One of the most frustrating situations I see in trust administration occurs when a beneficiary knows that assets are held in a trust but the trustee refuses, or appears to refuse, to distribute them.
This naturally raises the question: Can a trustee withhold money from a beneficiary in Florida?
The answer is sometimes yes, but a trustee does not have unlimited authority to simply hold trust assets indefinitely. Whether money can be withheld depends heavily on the language of the trust, the type of distribution involved, and the reason the trustee is delaying or denying payment.
As a Miami Lakes, Florida trust attorney, I regularly help trustees understand their fiduciary obligations and beneficiaries understand their rights under Florida law.
The Trust Document Comes First
The first place I look is the trust itself.
Some trusts require distributions at specific times. For example, a trust might direct the trustee to distribute a beneficiary's share when the beneficiary reaches a particular age or after the death of the person who created the trust.
Other trusts give the trustee discretion to determine when and how much should be distributed. A trust might authorize distributions for a beneficiary's health, education, maintenance, or support, or grant even broader discretion.
These distinctions matter.
Under Florida Statute § 736.0814, even when a trustee is given broad discretionary authority, that discretion must be exercised in good faith and consistently with the terms and purposes of the trust and the interests of the beneficiaries.
When Can a Florida Trustee Withhold a Distribution?
There are legitimate circumstances in which a trustee may delay or decline a distribution.
For example, the trust may expressly give the trustee discretion over distributions. The trustee may also need time to identify and value trust assets, resolve legitimate trust expenses or liabilities, address tax matters, sell property, maintain appropriate reserves, or determine what the trust actually requires before making a final distribution.
A trustee administering a terminating trust also should not simply distribute every dollar immediately without considering the obligations that must be satisfied as part of proper trust administration.
In a discretionary trust, the beneficiary may not have an automatic right to demand a particular distribution merely because the beneficiary wants the money. Florida law specifically recognizes discretionary distributions, while preserving a beneficiary's right to bring a proceeding for an abuse of discretion or failure to comply with a distribution standard. Fla. Stat. § 736.0504.
When Does Withholding Money Become a Problem?
A trustee's discretion is not a license to do whatever the trustee wants.
Problems can arise when a trustee withholds distributions for reasons unrelated to the trust, uses distributions to punish or pressure a beneficiary, favors one beneficiary improperly over another, ignores a mandatory distribution requirement, or simply refuses to administer the trust.
Florida trustees have fiduciary duties that include administering the trust according to its terms and purposes, acting loyally, acting impartially when there are multiple beneficiaries, and administering the trust prudently. The Florida Trust Code identifies these duties as part of a trustee's fundamental responsibilities.
This is why the specific language of the trust matters so much. A trustee's decision may be perfectly appropriate under one trust and improper under another.
Does the Trustee Have to Explain What Is Happening?
Qualified beneficiaries have important information rights.
Florida Statute § 736.0813 generally requires a trustee to keep qualified beneficiaries reasonably informed regarding the trust and its administration. The statute also provides rights concerning copies of the trust instrument, trust accountings, and relevant information about trust assets, liabilities, and administration.
When a beneficiary has been waiting for a distribution without explanation, I typically want to know:
What does the trust require? Is the distribution mandatory or discretionary? Has the trustee provided an accounting? Are legitimate liabilities or administrative issues preventing distribution? Has the trustee explained the delay?
Those questions often reveal whether there is a legitimate administration issue or a larger fiduciary problem.
What Can a Beneficiary Do If a Trustee Refuses to Distribute?
Florida courts have significant authority when a trustee breaches a fiduciary duty.
Under Florida Statute § 736.1001, a court may compel a trustee to perform the trustee's duties, order an accounting, require restoration of trust property, suspend or remove a trustee, reduce or deny trustee compensation, and grant other appropriate relief. When an abuse of discretion results in no distribution or an inadequate distribution, the statute specifically authorizes a court to require an appropriate payment to the beneficiary.
That does not mean every delayed distribution justifies litigation. Sometimes a formal request for information, review of the trust, or communication with the trustee can resolve the issue before a lawsuit becomes necessary.
Talk to a Miami Lakes, Florida Trust Attorney
Trust disputes often begin with a simple communication problem and escalate because beneficiaries do not know why assets are being withheld.
At Gold Legacy Law, PLLC, I represent clients throughout Miami Lakes, Miami-Dade County, Broward County, and South Florida in estate planning, trust administration, and trust disputes.
If you are a trustee unsure whether you should make a distribution, or a beneficiary concerned that a trustee is improperly withholding your inheritance, having the trust reviewed early can help determine what Florida law and the trust actually require.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship between you and Gold Legacy Law. For legal advice regarding your personal situation, please contact our office to schedule a consultation.
