Is Time really on your side when serving as a Trustee?

Time Limitations for Proceedings Against Trustees: Discussing Failure to Account

An individual serving as a trustee owes certain duties to the beneficiaries of that trust. One such duty is the duty to account to the beneficiaries.  Failure to provide an accounting as required in § 736.0813, Fla. Stat. is a breach of trust by a trustee. Fla. Stat. § 736.1001(1).  A beneficiary can institute an action for an accounting and/or against a trustee for breach of trust, but the factual circumstances of the case may determine the time limitations for bringing such actions. These limitations are found in the Florida Trust Code under  § 736.1008, Fla. Stat. Under  § 95.11, Fla. Stat., the statute of limitations for a legal action alleging breach of trust or fiduciary duty is four years.

The Trust Code, specifically §  736.1008, Fla. Stat., provides further clarification as to how Chapter 95 applies in trust matters. Under § 736.1008(1), if the trustee issued a trust disclosure document that adequately discloses information, the four year statute of limitations applies, beginning on the date that the beneficiary receives the disclosure. For all matters not adequately disclosed in a trust disclosure document if the trustee has issued a final trust accounting, the trustee has given final notice to the beneficiary that the trust records are available, and has given written notice of the applicable limitations period, the limitation period begins on the date that the beneficiary receives the final trust accounting and notice. However, under § 736.1008(3), when the trustee does not provide a final trust accounting, or give notice to the beneficiary that the trust records are available, the applicable limitations period for a matter not adequately disclosed begins on the date the beneficiary has actual knowledge of the facts underlying the claim.  Florida Statute § 736.1008(2) provides a way for a trustee to shorten the amount of time the beneficiary has to file a claim from four years to six months. In order for the six month time limitation to apply, the trust disclosure document must adequately disclose the information, and the trustee must inform the beneficiary of the shortened limitations period. The shortened limitations period starts on the date the beneficiary receives both the disclosure document and the limitations notice. .

A case out of the Fourth District Court of Appeal demonstrates how the facts underlying a case play an important role in determining which provision of § 736.1008 Fla. Stat. applies. In Woodward v. Woodward, — So.3d – (Fla. 4th DCA 2016), the trustee served a final accounting with a limitations notice that sought to shorten the period to six months. The final accounting disclosed that ten years earlier the trustee had terminated the trust and distributed the assets into two new trusts which did not include the beneficiary. The trustee argued that the breach occurred ten years earlier and the beneficiary had actual knowledge of it, thus it was outside of the four year statute of limitations. However, the court held that the triggering event was the serving of the final accounting with the limitations notice, and that the actual knowledge of the beneficiary was irrelevant, as the facts of the case placed it squarely within § 736.1008(2), and beneficiary was within his rights to file an action within the six month period after the final accounting.

This article is designed to give a brief overview of case law discussing statute of limitations on actions for an accounting. Those interested in learning more about statute of limitations and when the period for filing a suit commences, should not hesitate to contact the attorneys of Chepenik Trushin LLP, who are ready, willing, and able to assist with your estate planning and probate litigation needs.