make the distribution to you as soon as any outstanding issues are resolved. A trustee should not hold your trust distribution or inheritance hostage. Likewise, if you request money from your trustee for such things as a discretionary distribution for living expenses, the trustee should respond to you with a decision, and explanation, in a reasonable time frame.
- The right to have your trustee monitor and limit expenses of the trust, which should be reasonable. F.S. 736.0805. In other words, the trustee can’t fly to Vegas for a “trustee’s meeting” or an “investment conference” on the trust’s dime. If you don’t like the experts or professionals your trustee hires, or what the trustee is paying them, you have the right to object. F.S. 736.0206.
- The right to have the trustee use any special skills which the trustee has. F.S. 736.0806. This holds those trustees with a background in fiduciary administration to a higher standard.
- The right to have the trustee control and protect the trust property. F.S. 736.0809
- The right to have clear & accurate records of the administration of the trust. Big things matter and perhaps little things matter more. While bookeeping may be boring, it’s important: and required under Florida Trust Law. There is no comingling of the trust property with the trustee’s own property. Trust property, especially money and stocks and bonds, should be held and titled in the name of the trust in separate, distinct accounts. F.S. 736.0810.
- The right to have your trustee take steps to enforce claims of the trust and to defend claims made against the trust or trust property. If there is an asset out there which the trustee should go get, the trustee can use trust funds to go gather or get that asset, and may use trust money for that purpose. If the trust has a claim or lawsuit against someone, it’s the trustee’s job to file suit and enforce the trust’s rights in a court of law.F.S. 736.0811.
- The right to collect all trust property from prior trustees, and deal with any former trustees, including compelling the former trustee to turn over the books & records as well as all trust property. F.S. 736.0812
- The right to relevant information about the trust. F.S. 736.0813 This means that the trustee can’t hide the assets or not tell you where the money is or what it’s being spent on. The trustee should tell you where every dime is, and keep you informed about theadministration of the trust. F.S. 736.0813
- The right to have an annual trust accounting showing all gains, losses, trustees fees and distributions. F.S. 736.0813(1)(d), 736.08135.
- The right to receive notice from your trustee of your trustee’s identification, full name and address. F.S. 736.0813(1).
- The right to obtain a complete copy of the trust document including all amendments.F.S. 736.0813(1)(c).
In the end, you are entitled to all of these rights as a Florida trust beneficiary unless you waive them, relinquish them, or they expire. If your trustee does not want to give you all these rights, or complains that it’s too burdensome, your trustee should resign. If your trustee won’t resign, you can go to a probate court in Florida and seek to have your trustee removed or suspended. Good luck.