Being a Trustee over a Florida Trust is not always a fun job. The Trustee has some important responsibilities governed by (1) the Trust document (2) the Florida Trust Code. So in general what does a Florida Trust require?
- Adherence to and compliance with the Trust document.
The Trustee is a fiduciary and as such is held to a high standard in Florida. Any trust attorney will help in avoiding pitfalls and mistakes, that’s why it is incredibly important to follow your attorney’s advice in Trust Administration.
- Loyalty and Impartiality to the Beneficiaries.
Even if the Trustee is one of the Beneficiaries of the Trust, or in some cases the only Beneficiary of the Trust, the Trustee must appear and be impartial in the distribution of the Trust assets and Loyal to the Beneficiaries. This means that a Trustee cannot take property for themselves, cannot fail to distribute funds, and must keep a proper accounting of the Trust and share that accounting with the Beneficiaries. Providing an accounting of the Trust assets and what is happening is not only required by law, but also it is the best way to ensure that the Beneficiaries are informed about the Trust, and it can avoid a lawsuit.
- Properly Manage Trust Assets.
This one changes a little bit with what the role of the Trustee is and the nature of the assets. If the Trustee is tasked with managing the assets to be productive so that the Beneficiaries can benefit from the income derived from the assets, then the Trustee must work with their best effort to provide at least conservative growth in the assets. If the Trustee is simply collecting assets from someone who has died to distribute them to the beneficiaries, then there is no duty to ensure productivity, but there is a duty to continue to collect proceeds from a productive asset and to account for that in the Trust. Properly managing trust assets also means keeping the Trust assets separate from personal assets. This means separate accounts, separate safety deposit box, and ensuring that every hard asset is titled in the name of the trust only. This becomes specifically important for Tax implications when the Trustees duties are to distribute assets after a death.
- Pay Trust associated expenses from the Trust.
Trusts have their own expenses, for example, Trust Administration Attorneys, CPAs, if the Trust assets need to be maintained such as a rental property, all those expenses can and should be taken out of and paid for by the Trust. Keep in mind that every expenditure should be recorded and accounted for in the periodic accounting of Trust assets given to the Beneficiaries. These Expenses also could have their own Tax benefit or liability. Good Record Keeping is imperative and becomes even more important when the Trust is being dissolved. Every Trust must pay taxes on the income it generates and file a Form 1041 by April 15th of the next Calendar year. A Trust Administration Attorney can help either filing the form or connecting the Trustee with a CPA who can help ensure that the Trust complies with State and Federal Tax Laws.
- Invest prudently, but do not place yourself in conflict with the beneficiaries or do any self-dealing. Self-dealing is when the assets of a fiduciary account (a Trust) are sold, loaned, or otherwise to the fiduciary who is it’s director, officer, or employee (Trustee). Fla. Stat. 660.40. This is when a Trustee buys a Trust asset at a discount, uses Trust Property without paying rent. “Many forms of conduct are permissible in the workday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of honor, the most sensitive, is the standard of behavior.” ~Justice Cardozo (1928).
- Hire professionals to assist if needed.
Everything seems easy in theory. A Trustee needs to be above reproach, think Boy Scout/Honest Abe all rolled up into one. Hiring professionals to keep everything straight and organized, who can assist in ensuring that the Trust documents are followed and the laws are being obeyed in a timely manner is vitally important. Administering Trust assets quickly and efficiently, while following the law and crossing all “t’s” and dotting all “i’s” is vitally important to avoid the conflict with the Beneficiaries. That’s why it is always a good idea to hire a knowledgeable Trust Administration Attorney to help streamline and guide through the process of Trust Administration.
One of the reasons that Trust Litigation in Florida is so rampant is that the management of Trusts, the compliance with the terms of the Trust and the compliance with the obligations inherent in the Florida Trust Code are placed upon individuals who do not understand the gravity of their role as Trustee. If you or a family member need to administer a Trust in Florida give us a call, we offer free and no obligation consultations to advise you regarding the procedure and steps necessary to administer a Trust in a Florida.