Fla. Stat. § 736.1003 - Commentary to Florida Trust Code
Legal Commentary on Fla. Stat. § 736.1003
Fla. Stat. § 736.1003 makes clear that a trustee is liable for any loss of trust assets or a lack of profit resulting from trust assets if no breach of trust has occurred. This statute section creates some tension with Fla. Stat. § 736.0804, which requires a trustee to prudently administer a trust, and the prudent investor rule found in Fla. Stat. § 518.11 (and explicitly referenced by the Florida Trust Code in Fla. Stat. § 736.1007(4)(f)). A trustee generally has a duty to produce income from trust assets. In In re Estate of Feldstein, a trustee was held liable for a breach of trust due to the trustee’s failure to rent out a condominium for four years. 292 So. 2d 404 (Fla. 3d DCA 1974). Thus, it is not the case that trustee will never be found liable for a trustee’s failure to produce a profit or for the loss of trust assets; rather, a trustee can only be held liable if that failure was the result of a breach of trust.
If a trustee does everything right and loses trust money simply as the result of unpredictable bad fortune, there is no liability. However, if a trustee loses trust money because the trustee made poor decisions (or refused to invest the trust assets altogether), then the trustee would be liable for a breach. The comment to Section 1003 of the Uniform Trust Code notes that “[a] trustee is not an insurer.” Put differently, a trustee is liable for bad conduct, not just bad results.
Text of Fla. Stat. § 736.1003
Damages in absence of breach.—Absent a breach of trust, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit.
History of Fla. Stat. § 736.1003
Fla. Stat. § 736.1003 became law on July 1, 2007 as part of the Florida Trust Code. It has not been amended or revised since that date.
Fla. Stat. § 736.1003 is taken word for word from § 1003(b) of the Uniform Trust Code, which in turn is a paraphrase of § 204 of Restatement (Second) of Trusts.
This article is part of the PTM Legal Commentary to the Florida Trust Code. Click here to navigate through the entire commentary.