Bad trustee?
What can a trust beneficiary do when there is a breach of trust or a breach of fiduciary duty by a trustee? What can a beneficiary of a trust get in the form of damages when there is a breach of trust by a trustee?
These are important questions for a beneficiary of a Florida trust to ask when faced with a trustee who is not acting in your best interests. The legal remedies available to trust beneficiaries, and also the likelihood of winning or not winning your case, are important factors to consider when thinking about suing your trustee. Trust litigation in Florida is very statute-specific. The trust law of Florida is contained in many Florida statutes, called the Florida Trust Code . Florida trust law is also contained in opinions of appellate courts.
I’m “cutting and pasting” below what the Florida Trust Code says about what legal remedies are available to trust beneficiaries who are having trouble with their Florida trustee. You can also view it online for free. Here’s the link to this statute of the Florida Trust Code:
Florida Statutes § 736.1001 Remedies for breach of trust.-
(1) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust.
(2) To remedy a breach of trust that has occurred or may occur, the court may:
(a) Compel the trustee to perform the trustee’s duties;
(b) Enjoin the trustee from committing a breach of trust;
(c) Compel the trustee to redress a breach of trust by paying money or restoring property or by other means;
(d) Order a trustee to account;
(e) Appoint a special fiduciary to take possession of the trust property and administer the trust;
(f) Suspend the trustee;
(g) Remove the trustee as provided in s. 736.0706;
(h) Reduce or deny compensation to the trustee;
(i) Subject to s. 736.1016, void an act of the trustee, impose a lien or a constructive trust on trust property, or trace trust property wrongfully disposed of and recover the property or its proceeds; or
(j) Order any other appropriate relief.
(3) As an illustration of the remedies available to the court and without limiting the court’s discretion as provided in subsection (2), if a breach of trust results in the favoring of any beneficiary to the detriment of any other beneficiary or consists of an abuse of the trustee’s discretion:
(a) To the extent the breach of trust has resulted in no distribution to a beneficiary or a distribution that is too small, the court may require the trustee to pay from the trust to the beneficiary an amount the court determines will restore the beneficiary, in whole or in part, to his or her appropriate position.
(b) To the extent the breach of trust has resulted in a distribution to a beneficiary that is too large, the court may restore the beneficiaries, the trust, or both, in whole or in part, to their appropriate positions by requiring the trustee to withhold an amount from one or more future distributions to the beneficiary who received the distribution that was too large or by requiring that beneficiary to return some or all of the distribution to the trust.
The Florida Trust Code also deals specifically with trust damages, or damages in a trust lawsuit. Florida Statutes, § 736.1002 deals with damages for a breach of trust and is available for viewing free of charge. Here is the link to that part of the Florida Trust Code:
I’m also cutting and pasting this part of the Florida Trust Code below:
§ 736.1002 Damages for breach of trust.-
(1) A trustee who commits a breach of trust is liable for the greater of:
(a) The amount required to restore the value of the trust property and trust distributions to what they would have been if the breach had not occurred, including lost income, capital gain, or appreciation that would have resulted from proper administration; or
(b) The profit the trustee made by reason of the breach.
(2) Except as otherwise provided in this subsection, if more than one person, including a trustee or trustees, is liable to the beneficiaries for a breach of trust, each liable person is entitled to pro rata contribution from the other person or persons. A person is not entitled to contribution if the person committed the breach of trust in bad faith. A person who received a benefit from the breach of trust is not entitled to contribution from another person to the extent of the benefit received.
(3) In determining the pro rata shares of liable persons in the entire liability for a breach of trust:
(a) Their relative degrees of fault shall be the basis for allocation of liability.
(b) If equity requires, the collective liability of some as a group shall constitute a single share.
(c) Principles of equity applicable to contribution generally shall apply.
(4) The right of contribution shall be enforced as follows:
(a) Contribution may be enforced by separate action, whether or not judgment has been entered in an action against two or more liable persons for the same breach of trust.
(b) When a judgment has been entered in an action against two or more liable persons for the same breach of trust, contribution may be enforced in that action by judgment in favor of one judgment defendant against any other judgment defendants by motion upon notice to all parties to the action.
(c) If there is a judgment for breach of trust against the liable person seeking contribution, any separate action by that person to enforce contribution must be commenced within 1 year after the judgment has become final by lapse of time for appeal or after appellate review.
(d) If there is no judgment for the breach of trust against the liable person seeking contribution, the person’s right of contribution is barred unless the person has:
1. Discharged by payment the common liability within the period of the statute of limitations applicable to the beneficiary’s right of action against the liable person and the person has commenced an action for contribution within 1 year after payment, or
2. Agreed, while action is pending against the liable person, to discharge the common liability and has within 1 year after the agreement paid the liability and commenced the person’s action for contribution.
(5) The beneficiary’s recovery of a judgment for breach of trust against one liable person does not of itself discharge other liable persons from liability for the breach of trust unless the judgment is satisfied. The satisfaction of the judgment does not impair any right of contribution.
(6) The judgment of the court in determining the liability of several defendants to the beneficiary for breach of trust is binding upon such defendants in determining the right of such defendants to contribution.
(7) Subsection (2) applies to all causes of action for breach of trust pending on July 1, 2007, under which causes of action the right of contribution among persons jointly and severally liable is involved and to all causes of action filed after July 1, 2007.
If this all sounds like a lot of legal mumbo jumbo, you are not too far off. And while those Florida trust statutes are important for a trust beneficiary to know, there are also other remedies which may be available. For example, a trust court, a Florida probate court, could, while a trust lawsuit is going on, suspend a trustee from all or a part of its fiduciary duties or authority. Also, a probate court in Florida could appoint a special trustee or a trustee with a very limited role, to take or refrain from taking, certain actions for the benefit of the Florida trust and the beneficiaries.
Finally, any trust lawsuits or trust litigation should consider and evaluate what damages have actually taken place: and how you calculate those damages. Damage analysis and damage calculations, are an important part of Florida trust litigations. After all, damages are an important “last” element to any lawsuit which must be proven.