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If you’ve been named as the trustee for a loved one’s estate, the task ahead of you may seem to be a simple one. You might even think that there is nothing more to the role than just distributing assets in accordance with the deceased’s detailed wishes.
In reality, however, the job of a trustee can be extremely complex. There are a whole host of obligations that go with the title of trustee. To protect your own interests, you need to understand your duties as a trustee in the trust administration process in Florida. An experienced attorney can help.
How to Do Your Job During Trust Administration in Florida
To properly fulfill your role in any Florida trust administration process, you will need to comply with all of the terms of the trust and all applicable statutory requirements. You will also need to analyze tax concerns and ensure that the trust is maintained as the grantor intended.
Even those responsibilities just scratch the surface of your obligations as a trustee. There are many other duties that you must perform, including the following:
- Maintain loyalty to all beneficiaries. Trustees have a duty to demonstrate loyalty to every beneficiary. This is true even when you are a beneficiary. The duty of loyalty also mandates that you demonstrate impartiality, since favoring any one beneficiary would entail disloyalty to another.
- Maintain an accounting of the trust assets. With large trusts, you may need an accountant to help with this duty. For most trusts, however, you simply need to document the trust’s beginning balance, all transactions, and the ending balance.
- Maintain accountability. You must provide your accounting of trust assets and activities when beneficiaries request that information. You must also provide an annual report detailing the trust accounts.
- Protect the trust assets. You can be held personally responsible if your negligence or lack of attention to details results in assets being lost or destroyed.
- Never co-mingle your assets with those of the trust. While this might seem obvious, this type of mismanagement does happen. This is a breach of the fiduciary duty, and could have tax implications that negatively affect the value of the trust.
- Adhere to the terms of the trust. You were given this responsibility for a reason. Your loved one had faith that you would execute the terms of the trust to the best of your ability. It is important that you understand those terms and any state laws that modify trust provisions.
- Responsibly address any tax issues. Any annual taxes must be calculated and paid using the trust funds. Many trustees have tax specialists deal with these tax matters.
- Invest in a prudent manner. As a trustee, your job may involve investing trust assets. If so, you must invest as prudently as possible. A strategy involving risky investments could be a breach of your fiduciary duty. Florida’s prudent investor rule offers more guidance about this investment duty in Florida Statute §518.11.
- Make a conscious effort to avoid self-enrichment and conflicts of interest. Your role as a trustee requires you to forsake any opportunities that might enrich you at the expense of the trust or other beneficiaries. More than that, however, it requires you to avoid even the appearance of any conflict of interest. To meet that responsibility, you must not purchase assets that are owned by the trust, or have it purchase assets from you. You also cannot make withdrawals from the trust for personal use, or distribute assets to others unless the trust either allows or requires those activities.
Financing Your Trust Administration Duties
Some of those duties of a trustee, such as making investment decisions, handling tax issues, and accounting, may require skill sets that you might not possess. Most trustees who need help with these specialized activities hire professionals to assist them with their duties. Of course, that raises an obvious question as well: who pays for those services?
Professional investment services, accounting, tax preparation, and other advisory services that may be needed for the proper administration of a trust can all be paid for using the trust’s assets. In addition to those expenses, trustees can also use trust funds to pay any insurance related to the trust, as well as real estate tax obligations and legal service fees. Basically, any service expense related to the needs of the trust should be paid for by the trust.
Legal Assistance with Florida Trust Administration
If you read that list of duties and suddenly feel a bit overwhelmed, you’re not alone. Being a trustee is the type of awesome responsibility that can give even the bravest soul pause – especially when that trustee is expected to manage estates with high-value assets or complicated distribution terms. That’s why trustees are urged to seek competent legal advice to guide them and help make sure that they properly fulfill all of their duties.
For trustees who live in the Fort Myers area, Barbara M. Pizzolato, P.A. can help. Our firm has the experience and expertise you need to assist you with all of your trust administration questions, and can provide the guidance you may need as you work to manage your loved one’s trust. Sound legal counsel can be the best way to help make sense of your trustee duties and ensure that your own personal interests are protected as well. Contact us online or give us a call today at (239)-225-7911 to find out more.
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Fort Myers (Main Office):
12751 New Brittany Blvd.
Suite 402
Fort Myers, FL 33907
P: (239) 225-7911
F: (239) 221-0279
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Naples Office:
4851 Tamiami Trail North
Suite 253
Naples, FL 34103
P: (239) 225-7911
F: (239) 221-0279
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New York Office:
Suite 240, One Suffolk Square
1601 Veterans Memorial Hwy
Islandia, NY 11749
P: (866) 817-4713
F: (239) 221-0279
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New Jersey Office:
c/o Richard A. Feldman, Esq.
80 Main Street, Suite 140
West Orange, NJ 07052
P: (866) 817-4713
F: (239) 221-0279
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