171 So. 3d 764
Fla. Dist. Ct. App.2015Background
- Rita Wilson's will created a trust providing income and discretionary principal distributions for beneficiary David Wilson, with appellants Harrell and Dake as contingent remainder beneficiaries if David predeceased them.
- After Rita's death, Charles Badger was appointed trustee; the court ordered a $300,000 bond and semiannual accountings. Badger delayed bonding, filed minimal accountings, and advanced personal funds for David’s support.
- Badger arranged transfer (decantation) of the trust's entire remaining assets into a pooled special‑needs sub‑account (FFSNT) administered by the Littlefields, without giving written notice to Harrell and Dake; he also sold the trust house using his wife as realtor and paid her commission without prior court approval.
- The Littlefields later moved funds from the pooled trust to another trust (JNN Trust) and were convicted for misappropriation; much of the trust money was lost or missing.
- The trial court retroactively approved Badger’s actions, terminated the original trust, dismissed appellants’ claims, and awarded trustee Badger attorneys’ fees; the appellate court reversed on statutory and equitable grounds and remanded for an evidentiary hearing.
Issues
| Issue | Harrell/Dake's Argument | Badger's Argument | Held |
|---|---|---|---|
| Whether trustee complied with statutory notice before decanting principal | Decantation required written notice to all qualified beneficiaries 60 days before transfer; none was given | Reliance on counsel and prior practices excused defects; decantation valid | Reversed: trustee failed to comply with §736.04117(4); notice was required and not given |
| Whether beneficiaries of successor trust must be limited to original beneficiaries | Successor trust included unrelated pooled‑trust remainder beneficiaries, violating statute | Decantation still valid; policy justified special‑needs transfer | Reversed: successor trust included beneficiaries not in original trust, invalidating decantation under §736.04117(1)(a) |
| Whether trustee’s reliance on attorneys/Littlefields shields him from liability | Reliance cannot excuse failure to follow clear statutory requirements and fiduciary duties | §736.0816(20) allows trustee to rely on advisors; that reliance absolves him | Rejected: statutory notice and other clear duties are trustee's obligations; advice does not provide blanket immunity |
| Retroactive approval of employment of trustee’s wife and payment of commission | Employment and commission required prior court approval due to conflict; payments must be returned | Employment was reasonable and should be approved retroactively | Reversed: retroactive approval improper; trustee ordered to return commissions and may be removed if assets restored |
| Award of attorneys’ fees to trustee against appellants | Fees inappropriate where trustee breached duties and decantation was invalid | Trial court found appellants presented no evidence and awarded fees | Reversed: award was abuse of discretion because the court’s finding on insufficiency of evidence is invalidated; remand for reasonable apportionment |
Key Cases Cited
- Hiestand v. Geier, 396 So.2d 744 (Fla. 3d DCA) (appellate standard for trustee breach of fiduciary duty—facts reviewed for substantial evidence)
- Ortmann v. Bell, 100 So.3d 38 (Fla. 2d DCA) (de novo review of legal conclusions; factual findings tested for competent substantial evidence)
- Bewick v. State, 501 So.2d 72 (Fla. 5th DCA) (clear statutory language must be given its plain meaning)
- Shriner v. Dyer, 462 So.2d 1122 (Fla. 4th DCA) (trustee must return improperly paid commissions where employment lacked approval)
- Nalls v. Millender, 721 So.2d 426 (Fla. 4th DCA) (abuse‑of‑discretion standard for attorney‑fee orders in trust actions)
- Republic Nat’l Bank v. Araujo, 697 So.2d 164 (Fla. 3d DCA) (remand for reasonable apportionment of attorneys’ fees)
- Wohl v. Lewy, 505 So.2d 525 (Fla. 3d DCA) (limits of relying on expert advice in fiduciary contexts; distinguishable where statutory duties are clear)