The Florida Trust Code provides that “the trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.” Fla. Stat. § 736.0813. The trustee owes a duty to inform and account. The trustee’s duties to each qualified beneficiary include but are not limited to:
- Accounting, at least annually;
- Providing relevant information about the trust’s assets and liabilities*; and, among others,
- Provide a copy of the trust instrument.*
* Upon reasonable request. A beneficiary is not required to request an accounting. A trustee also has the duty, within 60 days after acceptance of the trust to give notice to the qualified beneficiaries of the acceptance of the trust. See Fla. Stat. § 736.0813(1)(a). In addition, “[w]ithin 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, the trustee shall give notice to the qualified beneficiaries of the trust’s existence, the identity of the settlor or settlors, the right to request a copy of the trust instrument, [and] the right to accountings . . . .” See Fla. Stat. § 736.0813(1)(b).
The Florida Trust Code defines a qualified beneficiary in Section 736.0103(16), Florida Statutes, as a “living beneficiary who, on the date the beneficiary’s qualification is determined:
- Is a distributee or permissible distributee of trust income or principal;
- Would be a distribute or permissible distribute of trust income or principal if the interests of the distributees described in paragraph (a) terminated on that date without causing the trust to terminate; or,
- Would be a distributee or permissible distribute of trust income or principal if the trust terminated in accordance with its terms on that date.
The term beneficiaries is defined as a far larger grouping of individuals who have a beneficial interest in a trust or power of appointment over trust property in a capacity other than a trustee. See, Fla. Stat. § 736.0103(4).
Conversely, qualified beneficiaries are those individuals who are current beneficiaries, intermediate beneficiaries, or first-line remainder beneficiaries (regardless of whether their rights are contingent or vested).
What is a trust accounting?
Florida law governs trust accountings. Fla. Stat. § 736.08135(1) states that:
A trust accounting must be a reasonably understandable report from the date of the last accounting or, if none from the date on which the trustee became accountable, that adequately discloses” the following required information:
- The accounting must begin with a statement identifying the trust, the trustee furnishing the accounting, and the time period covered by the accounting.
- The accounting must show all cash and property transactions and all significant transactions affecting administration during the accounting period, including compensation paid to the trustee and trustee’s agents. Gains and losses realized during the accounting period and all receipts and disbursements must be shown.
- To the extent feasible, the accounting must identify and value trust assets on hand at the close of the accounting period. For each asset or class of assets reasonably capable of valuation, the accounting shall contain two values, the asset acquisition value or carrying value and the estimated current value. The accounting must identify each known non-contingent liability with an estimated current amount of the liability if known.
- To the extent feasible, the accounting must show significant transactions that do not affect the amount for which the trustee is accountable, including name changes in investment holdings, adjustments to carrying value, a change of custodial institutions, and stock splits.
- The accounting must reflect the allocation of receipts, disbursements, accruals, or allowances between income and principal when the allocation affects the interest of any beneficiary of the trust.
- Final accountings shall include a plan of distribution for any undistributed assets.
See Fla. Stat. § 736.08135.
When a trustee does not comply with the Florida Trust Code’s requirements they may be in breach. A trustee who is in breach of his or her duties as a trustee may be compelled the Court to account and/or provide information to a qualified beneficiary. Please note that there are deadlines to object and/or contest the validity of a trust accounting.
Moving to compel a trustee to account
Trustees who have never accounted and/or have stopped accounting to qualified beneficiaries can be compelled by the Court to do so. However, filing a suit for breach of trust—because of a trustee’s failure to account—is not without risk. A breach of trust suit can also be filed where a trustee failed to adequately account or keep the qualified beneficiary reasonably informed about the trust, including the trust’s assets and liabilities.
A claim for breach carries with it the risk that the objecting beneficiary may be responsible for the attorneys’ fees and costs if the beneficiary is unsuccessful. Moreover, Florida law permits a trustee to use trust assets to pay attorneys’ fees and costs for the trustee’s administration of the trust. This could result in the beneficiary’s share being reduced for said attorneys’ fees and costs.
The right to trust accounting may be waived
Please note, however, that a qualified beneficiary of a trust may waive the trustee’s duty to account. In addition, a qualified beneficiary may withdraw a waiver of his or her right to receive an accounting. See, Fla. Stat. § 736.0813(2). Waivers and withdrawals of waivers must be in writing. Withdrawals of prior waivers are effective only as to accountings for future periods. Id.
Brian Spiro and the lawyers at Comiter, Singer, Baseman & Braun, LLP handle probate and trust accounting disputes throughout Florida. They may can be reached at (561) 626-2101 or toll free (800) 226-1484.