IRS Recovery & Tax Law Monroe County & Palm Beach County
Probate Trust Administration
Probate, Guardianship, Trust Administration, Litigation as it relates to Trusts, Guardianship and Probate Probate, Guardianship, Trust Administration, Litigation as it relates to Trusts, Guardianship and Probate
IRS Recovery & Tax Law Monroe County & Palm Beach County


 

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Trust Administration:

If a trust is funded during the life of a decedent or when a trust is funded upon the death of the decedent, the trust formed by that decedent during his or her life must be administered following death according to the terms and conditions of the trust.  As a result, trust administration is often a necessary process. In order to properly administer the Trust upon the death of the Settlor, there are very important steps that must be taken by the Trustee.  These steps are often overlooked by the unwary Trustee, of which if ignored can cause substantial problems up ahead for the Trustee and possibly the beneficiaries of the Trust. Fortunately, working with a knowledgeable attorney in regard to the administration of the Trust is often a way to ensure that all legal requirements pertaining to Trust administration are carried out timely and effectively.

Andrea C. D'Addario Areas of Practice;

The First Steps

The first step in properly administering the Trust begins with the Trustee accepting Trusteeship in accordance with the explicit terms of the Trust, or if none, the laws of Florida.  The Acceptance of Trustee, as well as the proper information pertaining to the Trust, including the name of the Trust and name and address of the Trustee are required to be served on certain beneficiaries of the Trust titled "qualified beneficiaries".  This term does not include all beneficiaries of the Trust.  To ensure that the proper beneficiaries of a Trust are being served, an attorney should be consulted.  There are additional notifications that should be served on the beneficiaries of the Trust within the first sixty (60) days of being appointed as Trustee. 

Trusteeship comes with responsibility and trust, as Trustees are considered "fiduciaries" who are held to a higher standard than a layperson. 

This article outlines some basic duties of Trustees, but due to the uniqueness of each trust and the beneficiaries involved, should not serve as an exclusive guide to the administration of the trust or legal advice regarding such.

Basic Duties of Trustee:
Notifying Beneficiaries of the existence of the trust and their rights thereunder;

Identifying and accounting for the assets of the trust;

Identifying and handling creditors of the trust, who can potentially come forward with claims up to two (2) years from the death of the decedent.;

  • Prudent investment as well as management and distribution of the trust assets;
  • Handling tax liability and responsibility; and
  • Carrying out the terms of the trust as intended by the decedent.

Depending on the terms of the trust, a Trustee may also be required to make discretionary decisions regarding the trust, its assets and the beneficiaries thereof.

Liability of Trustee
A Trustee can be liable for breaching his/her fiduciary duties pertaining to the Trust. This can include failing to properly administer the trust, failing to provide notice or inadequate notice to the beneficiaries of the trust, mismanaging and failing to prudently invest the assets of the trust; and failing to carry out the terms of the trust. Again, this list is not exclusive, but includes some basic liabilities of Trustees.

Trust and Probate Administration
Trust administration is similar to probate administration but without the requirement of court involvement. With that being said, if a Trustee breaches his/her duties as Trustee, a court action filed by one or more of the beneficiaries may soon follow.

Sometimes a probate administration is initiated in concert with a trust administration proceeding. This can be for several reasons, including if a Settlor of the trust fails to properly retitle or "fund" the trust with all of his/her assets, if the trust is not properly executed and/or is invalid for any purpose; and if the trustee decides to limit the amount of time a creditor has to file a claim against the trust assets. The time frame is usually two years from the date of death of the decedent, but can be shortened to three (months) (assuming proper notice is rendered) through a probate proceeding.

Regardless of whether a probate is initiated on behalf of the decedent, the decedent's original Will is required to be filed with the court and a Notice of Trust assuming the trust is qualifying revocable trust pursuant to Florida law. The trust is not required to be filed with the court unless an action is initiated in regard to the trust. At which time, the court would be included in the trust administration process.

Real Property owned by Trust
Another reason why legal counsel may be suggested to assist with the administration of the trust is in the event the trust is the legal owner of one or more parcels of real property. Depending on the terms of the trust, one or more legal documents, such as a deed, may be required in order to transfer the property from the ownership of the trust to the intended beneficiary.

Other Miscellaneous tasks
Other miscellaneous tasks often required during the pendency of the trust administration include: obtaining a federal tax ID number, filing tax returns, obtaining appraisals of trust assets and bringing or defending lawsuits on behalf of the trust.

Problems with Beneficiaries
It is not uncommon to have a dispute between one or more beneficiaries or between the beneficiaries and the Trustee. Keep in mind that you owe a duty as Trustee to treat all beneficiaries the same regardless of whether you like them or not.

The trust administration process is often complicated and confusing, and can seem overwhelming at times. Many times the process is hampered even further due to the emotions and conflicts that arise among the trust beneficiaries as a result of family dynamics and the grieving process. If not properly dealt with, these emotions and conflicts often play out in court in protracted and expensive trust litigation. We can help you avoid such a result by offering you competent and capable assistance throughout the trust administration process.​

If you are a beneficiary
If you are a beneficiary of a trust and the Trustee is not properly carrying out their duties pursuant to the terms of the Trust and the requirements of Florida law, consult with an attorney to assist you in protecting your rights.

Helpful Hints
Some helpful hints to assist you in your duties as Trustee:

1) Seek the advice of counsel, at least initially to assist you in carrying out your duties as Trustee;

2) Keep accurate records of your expenses and any debts you incur and/or satisfy on behalf of the trust;

3) Hire professionals such as attorneys, accountants and money managers to assist you with your duties as trustee. You are justified in doing this pursuant to Florida law and it is money well spent;

4) Prepare an informal accounting and use that to track your expenditures and receipts as Trustee. This will also cause you to be one step ahead of the game in the event a formal accounting is required;

5) Keep the beneficiaries informed throughout the pendency of the trust. An informed beneficiary is usually a happy beneficiary and make him/her less likely to involve the court in the trust administration process;

6) Obtain waivers and receipts for all distributions made to beneficiaries. These should be in writing and sometimes even witnessed and notarized;

7) Properly disclose the actions you take and serve the proper limitation notices on the beneficiaries to avoid problems later on. These are briefly discussed herein. Again, there are additional requirements under Florida law that must be met in order to effectively limit liability periods; and

6) Review the trust document and any amendments thereto and make sure you fully understand what is required and expected of you. Trusts can often contain confusing language including the requirement to fund one or more subtrusts. Do not ignore these requirements and if you are unsure, ask! It can never hurt to ask! ​

 
Disclaimer: This web site is designed for general informational purposes only. The content of this site does not constitute legal advice or the formation of a lawyer/client relationship. 

     

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In Palm Beach: 561-362-2366 • Fax: 561-362-2367
Email: andrea@daddario-law.com
13860 Wellington Trace, Suite 38-213 • Wellington, Florida 33414


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