Southwest Florida's Health and Wellness Magazine Health and Wellness Articles
By James W. Mallonee
Trustees who are appointed by a testamentary document are generally considered to remain as the trustee through the life of the trust’s beneficiary. But suppose the person who is the beneficiary of a trust instrument is 10 years of age and in good health. This means that the trust may continue (and the trustee must remain in place until the death of the 10 year old beneficiary); that could be 70 years. Is that realistic? Probably not, but sometimes it happens.
The question now is, can the Trustee resign and if so, what are the procedures to resign short of “I quit.” Resigning brings into focus liability and what, if any, restrictions are imposed on the resigning Trustee. Historically speaking, a Trustee could resign in accordance with the terms of the trust but what was unclear was the amount of time needed to be given when resigning. Is less than 30 days acceptable and who had to be served with notice?
Effective July 1, 2022, Florida’s Trust Code (§736.0705(1)) was amended to read:
(1) A trustee may resign in any of the following ways:
a. In accordance with the procedure set forth in the trust instrument and upon notice to the co-trustees or, if none, the successor trustee who have accepted the appointment, or if none, to the person or persons who have the authority to appoint a successor trustee; or
b. Upon at least 30 days’ notice to the qualified beneficiaries, the settlor, if living, and all the co-trustees; or
c. With approval of the court.
The new statute listed above gives greater flexibility to a resigning trustee by essentially eliminating the notice period. It also does not require all listed persons but at least one of the persons who would have authority to appoint a new trustee. Those individuals are identified in the trust instrument as the persons who would have the right to name a successor trustee. If there are none, then the resigning Trustee could request the court to act.
If no successor trustee is required (this is not likely), the trustee resigning simply has to wait until the last of the noticed recipients receives the actual notice of resignation. Some trusts do allow a trustee to resign without giving notice, but this is not recommended (even if the trust instrument allows it). The reason for this is there is no release from liability from the qualified beneficiaries.
The qualified beneficiaries have a right to have the actions of the trustee reviewed and possibly invoke charges of malfeasance such as monetary losses, poor investments, lack of notification and accountings. What really needs to be understood is the Trustee has a fiduciary duty to manage the beneficiaries’ rights and assets. Although the trust code has been modified to give the Trustee greater flexibility when desiring to resign, it still does not give a trustee the right to ignore their fiduciary responsibility to the beneficiaries of the estate. Thus, you as the Trustee, must be aware that notice to the beneficiaries is still required and should not be ignored. This is especially true to protect the Trustee from liability.
If you are considering terminating your role as Trustee of a trust, contact the attorney of your choice and discuss the rights you have when resigning. You may have to divulge fiduciary acts that have occurred which may put in you harms way. However, such open discussions may be the best investment in time and money you make to avoid sleepless nights.
James W. Mallonee (Jim Mallonee) is a graduate with a B.A. degree from the University of South Florida and a Master of Science degree from Rollins College in Winter Park, Florida. He obtained his Juris Doctorate from the University of the Pacific, McGeorge School of Law in Sacramento, California. Prior to returning to Florida to practice law, Mr. Mallonee was employed by Intel Corporation for 22 years in such locations as New Jersey, Florida and California.
In addition to being a member of the Florida Bar since 2003, Mr. Mallonee serves on the Charlotte Community Foundation Committee for asset allocation and teaches Business Law at State College of Florida. Mr. Mallonee is also on the Board of Directors for the Military Heritage Museum located in Charlotte County, Florida.
His firm practices law in the following areas: Probate, Wills & Trusts, Guardianships, and Litigation in the areas of Real Estate, Guardianships and Estates. The firm has two locations in Venice and Port Charlotte, Florida.
946 Tamiami Trail, #206
Port Charlotte, FL 33953
(941) 206-2223
871 Venetia Bay Blvd., #225
Venice, FL 34285
(941) 207-2223
