Florida Coast Bank of Pompano Beach v. Mayes

Florida Coast Bank of Pompano Beach (the trustee) (plaintiff) was the trustee for the trust under which William and Robert Mayes (defendants) were income beneficiaries. The trust instrument gave the trustee absolute discretion as to the payment of the trust’s expenses and did not require the trustee to comply with relevant Florida statutory law regarding the disbursement of trust principal and income for the payment of expenses. William and Robert sued the trustee for surcharge, removal, and accounting related to the trustee’s use of trust principal and income to cover expenses for a piece of real property held by the trust. The trial court appointed a special master to review the trustee’s accounting. The special master found that (1) the trustee paid the trust’s expenses from either income or principal depending solely on which account contained sufficient cash at the time; and (2) following the filing of William and Robert’s complaint, the trustee reallocated the source of payment for certain real property expenses from trust principal to trust income to reduce the amount of accumulated trust income payable to William and Robert. The trial court adopted the special master’s findings and held that the trustee’s accounting displayed an indiscriminate use of trust assets. The trial court ordered the trustee to amend its accounting practices and distribute accumulated trust income to William and Robert. The trustee appealed, arguing that the trust instrument granted it absolute discretion to apportion trust expenses between trust income and trust principal.