Trustee Duties in Miami, Florida

A trustee in Florida holds a position of significant responsibility. When a person accepts the role of trustee, they take on legally enforceable fiduciary duties that govern every aspect of how they manage, invest, and distribute trust assets. These duties are established by the Florida Trust Code, codified in Florida Statutes Chapter 736, particularly sections 736.0801 through 736.0813. At the Law Offices of Albert Goodwin, PA, we advise trustees on their obligations and represent beneficiaries when trustees fail to fulfill them.

Whether you have been named as trustee of a family member's revocable trust or have been appointed as a successor trustee following a death, understanding your fiduciary duties is essential. Failure to comply with these duties can result in personal liability, removal as trustee, and orders requiring you to reimburse the trust for any losses caused by your breach.

The Duty of Loyalty

The duty of loyalty is the most fundamental obligation of a trustee. Under Florida Statutes § 736.0802, a trustee shall administer the trust solely in the interests of the beneficiaries. This means that the trustee must not place their own interests ahead of the beneficiaries' interests and must avoid conflicts of interest.

Specific prohibitions under the duty of loyalty include: the trustee may not engage in self-dealing by purchasing trust assets for themselves or selling their own assets to the trust; the trustee may not use trust property for their personal benefit; and the trustee may not borrow funds from the trust. Any transaction that involves a conflict between the trustee's personal interest and the interests of the beneficiaries is suspect and may be voided by a court, even if the trustee acted in good faith and the transaction was fair.

Under F.S. § 736.0802(2), a sale, encumbrance, or other transaction involving trust property that is entered into by the trustee for the trustee's own personal account, or that is otherwise affected by a conflict between the trustee's fiduciary and personal interests, is voidable by a beneficiary unless one of several statutory exceptions applies. These exceptions include situations where the transaction was authorized by the trust terms, approved by the court, or ratified by all beneficiaries after full disclosure.

The Duty of Impartiality

Under F.S. § 736.0803, if a trust has two or more beneficiaries, the trustee must act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries' respective interests. This duty is particularly important when a trust has both income beneficiaries (such as a surviving spouse who is entitled to receive income during their lifetime) and remainder beneficiaries (such as children who will receive the trust principal after the income beneficiary's death).

The duty of impartiality requires the trustee to balance the needs of current beneficiaries against the interests of future beneficiaries. For example, a trustee who invests the entire trust portfolio in growth stocks that pay no dividends may be favoring the remainder beneficiaries at the expense of the income beneficiary. Conversely, a trustee who invests only in high-yield bonds may be favoring the income beneficiary at the expense of long-term growth for the remainder beneficiaries. The trustee must strike an appropriate balance based on the trust terms and the beneficiaries' circumstances.

The Prudent Investor Rule

Florida has adopted the Prudent Investor Rule, codified in F.S. § 736.0901 through 736.0906. This rule requires a trustee to invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. The trustee must exercise reasonable care, skill, and caution in making investment decisions.

Key principles of the Prudent Investor Rule in Florida include:

Diversification. Under F.S. § 736.0903, a trustee must diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying. Holding a concentrated position in a single stock, a single piece of real estate, or any other single asset class may constitute a breach of the duty to diversify unless the trust terms specifically authorize the concentration or special circumstances justify it.

Total return approach. The Prudent Investor Rule evaluates the trustee's investment performance based on the total return of the portfolio, not the performance of any individual investment. A trustee is not liable for a loss on a single investment if the overall portfolio strategy was reasonable at the time it was adopted.

Consideration of the trust's purposes. Investment decisions must be made in the context of the trust's overall purposes and the needs of the beneficiaries. A trust designed to provide for a surviving spouse's living expenses during their lifetime requires a different investment strategy than a trust designed to accumulate wealth for future generations.

Costs and fees. Under F.S. § 736.0905, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, purposes, and terms of the trust. Excessive trading, high-fee investment products, or unnecessary advisory fees may constitute a breach of duty.

The Duty to Inform and Account

Transparency is a core obligation of a Florida trustee. Under F.S. § 736.0813, a trustee has a duty to keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration. Specific obligations include:

Notice of trust existence. Within 60 days after accepting a trusteeship of an irrevocable trust, or within 60 days after the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, the trustee must notify the 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 an accounting.

Providing a copy of the trust instrument. Upon reasonable request by a qualified beneficiary, the trustee must provide a complete copy of the trust instrument.

Annual accounting. A trustee of an irrevocable trust must provide a trust accounting to each qualified beneficiary at least annually, and upon termination of the trust. The accounting must include information about the trust property, receipts, disbursements, and distributions made during the accounting period. Under F.S. § 736.08135, a trust accounting must show the trust property as of the beginning of the accounting period, all receipts and disbursements during the period, all distributions, all gains and losses, and the trust property as of the end of the period.

Failure to provide accountings or to keep beneficiaries informed can be a basis for the beneficiary to petition the court for an order compelling the trustee to account, and may support a claim for the trustee's removal.

The Duty to Administer the Trust in Good Faith

Under F.S. § 736.0801, a 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 the Florida Trust Code. Good faith administration requires the trustee to follow the trust's terms, carry out the settlor's intent, and act honestly and without improper motive in all trust-related matters.

A trustee who deliberately delays distributions to benefit themselves, who ignores the trust terms, or who takes actions designed to harm certain beneficiaries is not acting in good faith and may be held liable for breach of trust.

The Duty to Control and Protect Trust Property

Under F.S. § 736.0809, a trustee must take reasonable steps to take control of and protect the trust property. This means the trustee must identify all trust assets, take title to real and personal property, ensure that property is properly insured, collect debts owed to the trust, and safeguard the property from loss, theft, or damage.

If the trust holds real estate, the trustee must maintain the property, pay property taxes and insurance premiums, and ensure that the property is not wasted or allowed to deteriorate. If the trust holds financial accounts, the trustee must ensure that the accounts are properly titled in the name of the trust and that the investments are being managed in accordance with the Prudent Investor Rule.

The Duty Regarding Delegation

Under F.S. § 736.0807, a trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. This recognizes that not all trustees have expertise in investment management, tax, or other specialized areas, and that delegation to qualified professionals may be appropriate and even required under certain circumstances.

However, the trustee must exercise reasonable care, skill, and caution in selecting the agent, establishing the scope and terms of the delegation, and periodically reviewing the agent's actions. The trustee cannot simply hand over all responsibility and stop paying attention. If the trustee properly delegates, the trustee is not liable for the decisions or actions of the agent, but if the delegation was improper or the trustee failed to supervise the agent, the trustee may be held liable for resulting losses.

The Duty to Keep Adequate Records

Under F.S. § 736.0810, a trustee shall keep adequate records of the administration of the trust. This includes maintaining records of all transactions, investments, distributions, receipts, disbursements, and correspondence related to the trust. Proper record-keeping is essential both for fulfilling the duty to account and for protecting the trustee in the event of a dispute or litigation.

The Duty Regarding Trust Property and Earmarking

Under F.S. § 736.0810(2), a trustee must keep trust property separate from the trustee's own property. Commingling trust funds with personal funds is a serious breach of fiduciary duty. Trust property should be titled in the name of the trust, and trust bank accounts and investment accounts should be maintained separately from the trustee's personal accounts.

Consequences of Breaching Trustee Duties

A trustee who breaches any of these fiduciary duties may be held personally liable for the consequences of the breach. Under F.S. § 736.1002, a breach of trust may result in the trustee being ordered to compel a specific performance of the trust, to pay money damages, to restore trust property, or to account for profits. The court may also remove the trustee, reduce or deny the trustee's compensation, or impose other remedies that the court deems appropriate.

Beneficiaries who believe their trustee is failing to meet their duties have the right to petition the court for relief. Common remedies include petitions to compel accounting, petitions to compel distribution, petitions for removal, and actions for surcharge (monetary damages for losses caused by the breach).

Contact a Florida Trust Administration Attorney

Whether you are a trustee seeking guidance on your obligations or a beneficiary who believes a trustee is breaching their duties, experienced legal counsel is essential. The Law Offices of Albert Goodwin, PA is located at 121 Alhambra Plz #1000, Coral Gables, FL 33134. We advise on all aspects of trust administration, trustee duties, and trust disputes under the Florida Trust Code. Call us at 786-522-1411 or email [email protected] for a consultation.