Advice from a Florida and Palm Beach County Trust Attorney
Parties to a trust will often speak in terms of “firing a trustee.” In Florida, this is referred to as a “trustee removal action.” In a trustee removal action, an interested party may seek to remove a trustee from the trust, either for a variety of reasons, but also for no reason at all. In Florida, trustees can be removed for cause or even without cause.
Removal for a Cause
The removal of trustees is governed by Florida law. Under Florida Statute § 736.0706, and depending on the terms of a trust, a trustee may be removed “for cause” by:
- The settlor,
- A co-trustee,
- Any beneficiary, and
- The Court.
“For cause” may include:
- A serious breach of trust. In Florida, a breach of trust is the same as a breach of fiduciary duty. This is behavior may involve self-dealing, retaliatory, or erroneous conduct, either intentionally or negligently, by the trustee regarding the trust, that results in harm to the trust’s assets or beneficiaries. The law places a great many duties upon trustees, and failing to meet these duties may provide grounds for a beneficiary to bring a claim against you.
- A lack of cooperation among co-trustees. This substantially impairs the administration of the trust. Sometimes, people just do not get along. While this may not be problematic if the animosity does not impact the trust, it could be an issue when said animosity results in the co-trustees failure or refusal to communicate with each other.
- If the court determines that because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively and their removal best serves the interests of the beneficiaries, they will be removed. Unwillingness and even persistent failure are easy enough to understand. Most litigation revolves around whether the trustee is, and will remain to be, fit for the trustee’s duties.
The term “unfit” naturally changes according to the unique circumstances of any given case. Generally, you should be able to show specific circumstances where a lack of business acumen or even common sense has resulted in the decrease in value of the trust’s assets. This is difficult; the selection of who will should serve as trustee was made for specific reasons that are not taken lightly, and often the trustee being removed is an old friend or family member. Keep in mind that mere disagreements are not sufficient to remove a trusteee.
Just because you dislike a trustee or you disagree with something that the trustee did is insufficient reasoning. Commonly, showing a pattern of mismanagement and misjudgment should be established, especially if you can show these decisions are costing the trust money.
Removal Without Cause
Florida Statute § 736.0706(2)(d), often referred to as a “no-fault removal,” includes four requirements. The court may remove a trustee if:
- There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries,
- Removal of the trustee best serves the interests of all the beneficiaries,
- Removal is not inconsistent with a material purpose of the trust, and;
- A suitable co-trustee or successor trustee is available.
Recently, Florida lawmakers were concerned that the laws were improperly favoring the beneficiaries of a trust over the settlor’s intent, and amended various laws to remove any language that might serve to erode the primary goal of the trust, which is to be consistent with the settlor’s intent. The new language placed the focus of the administration of trusts on the settlor’s intent rather than the benefit of the beneficiaries.
Specifically, the Florida Trust Code was amended as follows:
- The definition of “interests of the beneficiaries” under Florida Statute § 736.0103(11) was amended to mean the beneficial interests intended by the settlor as provided under the terms of the trust;
- The exception to the general rule that the terms of the trust prevail over provisions of the Code contained in Florida Statute § 736.0105(2)(c) was amended to remove the mandatory requirement that the terms of the trust be for the benefit of the beneficiaries, and
- Florida Statute §736.0404 was likewise amended to remove the requirement that the trust and its terms be for the benefit of the beneficiaries. As amended, a trust’s purpose only needs to be lawful, not contrary to public policy, and possible to achieve.
The amendments to the Florida law state the “best interests of the beneficiaries” do not supplant the “intent of the settlor.” The courts are bound by the settlor’s intent and may not ignore that intent simply by accepting an argument that the consequence of following the settlor’s intent is not in the perceived best interests of the beneficiaries.
What Happens If a Trustee is Removed?
If the settlor selected a successor trustee when the trust was established, then that successor may step in and accept his or her role to become the new trustee, assuming they are willing and able to do so. Otherwise, if there is no successor named the court will appoint a qualified successor trustee in the best interests of the trust’s beneficiaries.
If there is an appreciable transition period, the original trustee will remain legally obliged to remain as trustee, with all applicable duties and responsibilities thereof, including the duty to account. They must also deliver any documents or property within a reasonable time after notice of their removal.
Let an Experienced Palm Beach County Trust Attorney Help
Our attorneys have years of experience with trust issues, and we can help you, too. Contact us today for your initial consultation.