Florida Banking June 2023

Co-Trustees When a trust names multiple trustees, the terms of the trust dictate the role of each trustee. When the trust is silent on any unanimity required for decisions, co-trustees may act by majority decision. Additionally, if there is a trustee vacancy, the remaining trustees or majority of the remaining co-trustees may act for the trust. A co-trustee may not delegate to another trustee the performance of a function the settlor reasonably expected the co-trustees to perform jointly. However, the settlor does not reasonably expect joint performance if the trust provides one or more co-trustees, to the exclusion of other trustees, the power to direct or prevent specified actions of the

includes the ability of the trust director to hire an attorney or others to assist in the performance of their duties, and to direct payment of fees and costs from the assets of the trust. If there are multiple trust directors with the same powers, they must act by a majority. Duties and Liabilities A trust director generally has the same fiduciary duty and liability as a trustee or co-trustee in a like position or under similar circumstances. The trust can modify duties and liabilities to the same extent that a trust can modify the duties or liabilities of a trustee, and the trust can also impose an additional duty or liability.

trustees. In this scenario, the excluded trustees generally have the same duty and liability as a directed trustee. Similar to Florida Statutes prior to the Act, the trustee(s) with the power to direct are liable to the beneficiaries for exercise of the power as if the excluded trustee(s) were not in office. The trustee(s) with power also have the exclusive obligation to account to and defend any action brought by the beneficiaries relating to the exercise. What about the liability of a co-trustee when decisions must be

What liability, if any, do employees of a trustee have? In Beaubien v. Cambridge Consolidated, LTD., 652 So. 2d 936 (Fla. 5th DCA 1995), the court held that an individual acting on behalf of a corporate trustee may be personally liable for their actions, even if acting as an agent for the corporation. As a result, and after review of the law by the Real Property, Probate and Trust Law Section of the Florida Bar, the Legislation also specifies that any claim barred against a trustee or trust director due to a statute of limitation

"A KEY QUESTION IS WHETHER AND WHEN A DECISION-MAKER, WHETHER A TRUSTEE OR NON-TRUSTEE, HAS A FIDUCIARY DUTY TO THE BENEFICIARIES. THE ANSWER IS CLARIFIED BY THE ACT."

made together? In this scenario, each co-trustee must exercise reasonable care to prevent a co-trustee from committing a breach of trust or compel a co-trustee to redress a breach of trust. Also, if a dissenting trustee joins at the direction of the majority, they will not be liable, as long as they notify their co-trustees of their dissent at or before the time of the action. Uncertainties What if a trustee or a beneficiary are uncertain whether a trust director has, or will accept the role? A written demand may be made on the designated trust director by a trustee, beneficiary, or even the settlor, to accept or confirm prior acceptance of the trust directorship in writing. Within 60 days after receipt of the demand, the designated trust director must either accept, indicate prior acceptance, or decline, in writing, and deliver the writing to all trustees, qualified beneficiaries and the settlor, if living. Trust Banking, Continued on page 20

is also barred against the directors, officers, and employees acting for the trustee or trust director. A directed trustee must take reasonable care to comply with a direction, and is not liable for such reasonable action. However, a directed trustee may not comply to the extent that by complying, the trustee would engage in willful misconduct. Note that willful misconduct is not a defined term in the Florida Trust Code, though it was already the standard applicable to an excluded trustee’s liability under the Trust Code prior to the enactment of the Act. Additionally, before complying with a direction, a directed trustee must determine whether the exercise is within the scope of the power of direction. However, an exercise is not outside the scope of a power merely because it constitutes or may constitute a breach of trust. Also, consistent with trust director statutes, a settlor may impose additional duties and liabilities in the trust document.

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