Trust Administration in Florida
What is a Trust?
A trust is a legal arrangement where one person, the trustee, holds and manages assets for the benefit of another person, the beneficiary. The person who creates the trust is the grantor. In a living trust, the grantor often acts as their own trustee during their lifetime. Upon the grantor's death or incapacitation, a successor trustee takes over. Trusts are popular because they can help avoid the lengthy and public probate process.
Key Duties of a Florida Trustee
A trustee in Florida has a fiduciary duty to the beneficiaries, meaning they must act in good faith and solely in the best interests of the beneficiaries. This is a significant responsibility and failing to meet these duties can result in personal liability for the trustee.
Some of the primary duties include:
Honoring the Trust's Terms: The trustee must strictly follow the instructions laid out in the trust document.
Managing Trust Assets: This includes locating, inventorying, and protecting all trust property, whether it's real estate, bank accounts, or personal belongings. The trustee must also manage these assets prudently, as if they were their own.
Communicating with Beneficiaries: Trustees must keep beneficiaries informed about the trust's administration. This includes providing an annual accounting of the trust's assets, liabilities, income, and expenses.
Paying Debts and Taxes: The trustee is responsible for identifying and paying any outstanding debts of the grantor and filing all necessary tax returns for the trust.
Distributing Assets: After all debts and taxes are settled, the trustee is responsible for distributing the remaining assets to the beneficiaries according to the trust's terms.
Steps in the Trust Administration Process
The trust administration process in Florida generally follows a specific sequence.
1. Initial Review and Notice
First, the successor trustee must obtain and carefully review the trust document to understand its terms and identify all beneficiaries. They must then provide proper written notice to the beneficiaries and heirs about the trust and their role as trustee. This notice gives beneficiaries the right to request a copy of the trust document and receive annual accountings. The original will, if one exists (like a pour-over will), should also be filed with the probate court.
2. Asset Management and Inventory
The trustee must take control of and secure all trust assets. This often involves retitling property in the name of the trust, creating a detailed inventory of all assets, and obtaining professional valuations where necessary. The trustee should also open a bank account in the trust's name to manage its finances.
3. Handling Debts and Creditors
The trustee is responsible for addressing the grantor's outstanding debts and creditor claims. While trusts generally avoid probate, Florida law provides a two-year window for creditors to file claims. The trustee can't safely distribute assets until this period has expired or all known creditors have been paid.
4. Tax Compliance
The trustee must handle all tax-related matters, which may include filing the grantor's final income tax return and any necessary estate or income tax returns for the trust itself.
5. Asset Distribution and Accounting
Once all legal and financial obligations are met, the trustee can distribute the remaining assets to the beneficiaries according to the trust's instructions. A final accounting of the trust's finances is then prepared and provided to the beneficiaries.
Trust administration can be a complex and demanding process. For many trustees, especially those who aren't familiar with legal and financial matters, seeking the guidance of an experienced Florida trust administration attorney is a wise decision. An attorney can help ensure that all legal requirements are met, minimizing personal liability and ensuring the grantor's wishes are fulfilled smoothly and efficiently.
CONTACT US us today to schedule a free consultation for your Florida trust administration needs.
