What Role Does a Court Have in Managing a Trust?
The person who chooses to create a trust must put a lot of reliance and faith in the trustee to the follow the terms written in the trust instrument, as well as in state law. The trustee, a person or entity in charge of administering the trust property and distributions to beneficiaries, can be granted a large amount of control over how the trust is operated. Because trusts are integral to effective estate planning and the work of many charitable organizations, courts are given particular authority to oversee certain aspects of trust administration. The role of a court over these matters is designed in part to prevent instances of trustee misconduct, like a recent appeals court decision that found a trustee violated state law when he created a new trust arrangement that expanded the class of possible beneficiaries. Florida law limits any new trusts, created using funds from an earlier trust, from adding new beneficiaries not prescribed in the original trust document. An overview of the limits of court involvement in trust arrangements will appear below so that those connected to a trust will know when judicial intervention is available to help them.
What a Court Can Decide
In order for a court to decide a trust issue, an interested party, like a trustee, settlor or beneficiary, must file a complaint. Generally, a court will not exercise continuing jurisdiction over a trust unless there is a compelling issue that prompts a court to order it. A court is permitted to decide issues related to validity, administration or distribution of a trust. Specifically, a court can:
- determine the validity of all or part of a trust;
- appoint or remove a trustee;
- review trustees’ fees;
- review and settle accounts;
- ascertain beneficiaries, decide questions around distribution or administration of a trust, and determine the existence and extent of a trustee’s authority; or
- obtain a declaration of rights.
Who Is Subject to Court Jurisdiction
One important question that must be answered before a lawsuit can be filed is if a Florida court has jurisdiction to hear the matter. Florida law provides that any beneficiary of a trust that has its principal place of administration in this state is subject to its courts. Further, any person connected with a trust that does or directs the following acts is considered to have consented to Florida jurisdiction:
- accepts trusteeship of a trust with its principal place of administration in Florida;
- moves administration of the trust to this state;
- serves as a trustee of a trust created by a person who was a resident of Florida at the time of trust creation;
- accepts or exercises a delegation of duties over a trust administered in this state;
- perpetrates a breach of trust in this state or a breach of a trust administered in this state;
- accepts compensation from a trust principally administered in this state;
- performs an act or service for a trust administered in this state; or
- accepts distribution from a trust administered in this state.
Contact a Trust and Estates Attorney
Trust law is a complex area with many laws and regulations governing how trusts operate. If you want to form a trust or have questions about an existing trust, it is best to discuss your concerns with an attorney to ensure any actions you take are legally valid or permitted. The Tampa law firm of Bubley & Bubley, P.A. provides representation for a variety of estate planning areas. Contact us to schedule a confidential consultation.