Under Florida’s Duty of Loyalty statute, a trustee who puts their personal interests ahead of the beneficiaries’ interests is already in breach — even if no financial harm has resulted yet.
Florida §736.0802: The Duty of Loyalty — What It Requires
The duty of loyalty under Florida Statute §736.0802 is clear: a trustee must administer the trust solely in the interest of the beneficiaries. Not mostly in their interest. Not primarily. Solely. Any transaction in which the trustee has a personal financial interest — on either side — is presumptively a breach of this duty.
Self-Dealing: What It Looks Like in Practice
Self-dealing transactions in Florida trust administration take many forms. The most common include: trustees paying themselves management, consulting, or other fees not authorized by the trust document; trustees directing trust business to companies they own or in which they have a financial interest; trustees keeping trust funds with financial advisors who pay the trustee referral fees or other compensation; trustees purchasing trust assets at below-market prices; and co-trustees approving transactions that benefit one trustee at the expense of the other or of beneficiaries.
The “Breach Occurs Upon Conflict” Rule
One of the most important aspects of Florida’s duty of loyalty is when the breach is complete. Under Florida law, the breach occurs the moment the conflict of interest arises — regardless of whether the beneficiaries suffered any financial harm. This means a trustee who hires their own company to perform trust services — even at a fair market price and excellent quality — has breached the duty of loyalty. The conflict itself is the violation. Financial harm is not required to state a claim.
What Beneficiaries Can Do About Self-Dealing Trustees
When a trustee breaches the duty of loyalty, Florida law provides powerful remedies: courts can void the self-dealing transaction entirely; courts can require the trustee to disgorge any profits they obtained through the conflict; courts can surcharge the trustee for losses resulting from the breach; and courts can award attorney’s fees to the beneficiary payable from the trustee’s personal assets — not from trust funds.
Financial Advisors and the Duty of Loyalty
One of the most common — and least recognized — duty-of-loyalty issues in Florida trust administration involves the trustee’s relationship with financial advisors. When a trustee keeps trust assets with an advisor who provides the trustee with referral fees, reduced personal investment costs, or other compensation, the trustee has a financial interest in maintaining that relationship — at the potential expense of the beneficiaries. Florida courts have found this arrangement can breach the duty of loyalty.
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Frequently Asked Questions
What is self-dealing in a Florida trust?
Self-dealing occurs when a trustee engages in transactions in which the trustee has a personal financial interest that conflicts with the interests of the trust beneficiaries. This includes purchasing trust assets for themselves, hiring businesses in which they have a financial interest, keeping trust assets with advisors who compensate the trustee, and paying themselves fees beyond what the trust authorizes.
Does the duty of loyalty apply to non-professional trustees?
Yes. The duty of loyalty under Florida Statute §736.0802 applies equally to all Florida trustees — family member trustees, professional corporate trustees, and everyone in between. A sibling who serves as trustee and directs trust business to their own company has breached the duty of loyalty just as surely as a professional trustee would have.
What is the difference between reasonable trustee fees and self-dealing?
Reasonable trustee compensation — fees that are disclosed to beneficiaries, authorized by the trust document or Florida law, and proportionate to the services rendered — is not self-dealing. Self-dealing involves undisclosed financial benefits, unauthorized compensation, or conflicts between the trustee’s personal financial interests and the trust’s interests.
Think Your Trustee Has a Conflict of Interest?
Under Florida law, the breach occurs when the conflict arises — not when harm results. Contact Weidner Law before the statute of limitations runs on your claim.
Read the Exact Statute
The exact text of Florida law cited in this article is published word-for-word — free, complete, and fully organized — at FloridaRules.net. Direct links:
FloridaRules.net — Every Florida Probate Rule, Statute, and Case Commentary. In One Place.
