A Trustee’s Duty to Inform and Account Under the Florida Law
The essence of the trustee’s existence is to keep a trust’s beneficiaries adequately informed. Florida probate practitioners, trust lawyers, and estate attorneys all recognize the reality that virtually all fiduciary litigation commences with a beneficiary not receiving a proper trust accounting or explanation of the trustee’s conduct.
The Florida Trust Code provides that a trustee has a duty to keep the “qualified beneficiaries” of an irrevocable trust reasonably informed of the trust and its administration. Florida law also holds that while a trustee owes no duties to a contingent beneficiary, once the trust becomes irrevocable at the death of the settler, 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. This general principle was examined and reaffirmed recently in Hilgendorf v. Estate of Coleman 41 Fla.L.Weekly D2402 (Fla. 4th DCA October 26, 2016).
Hilgendorf also answered the question of when does a trustee become responsible to provide accountings to a qualified beneficiary? The case involves a revocable trust created by Thelma Coleman which provided that during her life, the trust income and principal were to be paid to herself for her own benefit. She resigned as trustee after a few years and a successor trustee was a name (although Ms. Coleman remained in control of the trust assets as a practical matter.) After her death, the trust divided to other beneficiaries, including Betty Hilgendorf.
Ms. Hilgendorf sued the successor trustee after Ms. Coleman’s death seeking accountings that were never prepared during Ms. Coleman’s life. The Court denied the demand for these accountings for a variety of reasons. First, there were no accountings requested from the successor trustee prior to Ms. Coleman’s death. Second, Ms. Hilgendorf failed to include any allegations in her complaint that the successor trustee violated any of the terms of the trust while it was revocable (prior to Ms. Coleman’s death). Since neither the trust nor Florida trust law imposes a duty of the trustee to render accountings to a contingent beneficiary while a trust remains revocable, the Court concluded that there was 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.”
