Lexis Nexis - Case Brief

Not a Lexis Advance subscriber? Try it out for free.

Law School Case Brief

Harrell v. Badger - 171 So. 3d 764 (Fla. Dist. Ct. App. 2015)

Rule:

Section 736.04117(4), Fla. Stat. plainly and unambiguously requires a trustee to provide notice to "all qualified beneficiaries" of his intent to invade the principal of a trust at least 60 days prior to the invasion.

Facts:

In her will, Rita Wilson (Rita) devised the remainder of her estate to a Trust created for the specified purpose of benefitting her son, David. (Wilson).The will provided that if Wilson predeceased Appellants,he remaining Trust principal would be distributed to his sisters Appellants Joann Harrell (Harrell) and Barbara Dake (Dake). After Rita's death, Harrell consented to be Trustee. Although Wilson initially agreed to Harrell as Trust, he later petitioned the court to appoint defendant Charles Badger as trustee, which the trial court did in August of 2006. The trial court also ordered Badger to obtain a $300,000 trustee bond and to file semi-annual accountings. Badger failed to obtain the bond until September 12, 2007, and filed only one accounting in August 2007. Before obtaining the bond, Badger allegedly incurred $34,021 in personal expenses for Wilson's support. On February 16, 2007, Badger filed a motion seeking reimbursement of the personal expenses  and approval from the trial court to employ his wife as the realtor for the sale of Rita's house—the sole remaining asset of the Trust. Despite holding a hearing on the motion, the trial court never entered an order approving Badger's requests. On September 21, 2011, Badger filed a motion to terminate the Trust, wherein he first notified Appellants of the agreements, the sale of the house, and the transfer of all of the Trust funds into a special needs trust.  Appellants filed a counterpetition seeking damages for, among other alleged breaches and breach any fiduciary duty to the Trust. The trial court rejected Appellants' claims, discharged Badger as Trustee, and awarded Badger attorneys' fees.  Harrell and Dake appealed.

Issue:

Did Badger breach his fiduciary duties as trustee?

Answer:

Yes

Conclusion:

A trustee improperly exercised his power to invade the principal of the trust by failing under § 736.04117(4), Fla. Stat. to provide any notice to appellants, who due to their interest in the distribution of any principal remaining after their brother's death were qualified beneficiaries as defined in § 736.0103(16), Fla. Stat. The special needs trust included beneficiaries not contemplated by the original trust, rendering the trustee's decantation of all assets from the original trust invalid under § 736.04117(1)(a). Section 736.0816(20), Fla. Stat. did not absolve the trustee from liability, as his misconduct resulted from his failure to comply with clear and unambiguous statutory requirements, not from the faulty investment and decantation advice supplied by his attorneys. Additionally, finding that the award of attorneys' fees to Badger was an abuse of discretion and was against the equities, the appellate court reversed the award of attorneys' fees.

Access the full text case Not a Lexis Advance subscriber? Try it out for free.
Be Sure You're Prepared for Class