DEMYSTIFYING THE ROLE OF TRUSTS IN A FORMAL ADMINISTRATION

When a settlor (creator) of a trust dies, sometimes it is necessary to probate their estate.  While one of the great things about having a trust is the ability to potentially avoid probate, sometimes it makes sense to open a formal administration to be able to probate the settlor’s estate. It all starts with the language in the trust agreement that the settlor created.  If it is a joint trust and there is a surviving settlor, then it is likely that the trust will carry on and the deceased settlor’s share in the trust will carry on to the benefit of the surviving settlor.  Some trusts call for all of the trust assets to be distributed upon the death of the settlors.  Oftentimes, the settlor of a trust will be the trustee or co-trustee, and once they die, a successor trustee will be appointed. Oftentimes the trustee or successor trustee will be the same person as the nominated personal representative in the decedent’s will.  When a person has a trust, it is likely they have a pour-over will which designates the trustee of the trust as the sole beneficiary of the will. The first step that a trustee needs to take after the settlor’s death, is to file and record a Notice of Trust.  A Notice of Trust is required under F.S. 736.05055.  The Notice of Trust gives notice to the public at large that the settlor has died.  Typically, the Notice of Trust will be filed in the probate proceeding by the Personal Representative, but if there is no proceeding, then it will be filed similar to how a caveat is filed.  The idea behind it is so that creditors are aware and can file statements of claim in the probate proceeding.  Additionally, the trustee will send a Notice of Trust to Beneficiaries to inform them that the trust exists, disclose the identity of the settlor and trustee, and the rights of the beneficiary (to get a copy of the trust documents and to get an accounting of the trust).

736.05055 Notice of trust.—

(1) Upon the death of a settlor of a trust described in s. 733.707(3), the trustee must file a notice of trust with the court of the county of the settlor’s domicile and the court having jurisdiction of the settlor’s estate.

(2) The notice of trust must contain the name of the settlor, the settlor’s date of death, the title of the trust, if any, the date of the trust, and the name and address of the trustee.

(3) If the settlor’s probate proceeding has been commenced, the clerk shall notify the trustee in writing of the date of the commencement of the probate proceeding and the file number.

(4) The clerk shall file and index the notice of trust in the same manner as a caveat unless there exists a probate proceeding for the settlor’s estate, in which case the notice of trust must be filed in the probate proceeding and the clerk shall send a copy to the personal representative.

(5) The clerk shall send a copy of any caveat filed regarding the settlor to the trustee, and the notice of trust to any caveator, unless there is a probate proceeding pending and the personal representative and the trustee are the same.

(6) Any proceeding affecting the expenses of the administration or obligations of the settlor’s estate prior to the trustee filing a notice of trust are binding on the trustee.

(7) The trustee’s failure to file the notice of trust does not affect the trustee’s obligation to pay expenses of administration and obligations of the settlor’s estate as provided in s. 733.607(2).

If the settlor/decedent was the sole trustee at the time of their death, the successor trustee will first have to file and record an Acceptance of Trust.  The Acceptance of Trust will state who the successor trustee(s) is/are and will state that the settlor died and that the successor trustee accepts appointment as successor trustee.  It will be signed, witnessed by two subscribing witnesses, and notarized.

736.0813 Duty to inform and account.—The trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.

(1) The trustee’s duty to inform and account includes, but is not limited to, the following:

(a) Within 60 days after acceptance of the trust, the trustee shall give notice to the qualified beneficiaries of the acceptance of the trust, the full name and address of the trustee, and that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.

Similar to how a personal representative in a formal administration gets an EIN from the IRS to open an estate account for the decedent, the successor trustee will get a TIN or EIN for the trust and consolidate and marshal estate assets that are payable to the trust.  The trust must also file a federal tax return using the trust’s TIN if the trust generated more than $600 in income for any tax year. Trust administration is an important, and potentially complicated process to navigate without an attorney.  If you have any questions regarding the topics covered in this article or simply would like to discuss trust administration after a settlor’s death, give us a call for a free, no obligation consultation at 813-501-5071. -Jacob Rubin, Esq. Zoecklein Law PA 813-501-5071