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David Di Pietro
Managing Partner, Probate Attorney

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In the state of Florida, trusts serve as a vital estate planning mechanism, allowing individuals to safeguard and direct their assets both during their life and after their passing. The linchpin of any trust’s proper functioning is the trustee, who is charged with the task of managing the trust’s assets in the best interests of its beneficiaries. While numerous trusts operate without hitches in Florida, there are instances where disputes emerge, culminating in trustee litigation.

What is Trustee Litigation?

Trustee litigation involves legal disagreements that emerge due to the operation and oversight of a trust. Such disputes can occur between the trustee and beneficiaries, among beneficiaries themselves, or even between co-trustees. The roots of the litigation might lie in allegations of impropriety, breach of fiduciary duty, mishandling of assets, or deviation from the trust’s stipulated terms.

Common Grounds for Litigation

  1. Breach of Fiduciary Duty: A trustee has a fiduciary duty to act in the best interests of the trust’s beneficiaries. This means managing the trust’s assets prudently, avoiding conflicts of interest, and acting in good faith. If a trustee is believed to have violated this duty, beneficiaries might bring litigation against them.
  2. Mismanagement of Assets: If the assets of a trust decrease in value or are wasted due to the trustee’s negligence, beneficiaries may have grounds for litigation. This could be due to poor investment decisions, failing to collect owed debts, or not taking steps to maintain property within the trust.
  3. Improper Distributions: A trustee must follow the terms of the trust when making distributions to beneficiaries. If a trustee makes distributions that are not in line with the trust’s terms or shows favoritism to one beneficiary over another, litigation may ensue.
  4. Failure to Account: Many Florida trusts mandate trustees to offer consistent accountings to beneficiaries, showcasing the trust’s revenues, expenditures, and distributions. Inaccurate or delayed accountings can be a source of contention.

Resolving Trustee Litigation

Trustee litigation can be time-consuming, expensive, and emotionally draining. Therefore, many parties first seek alternative dispute resolution (ADR) methods, such as mediation or arbitration, before resorting to court. These methods can provide a more expedited and cost-effective way of resolving trust disputes. However, in cases where ADR is unsuccessful or inappropriate, litigation in court may be the only option.

It’s pertinent to note that Florida courts might opt to remove a trustee and appoint a successor if the trustee is found to have violated their fiduciary obligations or mismanaged the trust.

Avoiding Trustee Litigation

While it’s not possible to prevent all trust disputes, there are steps that can be taken to minimize the likelihood of litigation:

  1. Clear Trust Terms: The clearer the trust’s terms, the less room there is for interpretation and dispute. It’s essential to have a well-drafted trust that outlines the trustee’s responsibilities and the rights of beneficiaries.
  2. Regular Communication: Many disputes arise from misunderstandings or lack of communication. Trustees should maintain regular contact with beneficiaries, updating them on the trust’s status and addressing any concerns promptly.
  3. Professional Management: In complex trusts with significant assets, it might be wise to appoint a professional or corporate trustee. They often have the expertise and resources to manage the trust effectively and impartially.
  4. Seek Legal Counsel: Trustees should not hesitate to seek legal advice if they’re unsure about their duties or how to administer the trust. Having expert guidance can prevent inadvertent mistakes that might lead to litigation.

When to Seek Help

Trusts play a crucial role in many estate plans, ensuring that assets are managed and distributed according to the grantor’s wishes. However, where there’s a misstep in trust administration, trustee litigation can arise. Understanding the grounds for such litigation and taking steps to prevent disputes can ensure the trust serves its intended purpose without unnecessary legal entanglements. Those finding themselves in this situation are strongly encouraged to work with an experienced trustee litigation attorney in order to ensure they have the best possible legal outcome.

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