The concepts of statute of limitations and repose, and laches, exist to bring finality after the passage of time as to liability risks. Claims for breach of trust against a trustee can be subject to a confusing array of rules as to when the statute expires, especially when the concept of fiduciary accountings, and different rules for a continuing trust versus a terminating trust, are thrown into the mix. A recent Florida case demonstrates these complexities.
A short summary of the facts: (a) in 2002, the assets of the subject trust are moved into two trusts, (b) on October 11, 2011, accountings for the old trust and the two new trusts are given to a beneficiary who was a beneficiary of the old trust but not the two new trusts, which accountings included a limitations notice that warned that an action for breach of trust for matters disclosed in the accountings may be barred unless an action is commenced within 6 months, (c) on April 9, 2012, the above beneficiary sued the trustee of the old trust regarding the termination of the 2002 trust, (d) the trustee sought to dismiss the action, alleging that the beneficiary knew of the transfer by January 2003 and did not bring an action within 4 years of that date under the applicable statute of limitations, and (e) the trial court agreed and ruled in favor the trustee.
The appellate court reversed, finding that laches did not bar the lawsuit. The court found that Gregor did not have knowledge of being excluded from the new trusts until 2011. In a circumstance when adequate disclosure is not given to a beneficiary, the statute of limitations does not begin to run, unless a final trust accounting is given and a notice is given of the availability of the trust records for examination, or disclosure is later made. Since the final trust accounting procedure was not followed, the statute did not start to run until October 2011 when the accountings were issued. Since the beneficiary first obtained knowledge via an accounting with a limitations notice, a six month statute applied and not the usual four year statute of limitations from the October 2011 date. Since the beneficiary filed suit within those six months, his claim was not barred.
Florida Statutes section 736.1008 codifies the rules in this area. Nonetheless, the permutations and combinations of facts and the resulting periods of limitation that can apply under that statute are not immediately obvious. To assist practitioners in applying the statute, I have prepared a chart that should help - you can download a copy here. Since I have created this from scratch, if anyone thinks thinks any corrections are needed to it, please email me at crubin@floridatax.com.
Woodward v. Woodward, 41 Fla. L. Weekly D1073a (4th DCA, May 4, 2016)
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