When a trustee of a trust commits wrongdoing, beneficiaries need to know how to sue a trustee. If the trust is governed by Florida law, here are five things to know about how to sue the trustee.
What Can I Sue the Trustee For?
Trustees owe their beneficiaries a fiduciary duty to administer the trust according to the highest standards of conduct. Section 736.0801, entitled “Duty to Administer Trust,” sets forth the obligation in concise terms:
Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with the [Florida Trust Code].
The standard of conduct is further refined by the Florida Trust Code into distinct, yet overlapping “duties.”
The first of these duties set forth in the Florida Trust Code is the Duty of Loyalty. Trustees must administer the trust in the interests of the beneficiaries, not the interests of the trustee. there are significant restrictions on the ability of the trustee to engage in transactions with the trust or to profit from administering the trust. A trustee who violates the Duty of Loyalty can be sued.
The Duty Of Impartiality requires the trustee to administer the trust impartially and fairly as between multiple beneficiaries of the trust. A lawsuit can be brought against a trustee who does not administer the trust impartially.
The Duty of Prudent Administration requires the trustee to exercise reasonable care, skill and caution in administering the trust – especially as it relates to the selection and monitoring of the investments of the trust.
The Duty to Control Expenses of Administration requires the trustee to incur expenses in administering the trust that are reasonable in relation to the trust property, the purposes of the trust, and the skills of the trustee.
The Duty to Control and Protect Trust Property requires the trustee to take control of and to protect trust property.
The Duty to Inform and Account requires the trustee to provide information to beneficiaries who request it. The Duty also requires the trustee to account to the beneficiaries on an annual basis – by providing a trust accounting that is compliant with the Florida Trust Code.
When Can I Sue the Trustee?
In most situations, a lawsuit against a trustee for breach of trust must be brought within four years. Importantly, if a trust accounting has been provided with a statutory limitation notice, the time for filing the trust lawsuit could be six months.
Where Can the Trust Lawsuit Be Brought?
A lawsuit against a trustee can be brought in circuit court in Florida, if Florida has any connection to the trust. If the trustee is located within Florida, the lawsuit will most likely stay in Florida. If the trustee is in another state, it is possible that the trust lawsuit is moved to that state.
In the urban counties of Florida, trust lawsuits are typically brought in the probate division of the circuit court. Many of Florida’s rural counties do not have separate probate divisions, and trust lawsuits would be brought in the general civil division of the circuit court.
Will I Win my Lawsuit Against the Trustee?
The most important factor in winning a lawsuit against a trustee is to have a strong case. Minor transgressions typically do not result in a win. That being said, the failure to provide information and to account is a serious transgression and is often the basis for the “first” lawsuit filed against a trustee.
One of the most common questions we face is whether a trustee is liable for a stock market crash if the trust portfolio is invested in a diversified portfolio of stocks. A trustee does not insure the performance of the portfolio. So long as the trustee had a reasonable investment policy depending on the circumstances, liability is difficult to attach in such circumstances. If the portfolio is concentrated in one or a handful of equities, liability is easier to attach.
Do I need to Hire a Trust Lawyer in Florida to Bring my Lawsuit Against the Trustee?
Neither the Florida Trust Code nor the Florida Rules of Civil Procedure require a beneficiary to hire a lawyer to bring a lawsuit against a trustee. That being said, the area is highly technical and it would be a challenge to sue a trustee without a competent trust lawyer.