A Florida Trustee’s Duty to Prudently Invest
A Florida trustee has a duty to prudently invest the trust’s funds. Such trustees are legally obligated to act in the best interests of the trust’s beneficiaries and manage the trust funds responsibly. In Florida, as in many other states, there are specific laws governing a trustee’s duty to invest trust funds.
Investment Duties of a Trustee in Florida
Florida law imposes certain investment duties on trustees. Pursuant to section 518.11 of the Florida Statutes, a trustee must act with the care, skill, prudence, and diligence that a prudent person would exercise under the circumstances then prevailing. This duty is commonly known as the “prudent investor rule.”
Under the prudent investor rule, a trustee must manage trust assets as a prudent investor would, taking into account the purposes, terms, distribution requirements, and other circumstances of the trust. This includes a duty to diversify investments, unless the trustee determines that it is in the best interests of the beneficiaries not to do so. The trustee must also consider the expected total return from income and appreciation, the tax consequences of investment decisions, and the needs of the beneficiaries for liquidity, income, and preservation of capital.
A trustee must regularly review and monitor the performance of the trust investments and take appropriate action if necessary. This includes the duty to exercise reasonable care, skill, and caution in selecting and monitoring agents, such as investment advisors and asset managers.
In addition, a trustee must act impartially in investing and managing trust assets, taking into account any differing interests of the beneficiaries. This means that the trustee must balance the interests of income beneficiaries and remainder beneficiaries in a manner that is fair and equitable.
Remedies for Breach of Investment Duties
If a trustee breaches his or her investment duties, the beneficiaries of the trust may have the right to pursue legal remedies. Florida law allows beneficiaries to bring an action against a trustee for breach of fiduciary duty. Section 736.1001 of the Florida Statutes provides that a beneficiary may bring an action against a trustee for breach of trust, including a breach of the duty to invest trust assets.
If a beneficiary successfully proves a breach of trust, the court may order the trustee to pay damages, including any loss in value of the trust assets resulting from the breach. The court may also remove the trustee and appoint a successor trustee to manage the trust assets.
Florida trustees have a legal duty to invest trust assets responsibly and in the best interests of the beneficiaries. This duty includes managing trust assets as a prudent investor would, diversifying investments, and regularly monitoring and reviewing the performance of the investments. If a trustee breaches his or her investment duties, beneficiaries may have the right to pursue legal remedies, including damages and removal of the trustee. It is important for trustees to understand their investment duties and to seek the advice of professionals when managing trust assets. If you are the trustee or the beneficiary of a Florida trust and have questions about a Florida trustee’s duty to prudently invest trust funds, contact an attorney at Purcell, Flanagan, Hay & Greene, P.A. for a complimentary discussion.