A trustee is a fiduciary, and as such the trustee has several legal duties owed to the trust beneficiaries in relation to the management and administration of the trust. A trustee’s duties are set forth in the Florida Trust Code, as well as the trust agreement itself. The following analysis will focus on the duties imposed upon a trustee pursuant to the Florida Trust Code.
A trustee must administer the trust in good faith, in accordance with the trust terms and purposes and in the interests of the beneficiaries. (F.S. 736.0801). A trustee must act with fairness as it relates to the trust beneficiaries; the beneficiaries must be treated impartially. (F.S. 736.0803). For example, a trustee cannot give preferential treatment toward the current income beneficiaries to the detriment of the remainder beneficiaries.
One primary duty of a trustee is the duty of loyalty. A trustee shall administer the trust solely in the interests of the beneficiaries; not for his or her own personal advantage. (F.S. 736.0802). Self-dealing by a trustee is strictly prohibited by Florida law. A trustee cannot assume an individual position antagonistic to the interests of the beneficiaries. The Florida Trust Code expressly prohibits a trustee’s engaging in a sale, encumbrance or other transaction involving trust property which will benefit the trustee, or which is otherwise affected by a conflict between the trustee’s fiduciary duties to the beneficiaries and the trustee’s own, personal interests. Such a transaction is voidable by the beneficiaries unless the transaction was approved by the court; expressly authorized by the trust agreement; or consummated with the consent of the beneficiaries.
A trustee is under a statutory obligation to take all reasonable steps to take possession of trust property upon acceptance of trusteeship. (F.S. 736.0809). The trustee must also manage trust assets prudently, exercising reasonable care, skill and caution. (F.S. 736.0804).
As it relates to communicating with the beneficiaries, a trustee is under a statutory obligation to keep the beneficiaries reasonably informed of the trust and its administration, and to provide annual accountings. (F.S. 736.0813). This important obligation will be discussed in greater detail below.