So, you are the beneficiary of a family trust: an irrevocable trust with millions of dollars in it. Or, maybe you just inherited a small trust from your mom or dad who had a revocable trust when they were alive. But now you have trouble with your trustee and you believe that a legal dispute is coming. Where, exactly, do you sue the trustee? This is an area of trust law which is a very important part of trust beneficiary rights, and one area which trustees definitely need to know about.
Principal Place of Administration–Trust Venue
- Let’s say that your mom and dad lived in Boca Raton, Florida and each created a revocable trust which held their investments and most of their property
- Each has passed now, so that their trusts have combined into one family trust: an irrevocable trust which says that Florida law applies to the administration and interpretation of the trust
- So, do you sue the trustee in Florida?
- It’s not that simple
Trust Law vs. Trust Procedure
- Which state’s laws apply to help a trustee determine how to invest, or if a beneficiary is entitled to something, or whether a trustee is doing their job well, is just one trust legal issue.
- State trust laws tell us what standards to apply and what rights and obligations –fiduciary duties–exist, not necessary –or exactly — where to sue the trustee or trustees
- It’s true that some state trust laws do have a “venue” statute, but choosing a forum where a trustee may be sued is not always that clear when there are multiple trustees.
- Where to sue the trustee or trustees is a procedural issue which is often addressed in the trust document or under the governing law. In Florida, for example, the Florida Trust Code tells us that a beneficiary may sue the trustee where the principal place of administration of the trust is
- But what do you do when there are multiple trustees?
Multiple Trustees of the Family Trust
- Where does a trust beneficiary exercise his or rights to go to trust court when, for example, your parents’ trust has three trustees:
- a bank cotrustee which is headquartered in New York, is incorporated in Delaware
- a family adviser in Los Angeles who is a co trustee
- and the estate planning lawyer co -trustee who is in Palm Beach Gardens?
- Principal place of administration –where you may exercise your rights as a trust beneficiary, where the proper state is to sue a trustee of a family trust — is an important procedural issue, and certainly partly substantive, which needs to be understood and evaluated before you file your trust lawsuit.
Want to read more? Google Florida Trust Statutes 736.0204 or Google the Restatement of Trusts and search for venue. Remember: venue, or which court you go to, is different than whether a court may exercise subject matter or personal jurisdiction over an issue or a co trustee.