Micahel N. Bress, Esq.
FIDUCIARY DUTIES OF TRUSTEES IN FLORIDA
Updated: Oct 28, 2022
WHAT ARE THE FIDUCIARY DUTIES OF A TRUSTEE IN FLORIDA?
Under the Florida Trust Code, Florida Statutes chapter 736, a trustee of a trust is bound by basic fiduciary duties that the trustee owes to a trust’s beneficiaries. A trust is a legal arrangement created to hold property for the benefit of certain entities or persons and is managed by a trustee who holds “legal title” on behalf of the trust. The beneficiaries hold “equitable title,” which means they have the right to the “beneficial enjoyment” of the trust’s property and its fruits.
When a trustee accepts serving as a trustee, he or she also accepts certain duties to and responsibilities toward the trust’s beneficiaries. The trust instrument also invests the trustee with certain powers, such as to sell and invest the trust’s property. This may also include a degree of discretion as to the distribution of such property to its beneficiaries. If the trustee breaches their fiduciary duties, the trustee may be liable for “breach of trust.”
A fiduciary is a person or entity who must act for the benefit of another on matters within the scope of their relationship. Florida law imposes a number of duties on a trustee. The Florida Trust Code sets out the duties of a trustee in specific detail, but generally the duties a trustee owes to a trust’s beneficiaries are the following:
The duty of good faith. The Florida Trust Code provides that, “Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this code.” Fla. Stat. § 736.0801.
The Uniform Trust Code § 105 provides that the terms of a trust do not prevail over the duty of good faith. It is a mandatory duty. Id. “Good faith” is a purposefully vague term that must be understood in terms of the circumstances of the case. The duty broadly encompasses the other trustee duties but also considers subjective intent and whether the trustee abused their discretion. Put simply, this duty prevents the trustee from taking advantage of the beneficiaries by technical loopholes.
The duty of loyalty. A trustee owes a duty of loyalty to the beneficiaries of a trust. This means that a trustee must administer the trust solely in the best interests of the trust’s beneficiaries. Fla. Stat. § 736.0802. Generally, this means the trustee must avoid conflicts and self-dealing.
Duty of impartiality. A trustee has a “duty to act impartially in administering the trust property, giving due regard to the beneficiaries respective interests.” Fla. Stat. § 736.0803. This means that when a conflict is between the beneficiaries, the trustee must not favor one beneficiary over the other.
Duty of prudent administration. A trustee has a duty to “administer [a] trust as a prudent person would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.” Fla. Stat. § 736.0804.
Duty to inform and account. Fla. Stat. § 736.0813, requires a trustee to “[K]eep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.” Id. Moreover, the trustee has a duty to provide accountings to the beneficiaries. Id. Failure to timely respond to a request for information or an accounting, along with an explanation of the trustee’s conduct if requested, can be a breach of trust. In Florida, failure to account to the beneficiaries has led to the commencement of a considerable amount of litigation.
These are the primary fiduciary duties of a trustee, but they are not exhaustive of a trustee’s duties.
If a trustee breaches their fiduciary duties to a trust’s beneficiaries, whether intentionally, negligently, or recklessly, it can give rise to a legal claim by the beneficiaries against the trustee for breach of fiduciary duty. Therefore, before a trustee accepts service, they need to fully understand and be fully committed to their duties, responsibilities, and fundamental fiduciary obligations to the trust’s beneficiaries.
The trustee, in short, has serious obligations to the beneficiaries. The choice of a trustee and a trustee successor, should the initial trustee decline or cease to serve, is a serious consideration that must take various factors into account. Such a decision should be one that is fully informed and with the guidance of an estate planning professional.
Last updated September 10, 2022.
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Michael N. Bress, Esq.
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