By Phillip B. Rarick, Miami Trust Attorney and Hannah S. Rarick, J.D. Candidate
Florida’s short 6-month statute of limitations on a trust accounting can be a sand trap for the qualified beneficiary of a Florida trust. Here are some quick tips based upon our years of experience as Miami Trust attorneys.
It is standard practice for professional Trustees to place a limitation notice on all Trust accountings or trust reports to cut off beneficiary claims concerning the accounting or report.
Here is the statutory language, but note the notice does not need to mirror this language:
An action for breach of trust based on matters disclosed in a trust accounting or other written report of the trustee or a trust director may be subject to a 6-month statute of limitations from the receipt of the trust accounting or other written report. If you have questions, please consult your attorney. F.S. 736.1008(4)(c)
Note: Effective July 1, 2022, this statute now applies to Trust Directors (also referred to as Trust Protectors or Trust Advisors).
Per F.S. 736.1008(4)(b) “Trust accounting” means an accounting that adequately discloses the information required by and that substantially complies with the standards set forth in F.S. 736.08135. This statute is very specific regarding the details of the accounting, and among many other items, the accounting must show “ . . . compensation paid to the trustee and the trustee’s agents.” Therefore, in addition to compensation paid to the Trustee, the accounting or report must disclose payments to the Trustee’s attorney, CPA, financial advisor, or other agents. As Miami Trust attorneys, our experience is that disclosure of such compensation is often conveniently overlooked.
Upon receiving such a notice, the beneficiary may consider sending the Trustee an objection to the accounting. But is such an objection enough to toll the running of the 6-month statute of limitations? The statute states an action for breach of trust must be filed. Therefore, the safe approach for a beneficiary is to either file the action or secure a tolling agreement with the Trustee.
As we noted in a prior blog, under Florida law a beneficiary has an exceptionally broad range of statutory remedies if a trustee breaches its multiple fiduciary duties owed to the beneficiary. See 7 Effective Legal Remedies for Florida Trust Beneficiaries. However, failure to timely respond to a 6-month statute of limitations notice may eliminate some or all remedies.
3 Take-Aways for the Beneficiary
- Look for the limitation notice on all accountings or reports from the Trustee.
- If you find such a notice calendar accordingly.
- If the Trustee fails to comply with your objection, file your action within the 6-month window or secure a tolling agreement with the Trustee.
Note: For more information, see 5 Key Rights of a Florida Trust Beneficiary.
3 Takeaways for the Trustee
- Always put the F.S. 736.1008(4)(c) limitation notice on all accountings and reports to the beneficiary.
- Have a CPA who is experienced in Florida trust accounting prepare the accounting to comply with F.S. 736.1008(4)(b).
- Failure to give beneficiaries a limitation notice may result in a 10 year statute of limitation for claims against a Florida Trustee per F.S. 736.1008(6)(a)1.a.