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It’s not always easy for trustees to manage a trust together, especially when they are deadlocked or cannot even reach one another. When trustees disagree or fail to cooperate, it can cause serious trouble for beneficiaries who rely on the trust resources for themselves or their families.
Well-drafted trusts provide terms to specify how trustees should handle disagreements. But if there are no such terms, Florida law provides options for resolving trustee disagreements.
Responsibilities of Co-Trustees
Each trustee has a fiduciary duty to the beneficiaries, requiring them to manage the trust with loyalty, care, and prudence. Co-trustees have a further duty to:
- prevent each other from committing breaches of trust, and
- compel other trustees to make things right if they have already committed a breach of trust.
See Fla. Stat. § 736.0703. They cannot delegate duties to each other if the settlor (the person who created the trust) expected them to handle those duties together.
Trustees will be liable for damages if they allow co-trustees to take actions that lead to loss for the trusts. They must “maintain an attitude of vigilant concern” to the behavior of other trustees. See Anton v. Anton (Fla. 4th DCA 2002). However, they will not be liable for damages resulting from an action that other trustees overruled them to take.
Conflicts Between Trustees
If they cannot all agree, co-trustees can act by majority decision. However, a majority decision is only sure to work when there is an odd number of trustees. Deadlock can result when there is an even number—especially when there are only two. In some cases, co-trustees simply do not cooperate; they become absentees, neglecting their duties and remaining out of touch.
A carefully drafted trust instrument will provide options for resolving disagreements. For example, it may grant certain trustees the power to require the others to carry out a decision. See § 736.1412. Where the trust did not create powers like this, there is a risk that the business of the trust could come to a standstill.
Options for Resolution
There are three possible ways to resolve a conflict with a co-trustee.
Alternative Dispute Resolution
If the trustees cannot agree but are willing to avoid the expense of a lawsuit, they can submit to alternative dispute resolution (ADR): mediation or arbitration.
Mediation is a less formal process. The mediator—typically an attorney—acts as a neutral party to help the trustees reach an agreement. Arbitration is more formal since arbitrators act as judges in a hearing-like setting, and the parties must agree to be bound by the arbitrator’s decision.
Removal of the Co-Trustee by the Trust’s Terms
The trust instrument may provide ways to lawfully remove a trustee—for example, by a vote of beneficiaries on good cause shown. However, it may not be possible to meet these requirements, especially if the beneficiaries disagree among themselves or the co-trustee in question will not respond.
When it isn’t possible to complete a removal under the terms of the trust in Florida, it becomes necessary to go to court.
Seeking a Court Order
Florida courts have powers in equity over trusts—that is, they have the authority to address problems in almost any way necessary. When co-trustees disagree, a trust litigation attorney can petition the court to address it by:
- Compelling the trustee to perform their duties
- Stopping the trustee from any actions that breach their trust
- Removing the trustee
See § 736.1001.
A settlor, beneficiary, or co-trustee can request the removal of a trustee without cause if all of the qualified beneficiaries agree or if there has been “a substantial change of circumstances.” They must also show the court that:
- removal of the trustee serves the best interest of the trust;
- it is “not inconsistent with a material purpose of the trust,” and
- a suitable successor or co-trustee is available.
See § 736.0706. The court’s powers take precedence over any requirements the trust may have for removing a trustee.
The court can also remove the trustee for cause when “lack of cooperation among co-trustees substantially impairs the administration of the trust” or “due to the unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively.”
Requesting that the court remove a trustee for cause means building a case to prove it. That means preserving records of conversations, documented actions, unsuccessful attempts to get in touch, and other evidence of the co-trustee’s refusal to cooperate.
The court will also order discovery—requests for accounting, subpoenas for records, and anything else necessary to provide a complete record of the relevant facts. Faced with this expense and trouble, a recalcitrant co-trustee may be willing to step away or come to terms.
Orlando Trust Attorneys on Your Side
Disputes between trustees can waste trust resources and prevent beneficiaries from receiving what they need. Don’t wait any longer for a resolution; contact Bloodworth Law today. Our trust attorneys can analyze your situation and determine the best way to move forward—whether that is through mediation or by asking the court to compel action as soon as possible. Call our Orlando offices at (407-449-8958) to schedule your first appointment.
