In Hilgendorf v. Estate of Coleman (Fla. 4th DCA Oct. 26, 2016) the Court held that absent any claim of breach of fiduciary duty in carrying out the terms of the trust, there is no duty to account to a contingent beneficiary during the lifetime of the settlor while the trust is revocable. It stands to reason then that if a contingent beneficiary wished to obtain pre-death accountings of the trust during the period when the trust was revocable he or she would have to make a claim for breach.
Trustee Administered Trust While Trust Was Revocable
In Hilgendorf, the Decedent created a revocable trust which became irrevocable upon decedent’s death. Decedent was the trust’s only beneficiary during her lifetime. Further, there was no duty to account during her lifetime; the only requirement was that the books and records were available for inspection.
Prior to decedent’s death, decedent resigned as trustee and was replaced by another trustee. A qualified beneficiary of the trust and the successor trustee were appointed co-personal representatives of the estate. The trust was obligated to pay the administration expenses of the decedent’s probate. Each sought to remove the other as personal representative. Those requests were denied.
The qualified beneficiary then filed suit against the successor trustee for pre-death accountings from the trust but did not assert a claim for a breach of fiduciary duty. Pre-death accountings were not required by the trust. Pursuant to Fla. Stat. § 736.0813, a trustee is not required to provide trust accountings to qualified beneficiaries while the trust is revocable. The statutory duty under this provision of the trust code does not arise until the trust becomes irrevocable.
The issue presented in Hilgendorf was whether an estate or a beneficiary of a revocable trust created by the decedent may compel the trustee to render a pre-death accounting (an accounting during the decedent’s life), where (i) the trust did not require accountings, (ii) the settlor never requested accountings, and (iii) there was no showing of breach by the trustee.
Trustee Owes Duties to Beneficiaries of Revocable Trust Once Trust Becomes Irrevocable
Although a trustee owes no duties to a contingent beneficiary during the settlor’s life, once the trust becomes irrevocable upon decedent/settlor’s death, the “beneficiary may sue for breach of a duty that the trustee owed to the settlor/beneficiary which was breached during the lifetime of the settlor and subsequently affects the interest of the vested beneficiary.” Brundage v. Bank of America, 996 So. 2d 877, 882 (Fla. 4th DCA 2008).
In Brundage, the beneficiaries accused the trustee of violating an express provision of the trust and for self-dealing. This is not the case here, where the trust did not require the pre-death trust accountings sought in the suit, and no evidence of breach was shown.
During decedent’s lifetime, decedent never demanded an accounting from the successor trustee. Moreover,
[w]hile the trust had a provision for the payment of probate administration expenses, all of these had already been paid by the trust at the time the petition for accounting was filed, and the estate had not certified any demand for payment of expenses from the trust. Thus, the estate did not have an interest in the outcome of any accountings.
As noted above, the beneficiary seeking the accountings from the successor trustee did not claim that the successor trustee violated or breached the trust during the decedent/settlor’s lifetime. The claim, it appears, was for a general right to a pre-death trust accounting for a period of time when the trust was revocable.
The Fourth District concluded that there is authority by the trust’s terms or in statute to compel the trustee to render accountings to a contingent beneficiary while a trust is revocable. T
he Court went on to hold that “there is no authority to impose that duty retroactively after the settlor is deceased and the trust becomes irrevocable, absent any claim of breach of fiduciary duty in carrying out the terms of the trust.” This decision seems to invite a breach challenge in order to obtain pre-death accountings when the trust was revocable.