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Florida Trust Administration

Florida Trust Administration

Florida trust administration is the process of managing the assets someone has put in trust.  A trustee holds legal title to the assets and is in control but he or she does so for the benefit of the beneficiaries, who hold beneficial title to the property.  A trustee must strictly follows the rules provided in the trust and set forth in the Florida Trust Code.

The Duties and Liabilities of a Trustee

The responsibilities placed upon the individual placed in the role of Trustee under Florida law are tremendous. Trustees are given much power and with that power, the law imposes many protections against the possible temptations to abuse that power that might arise. Under the Florida Trust Code, trustees are fiduciaries with established duties (Florida Statutes §§736.0801 et seq) and corresponding liabilities (Florida Statutes §§736.1001 et seq.).

Under Florida law “… upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this code.” (Florida Statute §736.0801) This must be done“… solely in the interests of the beneficiaries.” (Florida Statute §736.0802) Accordingly, once the Trustee accepts the position, he agrees to act against his own self-interests if need be, in order to administer the trust for the beneficiaries’ benefit.

The trustee acts in allegiance and loyalty to the beneficiaries of the trust, and failure to meet his fiduciary duties can expose the trustee to personal liability. Accordingly, it is extremely important for a trustee to seek experienced legal guidance in the carrying out of his work as trustee in order to avoid or limit exposure of his personal assets to claims by the trust beneficiaries in any breach of fiduciary cause of action.

Trustees must follow the dictates of the trust instrument itself as well as federal and state law. Conflicts arising between the law and the language of the instrument must be resolved; sometimes, this may involve the filing of a lawsuit by the trustee specifically to obtain judicial resolution of the dilemma. (For the trustee to make the call on his own might expose the trustee to personal liability.)

During the course of his tenure as Trustee, periodic communications with the beneficiaries by the Trustee are extremely important. Keeping the beneficiaries “reasonably informed” is legally required, but what is “reasonable” will be dependent upon the individual circumstances. Also, the trust may not delineate guidelines for updating or informing those benefiting from the trust of the decisions and actions of the Trustee, but the prudent trustee is well-advised to communicate often and in detail with the beneficiaries of the trust. Written communications serve everyone well, and any conflicts or confusion that arise from these updates can be resolved expeditiously with the assistance of legal counsel, if need be.

Each year, the trustee will also be required to give a full accounting of the trust (assets, liabilities, revenue received, payments made, etc.) to the beneficiaries. This cannot be waived by the trustee; it is required by law that this annual accounting be performed.

Finally, while the trustee is required to undertake as much of the administration as possible personally, this does not prohibit the trustee from seeking the assistance of professionals, including accountants, bookkeepers, and attorneys to assist the trustee in the performance of his duties. Given the personal exposure a trustee undertakes when accepting the job of trust administration, most trustees do engage experienced trust planning and administration attorneys to assist them in their efforts.

A flip side of a trustee's duty is a beneficiary's right.  A trustee who fails to perform his or her duties may be subject to suit by the beneficiary for breach of fiduciary duty and may be compelled, among other things, to provide accountings.

 

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