Trustee Duties in Florida
The duties of a trustee may vary depending upon the terms and purposes of the trust and the level of expertise of the trustee. The following is an overview of the statutes which define the duties of the trustee in Florida: I. Duty to Administer the Trust: Upon accepting the role of trustee, a trustee must administer the trust in good faith, in accordance with its terms and purposes, in the interests of the beneficiaries, and in accordance with the Florida Trust Code. Fla. Stat. § 736.0801. II. Duty of Loyalty: As between a trustee and the beneficiaries, the trustee must administer the trust solely for the interests of the beneficiaries. A trustee may not engage in self-dealing with the trust for the trustee’s own advantage or profit. Any transaction entered into by the trustee for the trustee’s own personal account, or for the benefit of others related to the trustee, is generally voidable by the beneficiaries unless expressly authorized by the terms of the trust or approved by the court. Fla. Stat. § 736.0802. III. Duty of Impartiality: If a trust has two or more beneficiaries, the trustee must act impartially in administering the trust property, giving due regard to the beneficiaries respective interests. Fla. Stat. § 736.0803. IV. Duty of Prudence: The trustee must administer the trust as a prudent person would, considering the purposes, terms, distribution requirements and other circumstances of the trust and must exercise reasonable care, skill and caution in doing so. The trustee may only incur expenses that are reasonable in relation to the trust property, the purposes of the trust and the skills of the trustee. Fla. Stat. §§ 736.0804, 736.0805. V. Duty to Use Special Skills: A trustee who has special skills or expertise, or is named trustee in reliance on the trustee’s representation that the trustee has special skills or expertise, must use those special skills or expertise in the administration of the trust. Fla. Stat. § 736.0806. VI. Duty to Collect, Control and Protect Trust Assets: A trustee must take reasonable steps to gain possession and control of all trust property, and to protect the trust property. Fla. Stat. §§ 736.0809, 736.0812. VII. Duty to Keep Records and Not Commingle Assets: A trustee must keep clear, distinct and accurate records of the administration of the trust and must keep trust property separate from the trustee’s own property. Fla. Stat. § 736.0810. VIII. Duty to Inform and Account: A trustee must keep beneficiaries of the trust reasonably informed of the trust and its administration. This includes providing the beneficiary with preliminary information concerning the trust and annual accountings during the term of the trust. Fla. Stat. § 736.0813. IX. Duty to Distribute Income: A trustee must distribute income to the beneficiaries as required by the trust document or, where the document is silent as to the time for distribution of income, generally must distribute income to the beneficiaries at least annually. Fla. Stat. § 736.08147. X. Prudent Investor Rule: A trustee has a duty to invest and manage investment assets of the trust as a prudent investor would considering the purposes, terms, distribution requirements and other circumstances of the trust. Fla. Stat. § 518.11. In this context: • This standard requires the exercise of reasonable care and caution and is to be applied to investments not in isolation, but in the context of the investment portfolio as a whole and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the trust. • If the trustee has special skills, or is named trustee on the basis of representation of special skills or expertise, the trustee is under a duty to use those skills. • The trustee has a duty to diversify the investments unless, under the circumstances, the trustee reasonably believes it is in the interests of the beneficiaries and furthers the purposes of the trust not to diversify. • The trustee has a duty to pursue and investment strategy that considers both the reasonable production of income and safety of capital, consistent with the trustee’s duty of impartiality and the purposes of the trust. Whether investments are underproductive or overproductive of income is judged by the portfolio as a whole and not as to any particular asset. • Where adequate skills are lacking, it may be incumbent upon the trustee to seek qualified assistance with the management of the investment assets of the trust. XI. Tax Matters: A trustee must file all tax returns required with respect to the trust.