## Facts

- Lee G. Sanders created an irrevocable life insurance trust for the benefit of his wife and children and appointed Citizens National Bank of Leesburg as trustee.
- The trust corpus consisted of multiple life insurance policies on Sanders’s life, including a principal policy of substantial value.
- Sanders made periodic contributions so the trustee could pay premiums, and the trust instrument stated Sanders had no legal duty to continue funding the trust.
- The bank allegedly failed to timely pay premiums on the principal policy, causing it to lapse and be cancelled.
- Sanders’s health declined during the trust’s administration, and the bank allegedly could not obtain an equivalent replacement policy; the replacement had less favorable terms and a higher premium.
- The complaint alleged repeated late premium payments and misrepresentations by the bank to Sanders and the beneficiaries regarding trust administration.
- After learning of the lapse and replacement, Sanders refused to continue funding the trust for the replacement policy premiums.
- The bank allegedly exhausted the cash values of remaining policies to reimburse itself for expenses related to the replacement policy and later resigned as trustee.
- Sanders filed a separate action against the bank alleging negligence, breach of contract, failure of consideration, and seeking an accounting.
- The trial court dismissed Sanders’s complaint with prejudice for lack of standing, reasoning that a settlor of an irrevocable trust with no beneficial interest cannot sue the trustee.

## Issues

1. Whether the settlor of an irrevocable trust who retained no beneficial interest in the trust corpus has standing to sue the trustee for alleged misconduct in trust administration.
2. Whether allegations of reliance, misrepresentation, and other direct harms to the settlor state a personal injury sufficient to support standing independent of the beneficiaries’ claims.

## Decision

- The appellate court reversed the dismissal with prejudice and remanded.
- The court held that the complaint’s allegations, taken as true at the pleading stage, could establish that Sanders suffered direct, personal injury from the trustee’s conduct.
- The court rejected a categorical rule that a settlor of an irrevocable trust is always barred from suing the trustee, where the asserted wrongs are not limited to injury to the trust estate.

## Legal Principles

- Beneficiaries are ordinarily the proper parties to sue a trustee for injury to the trust estate.
- A settlor of an irrevocable trust generally lacks standing to sue for mismanagement of the trust corpus when the alleged injury is suffered only by beneficiaries.
- Standing turns on the nature and recipient of the alleged injury; a settlor may sue when alleging direct, personal harm caused by the trustee’s negligence, misrepresentations, or other actionable conduct directed toward the settlor.
- On a motion to dismiss, the court accepts well-pleaded allegations as true and construes them in the plaintiff’s favor; dismissal with prejudice is improper where the complaint alleges facts supporting a personal claim.

## Conclusion

The court held that an irrevocable-trust settlor is not automatically barred from suing the trustee; where the pleading alleges that trustee misconduct and misrepresentations caused the settlor direct personal harm beyond damage to the trust corpus, the settlor has standing and the case must proceed.


Sanders v. Citizens Nat'l Bank of Leesburg, 585 So. 2d 1064 (Fla. Dist. Ct. App. 5th Dist. 1991)