Trap for the Unwary: Florida Statute 736.0802

Even an experienced probate and trust litigator may get caught in this statutory land mine on the litigation battlefield.

Section 736.0802(10) of the Florida Statutes requires that notice be given to the be beneficiaries about payment of legal bills, when the trustee desires to defend claims of breach of fiduciary duty, breach of trust, removal of trustee, or other similar claims.  Notice must be provided in this instance prior to the trustee paying his attorney his or her legal bills.

…the trustee must serve a written notice of intent upon each qualified beneficiary of the trust whose share of the trust may be affected by the payment before such payment is made. The notice of intent does not need to be served upon a qualified beneficiary whose identity or location is unknown to, and not reasonably ascertainable by, the trustee.

Fla. Stat.§736.0802(10)(b)

The details of the notice itself are not lengthy, and they are set forth in Fla. Stat. § 736.0802(10)(c).  If these provisions are not followed, the consequences can be drastic.  Other than setting aside reputation with the Court and the client, the consequences include repayment of any legal fees or costs, if a beneficiary seeks to compel payment back to the trust:

If a trustee has used trust assets to pay attorney fees or costs described in paragraph (b) before service of a notice of intent, any qualified beneficiary who is not barred under s. 736.1008 and whose share of the trust may have been affected by such payment is entitled, upon the filing of a motion to compel the return of such payment to the trust, to an order compelling the return of such payment, with interest at the statutory rate. The court shall award attorney fees and costs incurred in connection with the motion to compel as provided in s. 736.1004.

Fla. Stat. §736.0802(10)(d)

From a beneficiary’s standpoint, on receipt of such a notice, it may be prudent to file a motion with the court that precludes the use of trust funds to pay lawyer’s fees.  The requirements for such a motion are set forth in Fla. Stat. §736.0802(10)(e), which provides that a Court may prohibit the trustee from using trust assets to make payment and if the payment has been made from trust assets after the service of the notice of intent, the Court may enter an order compelling return of the attorney fees and costs to the trust with interest at the statutory rate.  The statute further states:

In connection with any hearing on a motion brought under this paragraph:

1. The court shall deny the motion unless it finds a reasonable basis to conclude that there has been a breach of trust. If the court finds there is a reasonable basis to conclude there has been a breach of trust, the court may still deny the motion if it finds good cause to do so.

2. The movant may show that such reasonable basis exists, and the trustee may rebut any such showing by presenting affidavits, answers to interrogatories, admissions, depositions, and any evidence otherwise admissible under the Florida Evidence Code.

Your experienced probate and trust litigator should be mindful of these nuances regarding the payment of attorney’s fees and costs in cases involving allegations of breach and removal.