Trust Beneficiary Bill of Rights
Florida Trust Beneficiary Bill of Rights by the Pankauski-Hauser Law Firm PLLC
For trusts which are administered according to Florida law, trust beneficiaries have a LOT, I mean, a LOT, of rights. Most trust beneficiaries realize that you are entitled to trust accountings, but that’s just the tip of the legal/beneficiary rights iceberg. Although our trust litigation law firm in Florida has a robust defense practice of assisting trustees with the administration of trusts, we also are hired by a number of beneficiaries who need help getting information from their trustee. Many times, a trustee simply won’t tell the beneficiary where the money is, how the trust property is being handled, or what the money is being spent on. The Florida trust beneficiary is in the dark. And when trustees act like that, they can get into a lot of trouble. When trustees behave badly, a probate court can suspend the powers of a trustee, remove the trustee from serving any more, and make the trustee pay costs, attorneys fees, a financial fine often referred to as “surcharge“, and return compensation like trustee fees. In any trust beneficiary lawsuit under the Florida Trust Code against a bad trustee, you should consider what remedies and damages are available to you, and how best to achieve those. This is perhaps more important than it seems. Why? Well, most Florida estate planning attorneys prepare a revocable trust, also called a living trust, for their clients, which becomes a “will substitute.” In other words, you are probably getting your inheritance through a trust. How will your trustee treat you?
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. This may seem simple, but it’s important and it’s the law. Do you know how many trustees we accuse of not acting in good faith? Acting in a mean-spirited, rude, way which is meant to ignore, or pay no attention to, a trust beneficiary? Do you know how many Florida trustees engage in conflicts of interest, in conflicted transactions and in acts of self-dealing? Remember, if your trustee has conflict of interest, or self deals, those acts or transactions may be void, or voidable by your trust litigation law firm in Florida.
- The right to have your trustee administer the trust according to the trust document and Florida law, which is referred to as the Florida Trust Code. F.S. 736.0801. How do you know if your trust is governed by Florida law? Well, you start by reading the trust document from page to page, cover to cover. It often says it. Older trusts may not have a “governing law” provision, so you fall back on Florida law, and often look to where the trust was created and where the person who created the trust lived at the time.
- 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 bookkeeping may be boring, it’s important: and required under Florida Trust Law. There is no commingling 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 the administration 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).