The Coleman Law Firm, PLLC
Attorneys and Counselors at Law
10161 Centurion Parkway, Suite 310
Jacksonville, Florida 32256
Phone: (904) 448-1969
Fax: (904) 448-5244
Toll Free: (888) 492-2468
Our 30+ Years of Experience Can Help You Achieve Peace of Mind
Accumulation of documents and information:
Since the death tax return, if required, is due nine months after the Trustmaker's death, the accumulation of documents, appraisals, etc., described hereafter should be completed as son as possible either before or shortly after the first meeting with the estate's lawyer.
A general description of what will have to be compiled and the steps or procedures for the successor Trustee to do are summarized as follows:
This may sound like a complicated and time consuming job. However, it is considerably easier, faster and substantially less expensive than going through the probate process. Also, the successor trustee can access accounts for the trust immediately (once a death certificate is available), which is more convenient than waiting for authorization from the probate court.
Again, however, it is very important not to act without proper professional guidance from an experienced trust administration lawyer, because to do so could easily cause the estate or heirs to lose out on many protections and/or tax benefits that were intended to occur by use of the living trust format.Final comments on inventories, accountings and tax issues:
In preparing the inventory of assets, it is important to contact each institution holding assets to obtain date of death value, owner, beneficiary (if any), and other pertinent information in regard to the assets. In this way, specific ownership, and beneficiary designations, and other pertinent information can be determined before distributions are made.
It is not acceptable to take values off of statements, since the IRS has specific requirements for ascertaining date of death values, including calculating income earned to date of death even if income has not yet been credited to the account. Written verification of values from institutions holding the assets or a record of the calculations will be very helpful in the event of an audit. A formal inventory also prevents errors, and keeps tax records clean.
The preparation of an inventory and a comprehensive accounting is also an excellent method of verifying that everything is actually titled in the name of the trust, and if not, to determine how they are titled so that appropriate decisions and actions can be made.
The bottom line is that all the steps touched upon above are not only important from a legal stand point and the protection of the successor Trustee, but also are necessary to fulfill the specific financial distributions, protections and other goals that were intended by the Trustmaker and his or her use of a living trust.CONCLUSION:
The trustee has many duties and responsibilities in the administration of the trust that must be undertaken to fulfill the trustee's fiduciary duty to the beneficiaries of the trust. It is important that the trustee consult with an experienced trust administration lawyer or attorney to avoid potential personal liabilty for the failure to fulfill the duties and responsibilities assumed by the trustee upon accepting that position.
If you need the assistance of a Florida trust lawyer to determine your duties and responsibilites as the successor trustee to a living trust, please contact your Jacksonville lawyer for trust administration at 448-1969, toll free at 888-492-2468, or email us at Info@TheColemanLawFirm.net.
A. General Overview:
All trustees must follow the terms of the trust instrument unless the provision is illegal or impossible to perform, or if circumstances warrant a court-ordered deviation.
In order to perform the responsibilities of trust administration, all trustees have not only the powers specifically set forth in the trust instrument, but also those provided in the probate code which are automatically granted even though not stated in the trust itself.
If both the specific powers stated in the trust instrument as well as those found in the Florida Trust Code are not sufficient to enable the trustee to complete the instructions of the trust, the trustee can petition the court for additional powers.
Additionally, there may be an omnibus clause in the trust or other implied powers by law, which allow the trustee to do anything necessary to carry out the objectives and purposes of the trust. (Note: Using any powers that go beyond those expressly stated in the trust or provided by statute can be risky to the trustee and should be exercised very cautiously.
B. Terms of the Trust:
The express terms of the trust instrument are controlling of the trustee’s actions.
Any action taken by the trustee which goes contrary to the express language of the trust may expose the trustee to personal liability.
If the language of the trust instrument is ambiguous or unclear, the trustee can refer to verbal or written instructions known to the trustee that are outside of the trust for clarification. However, those extrinsic sources cannot be used to override or take any action that is contradictory to the language of the trust instrument.
Rather than taking any action that is contrary to the trust instrument (even if it appears to be inferred by extrinsic written or oral instructions from the trustmaker), the trustee should consider petitioning a court for direction and guidance. Failure to do so could make the trustee personally liable to beneficiaries or third parties who were negatively effected by the trustee’s conduct.
If any written direction to the trustee outside the trust would have the effect of modifying the language of the trust itself, the trustee would put himself at peril if he followed those instructions unless they meet the formal, legal requirements for trust modification. Any questions the trustee may have regarding the interpretation or meaning of trust terms should be discussed with the trustee's Florida trust administration attorney.
All trustees have the duties and responsibilities of the trustee position regardless of whether or not they are compensated for their services.
C. Duty of Skill and Care:
In fulfilling his duties, the trustee must do so “with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purpose of the trust as determined from the trust instrument”. This applies to investments, administration and distribution.
If the trustee is considered to be an “expert trustee” with special knowledge, skills and experience dealing with trusts, his duty of care and diligence will be greater.
At least once every year (more often if required by the trust), the trustee is required to give a full accounting of the value of all assets, income received, distributions made, expenses paid, etc., etc. to all beneficiaries to whom income or principal that year was distributable. Any language in the trust going contrary to this requirement is void. However, a beneficiary may voluntarily waive the right to receive that information.
The trustee also must keep beneficiaries reasonably informed of trust activity and administration.
When a trust that was revocable becomes irrevocable (usually on the death of a trustmaker), the trustee must provide a complete copy of the irrevocable portions of the trust to any beneficiary of a deceased trustmaker who requests a copy.
The above duty to provide a copy of the trust includes the responsibility to provide a report about the assets, liabilities and disbursements that are relevant to the beneficiary’s interest. (This does not apply if the trust is revocable.)
The privileges of attorney/client communications and attorney work product remain protected and do not need to be disclosed.
If access to records is given to a beneficiary or potential heir rather than providing copies thereof, the trustee should be present during that review.
Absent contrary instructions in the trust instrument, the trustee has a duty not to delegate to third persons the performance of acts that the trustee can reasonably be required to perform personally. (This does not mean the trustee is prohibited from engaging the services of attorneys, financial advisors, accountants, clerical assistants, etc.) The trustee should consult with an experienced Florida trust attorney to resolve any questions about administering the trust.
D. Notification Requirements:
Notification to all beneficiaries of an irrevocable trust or the irrevocable portion of a trust must be given in the following circumstances:
The persons to receive notification are:
Identification of said persons is tempered by the ability of the trustee to identify or locate such persons through reasonable diligence.
Notification is to be made by mail to the last known address or by personal delivery within 60-days following the occurrence of the event requiring service of the notification, or 60-days following the trustee becoming aware of the existence of the person entitled to notification.
The notification must contain the following:
Failure of a trustee to provide the required notice may subject the trustee to all damages, including attorney fees and costs caused by the failure to give the notification unless the trustee has made a good faith effort to comply with that responsibility. The trustee should consult with an experienced Florida trust administration attorney to ensure compliance with all statutory notice requirements during the trust administration.
E. Duty of Confidentiality:
Every trustee has a duty to keep the affairs of the trust confidential (this applies to the terms of the trust, the identity and interest of the beneficiaries and the nature of the trust assets.) The trustee should consult with an experienced Florida trust attorney to resolve any issues concerning the duty of confidentiality.
Special rules may apply if the trustee is a corporate fiduciary administering a private trust.
In some instances, the duty of confidentiality can be overridden. These include:
F. Conflicts of Interest :
The primary duty of every trustee is to administer the trust solely in the interest of the trust beneficiaries. (This means according to the distribution and asset management that is provided in the trust for the beneficiaries.)
Although a trustee can also be a beneficiary of the same trust, doing so may occasionally create a potential conflict of interest with respect to the rights or management of assets for other beneficiaries.
If the trustee has any other financial dealings with the trust such as landlord, creditor, etc., such may also create a potential conflict of interest.
All self-dealings of every nature by the trustee with the trust are prohibited! (This is true even though the transaction causes no actual loss or damage to the trust.)
If the trustee already had an existing relationship business-wise or was a creditor of the trust before becoming trustee, such may continue (though it may create a potential conflict of interest in the administration of trustee duties).
Once the trustee assumes that position, however, no new transactions of any kind that would benefit the trustee personally or for profit are allowed. Thus, the trustee can not even use assets of the trust for personal benefit or enter into new transactions with the trust of any nature that would be beneficial to the trustee.
The trustee may, of course, use the trust assets in the course of carrying out the trustee’s duties and administration of the trust.
This prohibition may also extend to family members or business associates of the trustee.
Sometimes, however, such self-dealing transactions are allowed by language in the trust and if so, may be allowed if the conditions of the trust are fulfilled.
Transactions between the trustee and the trust can also be undertaken if informed consent is contained from all beneficiaries or is approved by the court.
Every trustee is also prohibited from engaging in a business that is in competition with any business of the trust.
If you would like the assistance of an experienced trust attorney to assist you with determining your duties and responsiblities as Trustee, please contact your Jacksonville lawyer for trust administration at 448-1969, toll free at 888-492-2468, or email us at Info@TheColemanLawFirm.net.
The Jacksonville, Florida trust administration lawyers and attorneys with the Coleman Law Firm offer their services as estate planning, probate, elder law, Medicaid planning, asset protection and guardianship lawyers and attorneys primarily in Northeast Florida including the following counties, towns, and cities: Duval County - Jacksonville, Jacksonville Beach, Atlantic Beach, Neptune Beach; St. Johns County - St. Augustine, Ponte Vedra Beach, Nocatee, St. Augustine Beach; Clay County - Orange Park, Middleburg, Green Cove Springs; Nassau County - Amelia Island, Fernandina Beach, Yulee, Callahan; Flagler County - Flagler Beach, Palm Coast, Bunnell; Baker County - Macclenney, Glen St. Mary; Putnam County - Palatka, Interlachen; Columbia County - Lake City, Fort White; and in other parts of Florida as requested or necessary. We are a participating attorney in the AARP Legal Services Network by GE.