When the Florida trustee is also a beneficiary: the duties that do not bend

Allowed, with one limit

Nothing in chapter 736 bars a beneficiary from serving as trustee; the only structural limit is §736.0402's rule that the sole trustee cannot also be the sole beneficiary, because then there is no trust at all, only ownership. A trustee-beneficiary holds two interests: as beneficiary, the interest the trust gives; as trustee, the duty to administer the trust solely in the interests of all the beneficiaries (§736.0802) and impartially among them (§736.0803). The tension between the two is the subject of this guide.

Distributions to oneself

Section 736.0814(2) addresses the sharpest case. Unless the terms of the trust expressly provide otherwise, a trustee who is also a beneficiary may not exercise a discretionary power to make distributions to himself or herself except within an ascertainable standard — health, education, maintenance or support — and may not use a discretionary power to satisfy a personal legal obligation. A trust that says the trustee may distribute to the beneficiaries "as the trustee deems advisable" therefore gives a trustee-beneficiary less freedom over the trustee's own share than over the others'; the words "health, education, maintenance and support" are the fence.

Mandatory distributions are different. If the trust directs that each child receives one-third outright at the parent's death, the trustee-child takes the child's third as a matter of the terms, not of discretion, and §736.0814(2) is not engaged; impartiality asks only that the third be computed the same way as the others'.

Impartiality in practice

Section 736.0803 requires the trustee, when a trust has two or more beneficiaries, to act impartially in investing, managing and distributing, giving due regard to each beneficiary's interests. For a trustee-beneficiary the practical questions are timing and valuation: whether the trustee's own distribution went out first, whether the asset the trustee took in kind was valued the way the assets the others took were valued, whether the house the trustee wanted was sold to the trustee at the price a stranger would have paid. Each answer belongs in the file before the transaction, with the valuation that supports it.

Compensation, expenses, and living in the house

A trustee-beneficiary is entitled to reasonable compensation like any trustee (§736.0708), but taking it reduces the other beneficiaries' shares while the trustee's own share is unchanged, so it is the fee the others read most closely. Many trustee-beneficiaries waive compensation; those who take it set a rate in advance, keep time, and disclose the amount in the accounting. The same care applies to expense reimbursement (§736.0709) and to any personal use of trust property — a trustee who lives in the trust's house pays rent or documents the trust's authorization, because free occupancy is a distribution to the trustee.

Ways to make it easier

The instrument can help: a co-trustee or an independent trustee for discretionary decisions, an express grant of broader discretion where the settlor wants it, a formula for in-kind distributions. Where the instrument is silent, the beneficiaries can help: their informed written consent to a transaction with the trustee (§736.1012), or a nonjudicial settlement agreement on a contested point (§736.0111). And the file helps most of all — the valuation, the reason, the disclosure, in that order.

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