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The Beneficiary-Trustee Relationship

February 13, 2018

The trustee is the individual who is held responsible for informing the trust’s beneficiaries, keeping them updated and managing the assets that are in the trust. The individual is appointed as trustee by the grantor or by the court, and must voluntarily accept the position. He/she is unable to resign as trustee without the permission and consent of the court or of all the beneficiaries. However, according to Florida Statute §736.0706, a trustee may be removed if he/she has failed to perform his/her duties or has committed a serious breach of trust. The responsibilities and duties of a trustee differ depending on whether the grantor is incapacitated or has passed away ("What are the Duties of a Trustee" blog post).

 

While the duties of a trustee aren’t too difficult to comprehend, the discretionary powers are more complicated.

 

Florida Statute § 736.0814(1) states:

“Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including use of such terms as “absolute,” “sole,” or “uncontrolled,” the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.

 

After reading this Florida Statute, one may think that a trustee has the “absolute” and “sole” discretion in the administration of the trust; however, this is false. Discretionary powers MUST be exercised and used honestly, following the terms of the trust. If these powers are exercised in bad faith, such as refusing to carry out distributions for the beneficiary’s health, the courts have the ability to intervene.

 

How can the relationship between the beneficiary and trustee be improved?

 

The relationship can be improved if the beneficiary is open minded and willing to learn about the purpose and powers of a trust, and the trustee is willing to be patient and teach the beneficiary,

 

Below are seven points that the beneficiary must be willing to learn to improve the beneficiary-trustee relationship

  1. Understand the terms of the trust.

  2. Understand that the trustee is a fiduciary.

  3. Understand that trusts may have multiple beneficiaries.

  4. Understand basic trust accounting and taxation.

  5. Understand trust investments.

  6. Know how to read a trust accounting statement.

  7. Know how to most effectively request a trust distribution.

 

If you get confused about the roles and responsibilities of a trustee or feel as though your trustee is acting in bad faith and hasn’t been administering the trust correctly, feel free to contact Lauren Richardson Law, PLLC.

 

Sources:

https://www.laurenrichardsonlaw.com/single-post/2018/01/05/What-are-the-Duties-of-a-Trustee

 

http://www.floridaprobatelitigator.com/blog/the-sole-and-absolute-discretion-of-the-trustee.cfm

 

 

http://www.leg.state.fl.us/Statutes/index.cfm App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0814.html

 

http://www.ac.northerntrust.com/content//media/attachment/data/brochure/1201/document/Outline_1-31_Event_Final.pdf

 

https://ascent.usbank.com/insights/seven-keys-to-better-beneficiary-trustee-relationship

 

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