Florida law regarding the responsibilities of trustees is very clear and simple. First and foremost, trustees are fiduciaries and must act in the best interests of those beneficiaries that they have been charged with serving. Next, Florida law provides very explicit instructions that trustees must provide a formal accounting at the inception of a trust, and for each year thereafter. I am currently litigating a case that is pending in Orange County, Florida which asserts, among many other causes of action, that the trustees of two very large trusts, have failed and refuse to provide the annual accountings as required by Florida’s Trust Code. The case name is Fink v. Steven Meyer and Posternak, Blankstein & Lund, LLP, Case No. 2017-CA-002315-O, (Of course the whole case and all the pleadings can be found by clicking through to the Orange County Clerk of Court Website here)
The Verified Complaint in this case is attached here in the following link (ComplaintFINAL) but the most important thing to be considered in this case is the application of Florida’s Trust Code with respect to annual accounting. You see, Florida probate practitioners have long understood that the law regarding trust accounting was clear and simple…they must be provided every year and there is no limitations period on when these accountings must be provided:
The trustees never complied with § 736.0813, Fla. Stat. and the “accountings” that have been provided do not comply with § 736.08135, Fla. Stat.
736.0813 Duty to inform and account.—The trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.
(1) The trustee’s duty to inform and account includes, but is not limited to, the following:
(a) Within 60 days after acceptance of the trust, the trustee shall give notice to the qualified beneficiaries of the acceptance of the trust, the full name and address of the trustee, and that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.
(d) A trustee of an irrevocable trust shall provide a trust accounting, as set forth in s. 736.08135, from the date of the last accounting or, if none, from the date on which the trustee became accountable, to each qualified beneficiary at least annually and on termination of the trust or on change of the trustee.
736.08135 Trust accountings.—
(1) A trust accounting must be a reasonably understandable report from the date of the last accounting or, if none, from the date on which the trustee became accountable, that adequately discloses the information required in subsection (2).
(2)(a) The accounting must begin with a statement identifying the trust, the trustee furnishing the accounting, and the time period covered by the accounting.
(b) The accounting must show all cash and property transactions and all significant transactions affecting administration during the accounting period, including compensation paid to the trustee and the trustee’s agents. Gains and losses realized during the accounting period and all receipts and disbursements must be shown.
(c) To the extent feasible, the accounting must identify and value trust assets on hand at the close of the accounting period. For each asset or class of assets reasonably capable of valuation, the accounting shall contain two values, the asset acquisition value or carrying value and the estimated current value. The accounting must identify each known noncontingent liability with an estimated current amount of the liability if known.
(d) To the extent feasible, the accounting must show significant transactions that do not affect the amount for which the trustee is accountable, including name changes in investment holdings, adjustments to carrying value, a change of custodial institutions, and stock splits.
(e) The accounting must reflect the allocation of receipts, disbursements, accruals, or allowances between income and principal when the allocation affects the interest of any beneficiary of the trust.
But along comes this case out of Florida’s 4th District Court of Appeals called Corya v. Sanders, which completely upends what practitioners think they know about trust accountings. The holding in Corya is that trust accountings must only go back four years! But the myriad of issues that exist after this opinion is…if the requirement of accounting only goes back four years….then what happens in a lawsuit like Fink v. Meyer and Posternak, Blankstein & Lund which also include claims of Breach of Fiduciary Duty and Surcharge? As you read from the Fink Case, the plaintiffs have counts for Breach of Fiduciary Duty and Removal of Trustee based in part on what the beneficiaries discover are large expenses and charges that they were never adequately informed about. (Because they hadn’t recieved proper accountings.)
Count I – Breach of Fiduciary Duty
(as against Meyer, Michael Fink, and Labret)
- Plaintiffs re-allege Paragraphs 1-83 as if fully stated herein.
- A fiduciary relationship exists between Plaintiffs and Meyer, Michael Fink, and Labret because Meyer, Michael Fink, and Labret act as co-trustees of trusts of which Plaintiffs are the only remaining qualified beneficiaries and because Michael Fink acted as the personal representative of Norman Fink’s Estate of which Plaintiffs are the heirs.
- Meyer, Michael Fink, and Labret breached the fiduciary duties they owed to Plaintiff.
- But for Meyer’s, Michael Fink’s, and Labret’s breaches, Plaintiff has been damaged.
WHEREFORE, based upon the foregoing, Plaintiffs request that the Court enter judgment in their favor finding:
- That a fiduciary relationship existed;
- That Meyer, Michael Fink, and Labret breached the fiduciary relationship;
- That Plaintiffs has been damaged by the breach of the breach of the fiduciary relationship in an amount to be determined by the Court; and
- That Plaintiffs are entitled to an award of those damages along with an award of attorney’s fees and costs.
Count II – Removal of Trustee and Appointment of Successor Trustee
(as against Meyer, Michael Fink, and Labret)
Plaintiffs re-allege Paragraphs 1-83 as if fully stated herein.
This is an action to remove Meyer, Michael Fink, and Labret as trustees of the 1999 Trust and the 2001 Trust pursuant to § 736.0706, Stat. and to appoint a successor trustee or trustees pursuant to § 736.0704, Fla. Stat.
Plaintiffs are the only remaining qualified beneficiaries under the trusts.
Meyer, Michael Fink, and Labret, individually and collectively have committed serious breaches of trust based on the allegations in this complaint including, but not limited to
Their failure to provide Plaintiff an initial and annual accounting of trust assets pursuant to § 736.0813, Fla. Stat;
Providing “accountings” to Plaintiff’s counsel which do not meet the requirements of Florida law pursuant to § 736.08135, Fla. Stat.;
The failure to set up individual trusts for each of Norman Fink’s children pursuant to Article 6.2 of the First Amendment to the 1999 Trust;
The failure to set up individual trusts for each of Norman Fink’s children pursuant to Article 4.6 of the 2001 Trust;
Payment of inconsequentially small and nearly daily payments to Plaintiff amounting nothing more than a few hundred dollars out of trust assets; and
Payment of an inordinate amount of attorney’s fees to Meyer, Meyer’s law firm, and other law firms for attorney “work” which never should have been done in the first place.
There is also a lack of cooperation between the co-trustees.
Due to Meyer’s, Michael Fink’s, and Labret’s unfitness, unwillingness, or persistent failure to administer the 1999 Trust and the 2001 Trust, removal of all three of them best serves the interests of all beneficiaries.
So the issue is…if the court sustains the counts for removal and breach of fiduciary duty, how do plaintiffs measure damages if the removed trustees are not required to account?
These issues…and many, many more…are being actively considered by the Florida Bar and in fact there are even legislative proposals to “Fix” the Corya problem. And see the following white paper that addresses the subject
The appellate court opinion in Corya v. Sanders, 155 So. 3d 1279 (Fla. 4th DCA 2015) construes Florida statutes in a manner that is contrary to the intended operation of those statutes by improperly limiting a trustee’s duty to render trust accountings. First, the court construed section 736.08135 as limiting the beginning period for which a trustee of an irrevocable trust is statutorily required to render a trust accounting to no earlier than January 1, 2003. Second, the court construed Florida law as barring a beneficiary of an irrevocable trust who has actual knowledge of the existence of the trust and that he or she has not received a trust accounting from the trustee from seeking a trust accounting for any period more than four years prior to the filing of the action.