Is a Florida Trustee Liable for Portfolio Losses?

Attorney L. Reed Bloodworth is the managing partner of Bloodworth Law, a 2022 U.S. News & World Report Best Law Firm in Orlando for Trusts & Estates Litigation.

Is a Florida Trustee Liable for Portfolio Losses?

Bloodworth Law handles trustee defense and addresses the question: Is a Florida trustee liable for portfolio losses?

Only An Attorney Has Clear Answers

There is not a simple answer to this question whether you’re a trustee or a beneficiary. You’ll have to consult with a trust litigation attorney for the complete answer that will depend on exact details, facts, and the paperwork of your specific case.

If you’re looking to the Florida Statutes addressing limitation on the personal liability of a trustee, there is not a clear answer:

What Does Florida Law Say?

A portion of Chapter 736 of the Florida Statutes addresses the Florida Trust Code and states:

“Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee’s fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.”

“A trustee is personally liable for torts committed in the course of administering a trust or for obligations arising from ownership or control of trust property only if the trustee is personally at fault.”

A tort is the legal name given to various wrongful acts that result in an injury to another person or entity.

Interpretation of the Florida Statutes

Interpretation of the Florida Statutes and understanding based on circumstances and facts can only be determined by a Florida Trusts & Estates attorney. It cannot be answered here and requires a thorough legal appointment to discuss the matter in full with all facts and proof.

A parent, a loved one, may select an honest trustee who hires a qualified financial firm to manage the trust.

Dissatisfied Beneficiaries?

Maybe a beneficiary was angry that they were not selected as the trustee by a parent or relative. An unhappy beneficiary may have unreasonable demands and expectations of the trustee.

Trustees have very extensive responsibilities outlined by Florida law. If a trustee fails to uphold the law, he or she may become liable to the trust’s beneficiaries.

Large Trust Management

Trusts are created in all sizes. Some are very substantial and require professional financial investment skill to properly manage.

In a generous trust, there are usually many kinds of assets. A trustee is expected to manage assets so that they will generate income and increase the principal value of the trust.

Market Effects On A Trust

However, a market increase or decrease can have a significant effect on a trust’s assets. This is the reason Florida law closely monitors the rules that guide trustees.

A trust’s value may decrease although the trust investments were handled properly. No one was inept or unskilled, there may have been no wrongdoing by the trustee.

Even when the trustee made the right choices, everything was done properly, there was a market dip that could not have been forecast.

Trustee Defense Disputes

There may be pressures on the trustee to make the beneficiaries happy. When a dispute erupts over a properly managed trust by a beneficiary, the legal process for trustee disputes can be extensive.

A Florida court may or may not find a trustee liable based on a single poor investment. A probate court judge reviews and considers all circumstances surrounding investment decisions.

Managing Partner L. Reed Bloodworth, a U.S. News & World Report Best Lawyer since 2019, handles trustee defense.

If you’re a trustee and your position is challenged, or a beneficiary is threatening legal action, or is claiming that you broke the law, talk with Reed and the Bloodworth Law Trust Litigation team about you, and the trust that you manage.