PBCBA BAR BULLETINS pbcba_bulletin_november 2018 | Page 13

PROBATE C o r n e r
Trustee’s Duty, Post-Death, To Provide Qualified
Beneficiaries With Financial Information Regarding
The Revocable Trust
DAVID M. GARTEN
As a general rule, while a trust is revocable,
the duties of the trustee are owed exclusively
to the settlor, and the beneficiaries of
the trust lack standing to challenge the
trustee’s actions. See §§736.0603(1) and
736.0813(4), F.S. However, once the trust
becomes irrevocable, the beneficiary may
sue for breach of a duty that the non-settlor/
trustee owed to the settlor/beneficiary
which was breached during the lifetime of
the settlor and which adversely affected
the beneficiary’s interest in the trust. See
Brundage v. Bank of America, 996 So. 2d 877
(Fla. 4th DCA 2008); Hilgendorf v. Estate of
Coleman, 201 So. 3d 1262 (Fla. 4th DCA 2016);
Smith v. Bank of Clearwater, 479 So. 2d 755
(Fla. 2nd DCA 1985); and Siegel v. Novak, 920
So. 2d 89 (Fla. 4th DCA 2006).
himself to act as trustee, once the settlor
dies and the trust becomes irrevocable, the
remainder beneficiaries have standing to
sue the trustee for breaches of fiduciary duty
committed during the period of revocability.
This standing gives the beneficiaries
the right to demand an accounting and
information from the trustee regarding trust
assets and transactions during the time
period before the trust became irrevocable.
But what if the settlor of a revocable trust
does not appoint someone other than
himself to act as trustee, but instead
appoints himself to be the trustee? Do the
beneficiaries have the right to demand
an accounting and information from
the trustee regarding trust assets and
transactions during the time period before
Pursuant to the Florida Trust Code, once the the trust became irrevocable? This is an
trust becomes irrevocable, the trustee has unresolved issue in Florida. However, the
a duty to keep the qualified beneficiaries courts in California, Iowa, and New York
of the trust reasonably informed of the have dealt with this issue.
trust and its administration, including,
but not limited to: (i) providing a trust In Babbitt v. Superior Court, 246 Cal.App.4th
accounting annually and on termination 1135, 201 Cal.Rptr.3d 353(Cal. App. 2016), the
of the trust or on change of the trustee, issue, as framed by the court, was whether
and (ii) upon request, providing relevant the term “the internal affairs of the trust”
information about the assets and liabilities includes an accounting of assets held by
of the trust and the particulars relating to the trust while it was revocable where
its administration. See §736.0813(d) and (e), the trustee and the settlor were the same
F.S. This duty may include the period that person. Pursuant to the California Probate
the trust was revocable. See Tseng v. Tseng Code, a trustee or beneficiary of a trust may
(In re Second Amendment & Restatement petition the court concerning the internal
of Pe Kuang Tseng Trust Agreement), 271 affairs of the trust. The term “internal affairs
Ore. App. 657; 352 P.3d 74 (Ore. App. 2015) of the trust” includes information relevant
(Where the settlor and the trustee were to the beneficiary’s interests, information
not the same, the qualified beneficiaries necessary to enforce the beneficiary’s
were entitled to be reasonably informed rights, and information that could prevent or
about the administration of the trust and redress a breach of trust. The court held the
of the material facts necessary to protect settlor’s death did not give the beneficiaries
their interests, include the period that the a right to obtain information about the
trust was revocable, where they sought disposition of assets while the trust was
to ascertain whether the transfer of $1.8 revocable as “internal affairs of the trust”.
million in funds out of the revocable trust The court reasoned, in part, that in the
harmed their beneficial interests in the trust absence of any claim that the settlor was
by wrongfully depleting trust assets); Estate incompetent or subject to undue influence,
of Giraldin, 55 Cal.4th 1058 [150 Cal.Rptr.3d nothing that an accounting of such assets
205, 290 P.3d 199 (Cal. 2012), where the after his death might reveal could support
California Supreme Court held that when a claim for breach of trust based on actions
the settlor of a revocable trust appoints, that occurred before his death.
during his lifetime, someone other than In In re Trust No. T-1 of Trimble, 826 N.W.2d
PBCBA BAR BULLETIN
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474 (Iowa 2013), the court held that a trustee,
who owes no accounting to beneficiaries
while the trust is revocable, should not face
retroactive accounting duties for the same
period upon the settlor’s death.
In Matter of Malasky, 290 A.D.2d 631, 736
N.Y.S.2d 151(N.Y. App. Div. 2002), a husband
and wife created a joint revocable living
trust and named themselves trustees. After
the husband died, his children from a prior
marriage sought an accounting from their
stepmother of the trust assets from the
trust’s inception to the date of their father’s
death. The court held that, because the
settlors also acted as trustees and retained
the power to revoke or amend the trust at
any time, the stepchildren had no pecuniary
interest in the revocable trust until their
father’s death, and therefore could not seek
an accounting of assets while the trust was
revocable.
October 2, 2018
Palm Beach County Commission
Proclamation for Mediation Week
PBC Commissioner Paulette Burdick, PBCBA ADR
Committee Chair Rosine Plank-Brumback, and PBCBA
President Greg Huber