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7 Effective Legal Remedies for Florida Trust Beneficiaries

Under Florida law, a beneficiary has an exceptionally broad range of statutory remedies if a trustee violates a duty owed to the beneficiary including: (1) compel the trustee to perform the trustee’s duties; (2) enjoin the trustee from committing a breach of trust; (3) compel the trustee to redress a breach of trust by paying money or restoring property or by other means; (4) order a trustee to account; (5) appoint a special fiduciary to take possession of the trust property and administer the trust; (6) suspend the trustee; (7) remove the trustee as provided in s. 736.0706; (8) reduce or deny compensation to the trustee; (9) 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 (10) order any other appropriate relief. See F.S. 736.1001(1).

This broad range of remedies is further expanded by equitable law. As noted by John Grimsley and David Powell in their treatise, Florida Law Of Trusts: “The (Florida) beneficiary has available to him broad equitable remedies to compel the trustee to carry out his duties properly.”

Among this broad spectrum of remedies, here are seven especially effective remedies:

  1. Order Accounting. In the case of In Re Will minor beneficiaries brought an action against the Trustee for an accounting and other relief. If was held that if the trustees failed to file an accounting, improperly valued assets or failed to account for all of the assets in the corpus of the trust, then the minor beneficiaries would be entitled to bring the trustee to account for any breach of fiduciary responsibility that might exist. 289 So. 2d 788, 790 (Fla. 2d DCA 1974).

    Florida law has rigorous accounting requirements. The Trustee must provide beneficiaries with a detailed accounting that complies with F.S. 736.08135 from the date the trustee accepts the trustee duties at least annually and on termination of the trust or on change of the trustee. F.S. 736.0813(1)(d). Important information required in the trust accounting by F.S. 736.08135 include all cash and property transactions and all compensation paid to the trustee and the trustee’s agents, such as the trustee’s attorney, CPA, or investment advisor.

  2. Demand and receive payment. Income beneficiaries of a trust often have a compelling tax reason to demand distribution, as the trust tax environment is high – usually at the rate of 39.6% – whereas the tax rate of beneficiaries is often lower. Trustees who fail to exercise good income tax planning can be in breach of their fiduciary duties to manage the trust assets in the best interests of the beneficiaries.

  3. Order the removal of the trustee. Pursuant to 736.0706, the court may remove a trustee if, among other reasons: (1) The trustee has committed a serious breach of trust; (2) persistent failure of the trustee to administer the trust effectively; (3) the court determines that removal of the trustee best serves the interests of the beneficiaries; or (4) the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable successor trustee is available.

    Under Florida case law, a trustee can be removed upon proof of improper administration for misfeasance. Salisbury v. Taylor, 116 So. 2d. (Fla 3d DCA 1959) This right is so strong that a forfeiture clause in a will does not prevent the filing of a petition by a beneficiary of a testamentary trust to remove the trustee for abuse of fiduciary powers. Railey v. Skaggs, 212 So. 2nd 86 (Fla. 3rd DCA 1968). Also see Stadler v. Gerry Corp., 192 So. 2nd 299 (Fla. 3d. DCA 1966) where the trustee was removed upon findings of misfeasance and malfeasance concerning the improper expenditures for which the trustees were required to account.

  4. Compel trustee to make distributions that have been improperly withheld. See F.S. 736.1001(2)(c). In Re Herskowitz’s Estate, 338 So. 2d. 210 (Fla. 3d DCA 1976).

  5. Appoint a receiver or special fiduciary. The court can appoint a receiver or special fiduciary to administer the trust in conjunction with other relief. F.S. 736.1001(2)(e).

  6. Compel the trustee to perform any duty under the trust. As a fiduciary, the trustee is obligated to perform all duties and instructions under the trust, and generally to fulfill the grantor’s intent in establishing the trust. “Where there are two or more tiers of beneficiaries, the trustee is under a fiduciary duty to deal without partiality and must make the trust estate reasonably productive while maintaining the principal. This area of trustee’s responsibility to all beneficiaries represents the most inviolate of all his duties.” Grimsley, supra. 8.4, p. 128.

  7. Modify or Terminate Trust. If because of structural flaws in the trust the trustee is unable to fulfill the grantor’s intent, the trustee may have a fiduciary duty to reform the trust or terminate it. Modification of an irrevocable trust is allowed where (1) the purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill; or (2) because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust. F.S. 736.047113

    In addition, the trust can be reformed if (1) modification is not inconsistent with the grantor’s purpose, F.S. 736.047113; or (2) where modification is in the best interests of the beneficiaries. F.S. 736.04115. The “best interests” standard gives the court exceptionally broad discretion to modify the trust. Although these statutes apply to any trust created prior to January 1, 2001, it is clear that for trusts created prior to 2001, the statutory provisions are “in addition to, and not in derogation of, rights under the common law to modify, amend, terminate, or revoke trusts.” F.S. 736.047113(4). In fact it can be argued that the statutory language is simply a codification of the common law that existed prior to 2001.

Take-Away Points

  1. The trust’s sole reason for existence is to secure benefits for the beneficiary. The trustee’s multiple fiduciary duties run like a laser beam to the beneficiaries.

  2. If the beneficiaries are not receiving timely and appropriate benefits from the trust, the beneficiary has an extraordinary range of remedies to make the trust productive, including removing the trustee and appointing a successor.

  3. If remedies are not available or practical to make the trust productive for the beneficiaries, the court can modify the trust or terminate it.