It may seem straightforward to tell whom you should sue in a trust litigation suit. For example, beneficiaries who want to challenge a trustee’s actions may assume they are filing a lawsuit against the trustee directly. However, this might not be the case—and a failure to name the right defendant in your complaint could make any judgments unenforceable even if you succeed in court.
Your Lawsuit May Name the Trust, the Trustee, or Other Beneficiaries
Under Florida law, all legal actions (lawsuits) must be prosecuted in the name of the real “party in interest." The trust cannot be the party in interest because trusts are not people. In claims against trusts and estates, the personal representative or trustee(s) is most often the party in interest. Depending on the nature of the complaint, your recovery may be paid by the trustee personally or by using the funds in the trust.
You may have to file a claim against a trustee to recover from:
- Testamentary trusts. Complaints against testamentary trusts (trusts created through a last will and testament) may be directed at a trustee, but they could also be directed at the probate estate. For example, if your grandfather created a testamentary trust for you and your family, a creditor could make a claim against the trust after your grandfather passes away. While there could be a greater chance of recovery by suing the trust rather than the probate estate, the trust will most likely be protected from the claim. Florida law prohibits a creditor from suing a trust or its trustees if the lawsuit is based on the individual debts of the settlor.
- Spendthrift trusts. Beneficiaries of spendthrift trusts are likely to have debts, but most creditors will be unable to reach assets within the trust. However, Florida courts will allow certain creditors to access a spendthrift trust, such as claims for outstanding alimony or child support payments.
- Land trusts. Land trust beneficiaries are generally protected from lawsuits brought against the trust or the trustee. A beneficiary’s rights are also protected by the trust (since it holds legal title to the property) if there’s a judgment or lien against the beneficiary personally. Finally, the beneficiaries have the right to sue the trustee of the land trust for incompetence or breach of fiduciary duty.
- Guardianships. It can be difficult to tell who will prevail in cases between guardians and trustees. Under Florida statutes, a guardian has the authority to exercise any power as trustee that the ward would have, including the power to appoint a new trustee. A guardian could even take control of the assets of a revocable trust if doing so is necessary for the protection of the estate and the best interests of the ward.
Does the Language Used in My Trust Lawsuit Matter?
Yes! Since state laws require lawsuits to name the actual party in interest, it’s possible to go through a long court process and win your case—only to have the results challenged on appeal. You could waste significant time, money, and energy on a case that could ultimately be overturned.
It’s important to know that you not only have to choose the correct person to sue, but also the specific roles and duties that person is expected to perform. In one recent case, a beneficiary only sued the trustee personally—not the trust nor the individual in her capacity as a trustee—in order to get information about the trust funds. The court of appeals ruled that since the beneficiary did not name the trust in the action, the beneficiary had no right to request the trust’s financial records, forcing the beneficiary to start the legal process all over again.
Let Us Help You Determine Which Party to Name in Your Lawsuit
At DeLoach, Hofstra & Cavonis, P.A., we can help you start your claim off on the right foot with no time lost to costly mistakes. We have helped clients across Florida with all manner of estate litigation matters, and we always take the time to explain all of your options under the law. Please call us at (727) 397-5571 or use our quick contact form to get started.
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