Beneficiary of Trust Rights in Florida

If you are a beneficiary of a trust in Florida, you have specific legal rights that are protected by the Florida Trust Code, codified in Florida Statutes Chapter 736. These rights are designed to ensure that trustees administer the trust honestly, competently, and in accordance with the terms of the trust document and Florida law. Understanding your rights as a trust beneficiary is essential to protecting your interests and holding the trustee accountable for their actions.

Right to Information Under F.S. 736.0813

One of the most important rights of a trust beneficiary in Florida is the right to information about the trust and its administration. Florida Statutes Section 736.0813 requires the trustee to keep qualified beneficiaries reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.

Under F.S. 736.0813, the trustee has a duty to provide the following to each qualified beneficiary:

• A complete copy of the trust instrument — upon reasonable request, a qualified beneficiary is entitled to receive a copy of the trust document, including any amendments;
• An annual trust accounting — the trustee must provide a trust accounting at least annually and upon termination of the trust to each qualified beneficiary. The accounting must include a statement of trust receipts, disbursements, distributions, and the trust's assets with their values;
• Notice of the existence of the trust — within 60 days after accepting a trusteeship, the trustee must notify qualified beneficiaries of the trust's existence, the identity of the settlor, the right to request a copy of the trust instrument, and the right to receive accountings; and
• Relevant information upon request — beneficiaries may request information reasonably related to the administration of the trust, and the trustee must respond within a reasonable time.

A "qualified beneficiary" under F.S. 736.0105(16) includes current beneficiaries (those currently entitled to or eligible to receive distributions), first-line remainder beneficiaries (those who would become entitled to distributions if the current beneficiaries' interests ended), and intermediate beneficiaries. Not all beneficiaries qualify — contingent or remote remainder beneficiaries may have more limited information rights.

Right to an Accounting

The right to a trust accounting is one of the most powerful tools available to a Florida trust beneficiary. A proper trust accounting provides a detailed record of every financial transaction involving the trust, including:

• All income received by the trust, including interest, dividends, rents, and other earnings;
• All expenses paid from the trust, including trustee fees, attorney fees, accounting fees, property management costs, and tax payments;
• All distributions made to beneficiaries;
• All gains and losses from the sale of trust assets;
• The beginning and ending balances of all trust accounts; and
• A detailed inventory of all trust assets and their current values.

If a trustee fails or refuses to provide an accounting, a beneficiary may petition the court under F.S. 736.0201 to compel the trustee to account. The court may order the trustee to provide the accounting within a specified time period, and the trustee's failure to comply with a court order may result in sanctions, removal, or a finding of breach of fiduciary duty.

Right to Distributions

Your right to distributions from a Florida trust depends on the terms of the trust document. Trusts are drafted with varying levels of discretion granted to the trustee regarding distributions:

Mandatory Distributions

Some trusts require the trustee to make distributions at specific times or upon the occurrence of specific events. For example, a trust may require that all net income be distributed to the surviving spouse quarterly, or that the principal be distributed outright to the children when they reach age 30. When a distribution is mandatory, the trustee has no discretion and must make the distribution as directed. A trustee who fails to make a mandatory distribution is in breach of their fiduciary duty and may be held liable for any damages, including interest on the delayed distribution.

Discretionary Distributions

Many Florida trusts grant the trustee discretion to make distributions for the beneficiary's health, education, maintenance, and support — often referred to as a "HEMS" standard. Under a discretionary distribution provision, the trustee has the authority to determine whether, when, and how much to distribute, guided by the standard set forth in the trust. While the trustee has discretion, that discretion is not unlimited. The trustee must exercise their discretion in good faith, in accordance with the terms and purposes of the trust, and in the interests of the beneficiaries.

Under F.S. 736.0814, a court may review the trustee's exercise of discretion and may set aside a distribution decision that was made in bad faith, was based on improper considerations, or was an abuse of discretion. However, courts generally give considerable deference to a trustee's distribution decisions when the trust grants broad discretion.

Right to Challenge the Trustee

Florida law provides trust beneficiaries with standing to challenge a trustee's actions — or inaction — in several important ways:

Breach of Fiduciary Duty

A trustee owes a fiduciary duty to the beneficiaries that includes duties of loyalty, impartiality, prudent administration, and compliance with the trust terms. Under F.S. 736.1001, a beneficiary may bring an action against a trustee for breach of fiduciary duty. Common claims include:

• Self-dealing — the trustee uses trust assets for their own benefit or engages in transactions that involve a conflict of interest;
• Failure to invest prudently — the trustee fails to manage trust investments in accordance with the Florida Prudent Investor Act (F.S. 518.11);
• Failure to account or provide information — the trustee refuses or neglects to provide required accountings or information;
• Commingling trust assets — the trustee mixes trust assets with their own personal assets or with assets of other trusts without authorization;
• Failure to make required distributions — the trustee withholds distributions that the trust requires; and
• Excessive compensation — the trustee takes unreasonable fees for their services.

Trustee Removal

Under F.S. 736.0706, a beneficiary may petition the court to remove a trustee if the trustee has committed a serious breach of trust, has failed to cooperate with a co-trustee, is unfit or unwilling to administer the trust effectively, or if there has been a substantial change in circumstances. The court will consider whether removal serves the interests of the beneficiaries and whether there is a suitable successor trustee available.

Trust Contests

In addition to challenging the trustee's administration, a beneficiary may have standing to contest the validity of the trust itself if there are grounds to believe the trust was the product of undue influence, lack of capacity, fraud, or duress. Trust contests are governed by the same general principles as will contests, though the procedural requirements may differ.

Remedies Available to Beneficiaries

When a trustee breaches their duties, Florida law provides several remedies to protect beneficiaries:

• Surcharge — the court may order the trustee to personally compensate the trust for any losses resulting from the breach, including lost investment returns and improperly taken fees;
• Removal of the trustee — the court may remove the trustee and appoint a successor;
• Injunctive relief — the court may issue an injunction to prevent the trustee from taking a specific action that would harm the trust or the beneficiaries;
• Reduction or denial of trustee compensation — the court may reduce or eliminate the trustee's fees as a consequence of the breach;
• Constructive trust — the court may impose a constructive trust on assets that the trustee improperly diverted from the trust; and
• Attorney fees — under F.S. 736.1004, the court may award attorney fees to a beneficiary who successfully challenges a trustee's breach of duty, payable from the trust or from the trustee personally.

Limitations on Beneficiary Rights

While Florida law provides robust protections for trust beneficiaries, there are limitations. A settlor may, within certain bounds, limit or modify certain default rules of the Florida Trust Code. For example, a trust may include provisions that limit the frequency of accountings, restrict the information available to certain classes of beneficiaries, or establish alternative dispute resolution procedures for trust disputes. However, certain core protections cannot be waived, including the duty to act in good faith and in accordance with the purposes of the trust under F.S. 736.0105(2).

Beneficiaries should also be aware of limitations periods. Under F.S. 736.1008, a beneficiary who receives a trust accounting has six months from the date of receipt to bring a claim for breach of trust with respect to matters adequately disclosed in the accounting. If the beneficiary does not bring a claim within this period, the trustee is generally protected from liability for those matters. This makes it critical for beneficiaries to review accountings carefully and promptly when they are received.

Contact a Florida Trust Beneficiary Attorney

If you are a trust beneficiary in Florida and believe your rights are being violated — whether through a failure to provide information, improper investment management, self-dealing, or unreasonable withholding of distributions — the Law Offices of Albert Goodwin can help. We represent trust beneficiaries in trust litigation, contested accountings, trustee removal, and breach of fiduciary duty proceedings throughout Florida. Contact us at 786-522-1411 or email [email protected] to schedule a consultation at our office at 121 Alhambra Plz #1000, Coral Gables, FL 33134.