Trust Administration

A trust instrument means a document executed by a settlor (meaning the person who creates or contributes property to the trust), which contains the terms of a trust. One of the most common types of trust - a revocable trust - is typically a trust created by the settlor and controlled by the settlor during his or her lifetime to manage his or her own assets. Upon the death of the settlor, the trust becomes irrevocable and the trust instrument provides the instructions for how the assets are to be managed post-death. These type of trusts have become very popular for both tax purposes and to avoid probate. It is also common for the settlor to name a family member as the successor trustee to the trust. Often times, the named successor trustee has no specialized knowledge regarding trusts and is unaware of the duties and obligations that come with accepting the role as successor trustee.

A nominated trustee is not obligated to become the trustee, so the trustee must accept the trusteeship, as provided in the trust or in Florida Statutes. A trustee is entitled to representation by an attorney with respect to the administration of the trust. Moreover, their attorney is entitled to reasonable compensation for those legal services, to be paid from the assets in the trust. The trustee is also entitled to compensation that is reasonable under the circumstances.

The administration of the trust can range from a fairly straightforward process to an intricately complicated process, depending on the terms of the trust. The trustee must have a suitable grasp on his or her duties to ensure compliance with the terms of the trust and Florida Statutes. When handled appropriately, the administration of a trust can be much easier, less time-consuming, and less expensive than probate administration. However, for an unwary trustee, the trust administration process can be cumbersome and fraught with potential traps.

Every trust is different, depending upon numerous factors, including (1) the terms and conditions set forth in the trust agreement, (2) the size, nature, and location of the trust estate, (3) when the trust became funded, (4) the number and temperament of the beneficiaries, (5) the type of assets held in trust, and (6) whether the trust owns an ongoing business. Every trustee should be aware that if the assets of the trust are administered and/or distributed improperly, the trustee could be held personally liable for the consequences of the improper administration or distribution. As such, every trustee should retain a qualified lawyer to guide the trustee through the trust administration process.

Additionally, qualified beneficiaries of a trust are entitled to a copy of the trust, as well as other information relating to the trust administration. We represent beneficiaries who are either not being kept properly informed or who need an attorney to properly explain the trust instrument and the administration process to them. Trust provisions can be complicated, causing the trustee difficulty in ascertaining the division of assets or determining the difference between principal and income. It is always a good idea to have independent legal counsel review the documents and determine your rights. Beneficiary representation can sometimes turn into litigation when the trustee is breaching his or her fiduciary duties. The trustee and/or the trust can be held responsible for the attorneys’ fees incurred in the litigation.

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