Desperate Times Call for Desperate Measures
“O mischief, thou art swift To enter in the thoughts of desperate men!”~William Shakespeare
During the recent economic crisis, our office has seen an increase in trust litigation matters involving trustees failing to fulfill their fiduciary obligations by participating in self-dealing, receiving unreasonable compensation and trustee fees, and taking personal loans against the Trust expecting to pay them back before any of the beneficiaries become aware. These cases generally do not involve strangers or neutral, independent, or professional trustees breaching their duties to the Trusts, but quite often involve siblings breaching their duties to siblings, step-parents failing their step-children, long-time family attorneys or friends stealing from their clients’ children. What is disturbing is these are the same people we tend to trust and have shown no signs of dishonesty or disloyalty in the past. One can debate the reasons behind this sudden increase in fiduciary litigation, but one thing is certain, now more than ever it is important that a beneficiary of trust ensures that their interests are protected and that the trustee responsible for preserving the Trust’s assets is not asleep behind the wheel, or worse, treating the Trust assets as if they were their own personal assets. As so eloquently stated by Mr. Shakespeare, even people we love and trust, named as trustees to take care of our inheritances, may be facing their own personal financial crisis, a level of desperation which can cause a once honest person to steal in order to survive.
The question is, how can you try to prevent such indiscretions and limit the number of potential damages that occur when good trustees go bad?
One very important protection beneficiaries of a Trust have is the Trustee’s duty to account and inform as required under Florida Statute § 736.0813, which in part states, “The trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.” The trustee’s duty to inform and account includes, among other requirements, that upon reasonable request, the trustee shall provide a qualified beneficiary with a complete copy of the trust instrument. See§ 736.0813 (1)(c). This is important for understanding what your rights and interests are as a beneficiary under the terms of the Trust.
A trustee shall also provide a trust accounting, as set forth in s. 736.08135 to each qualified beneficiary annually and upon the termination of the trust. See Fla. Stat. § 736.0813 (1)(d). It is necessary to keep track of how the trust assets are being administered or invested, whether all necessary expenses are being paid, determine what compensation the trustee is receiving and whether the beneficiaries are receiving the appropriate distributions. Also, upon reasonable request, the trustee shall provide a qualified beneficiary with the relevant information about the assets and liabilities of the trust and the particulars relating to the administration. See§ 736.0813 (1)(e). This information would be in addition to the more formal annual accounting required of a trustee under §736.0813 (1)(d). This information allows you to keep track of the administration of the trust’s assets on a more regular basis. Requesting quarterly statements for the trust accounts would certainly be a reasonable request.
You should not feel uncomfortable or concerned with asking the trustee, quite often a loved one or member of your family, for trust information and disclosure. They should not feel like you are questioning their character or credibility or in any way feel like you are accusing them of anything when seeking this information. The statutes requiring the trustee to keep the beneficiaries of the trust informed are not at the trustee’s discretion. The duties set forth in Fla. Stat. 736.0813 (1) (c),(d), and (e) do not indicate that the trustee may provide this information, but rather they clearly state that the trustee shall provide this information. In other words, if you have to ask for it, then the trustee has already breached their duty to inform and account. If you have questions regarding the information contained in a trust accounting or to determine what information you need to request, then contact a trust litigation attorney immediately to ensure the trust assets are being properly administered and protected, and to ensure you are receiving the maximum value for which you are entitled.