Protecting Yourself as a Trustee
May 8, 2023
A trustee can be removed from his or her fiduciary position by either a court or at the request of a settlor or a beneficiary.
In addition to removal as trustee, a trustee can face a lawsuit if he or she is in breach of trust.
The applicable statute is Florida Statute 736.0706, which states in relevant part:
(1) The settlor, a cotrustee, or a beneficiary may request the court to remove a trustee, or a trustee may be removed by the court on the court’s own initiative.
(2) The court may remove a trustee if:
(a) The trustee has committed a serious breach of trust;
(b) The lack of cooperation among cotrustees substantially impairs the administration of the trust;
(c) Due to the unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries; or
(d) There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available.
To protect yourself from this kind of lawsuit as a trustee, and to fully understand your role as a trustee and the associated duties, retaining legal counsel to advise on the trust agreement and your obligations will help you to avoid the potential for any mismanagement that could later lead to litigation, including possible removal as trustee. The duties of a trustee are spelled out in Fla. Stat. 736.0802 et seq.
A trustee must keep good, detailed records of the trust. This is absolutely essential, so that the trustee’s actions regarding the trust are clear and accurate, and can be provided to a trust beneficiary upon request, to an accountant for preparing annual trust accountings, and to the trustee’s counsel. See Fla. Stat. 736.0810 and 736.08135. Florida Statute 736.08135 is particularly helpful in that the appendix to this statute provides the accounting form.
A trustee also has a duty to inform those involved in the trust about actions and activity regarding the trust (see Fla. Stat 736.0813), meaning the trust’s beneficiaries, any co-trustees, the trustee’s attorney, the trustee’s accountant, etc.
If you are serving as a trustee and have particular questions or concerns regarding the trust’s management, statutory and other management requirements, it is important to speak with your trust lawyer about these, and this may even be helpful before trust litigation is commenced.