Can A Trustee Be Sued For Refusing To Maximize The Value Of A Trust’s Assets?

When assets are placed into a trust, the trustee assumes a legal duty to manage those assets for the benefit of the trust’s beneficiaries. And while the trust may give the trustee broad discretion in managing the trust’s assets on a day-to-day basis, such discretion is not unlimited. The beneficiaries can take legal action against a trustee who breaches that duty.

Florida Appeals Court Revives Lawsuit Over Brevard County Property Trust’s Management

Take this recent decision from the Florida Fifth District Court of Appeal, Sola v. Markel. This case involves an ongoing dispute between three individuals. The two plaintiffs are a beneficiary and co-trustee, respectively, of an irrevocable trust that owns 3,400 acres of property in Sumter County. The property is known as the Monarch Ranch and lies along I-75.

The Florida Department of Transportation has approved a new I-75 interchange near the Monarch Ranch property, making it potentially much more valuable as a future development site. But to achieve this, the property owners must obtain certain legal “entitlements.” The plaintiffs convinced the defendant in this case, the other co-trustee of the trust, to spend $500,000 in trust assets to obtain these entitlements.

At some point, however, relations broke down between the non-trustee plaintiff and the defendant. The plaintiff alleged the defendant “attempted to coerce him into sharing his interest” in a non-trust property with him. This prompted the defendant to withdraw her consent to spending any further trust funds on the entitlement issue. The plaintiffs thus alleged the defendant had breached her duties as trustee by not taking actions necessary to maximize the value of the trust’s assets for the beneficiaries.

A Florida judge initially dismissed the lawsuit, holding that as a matter of law, the court could not order a trustee to “take any specific steps to spend trust money on the entitlement process.” While there may be a disagreement about the best way to manage the trust, the defendant “had not exceeded the broad discretion afforded her as trustee.”

On appeal, the Fifth District held dismissal of the case was premature. The plaintiffs’ lawsuit did, in fact, identify specific acts or omissions by the defendant that, if proven at trial, would “constitute a breach of her duties” as trustee. As such, the case was sufficient to at least survive a motion to dismiss before any discovery couple be completed. The Fifth District therefore returned the case to the trial court for further proceedings.

Speak with a Florida Trust Litigation Lawyer Today

Disagreements over trust management are not unusual, especially when there are two or more co-trustees. And not every disagreement rises to the level of a breach of duty. A trustee can be held responsible, however, if their intentional acts or incompetence leads to preventable losses by the trust. At the end of the day, the trustee’s role is to act as a fiduciary for the beneficiaries.

If you are involved in a dispute related to trustee performance and need legal advice or representation from a qualified Pompano Beach trustee performance & actions attorney, contact Mark R. Manceri, P.A., Attorney at Law, today to schedule a consultation.

Source:

5dca.org/content/download/741933/opinion/200167_DC13_05142021_081850_i.pdf