Duties of Trustees

If you have been named as a trustee or successor trustee for someone’s revocable living trust, you may want to know what you are supposed to do. Successor trustees can relax a bit, because you have no duties and responsibilities until the incapacity or death of the grantor or settlor (trustmaker) of the trust. You will only begin to act when the trustmaker becomes unable to manage his or her own financial affairs due to incapacity, or when he or she dies. If you have been named as a current trustee or co-trustee, you may already be acting in that capacity and need to be aware of your trustee’s duties and responsibilities.

In either case, it is important that you understand a trustee’s duties and responsibilities in the administration of a trust in Florida. These FAQs will help. We will start with some explanations and definitions.

If you are a trustee, or a beneficiary, of a trust and you want the assistance of experienced Jacksonville trust administration lawyers or estate planning attorneys in northeast Florida, please call us at (904) 448-1969, or toll free at 1-866-510-9099, or email us at Info@TheColemanLawFirm.com.

Today, many people use a revocable living trust instead of a last will and testament in their estate plan because the revocable living trust, if properly funded (assets are retitled to the trust), avoids court interference at death (probate) and at incapacity (court supervised guardianship). It is also flexible. As long as you are alive and competent, you can change the revocable living trust document, control all investments and other assets, add or remove assets, decide when and how much to distribute out of the trust, even cancel or revoke it. After your death, the successor trustee that you named in the trust takes over control of the trust.  That trustee’s duties and responsibilities is the topic of this section.

If you would like to explore how a revocable trust can help you control your estate, and avoid probate, please call us at (904) 448-1969, toll free at 1-866-510-9099, or email us at Info@TheColemanLawFirm.com.

The trustee manages the assets that are in the revocable living trust. Many people choose to be their own trustee and continue to manage their affairs for as long as they are able. Married couples are often co-trustees, so that when one dies or becomes incapacitated, the surviving spouse can continue to handle their finances with no other actions or steps required, including Florida probate court interference.

A successor trustee is named to step in and manage the revocable trust when the trustee is no longer able to continue (usually due to incapacity or death). Typically, several successor trustees are named in succession in case one or more cannot act. Sometimes two or more adult children are named to act together. Sometimes a corporate trustee (bank or trust company) is named. Sometimes it is a combination of the two.

The beneficiaries are the persons or organizations who will receive the benefit of the trust assets after the grantor dies.

You also need to know who the trustees are currently, who are the successor trustees, the order in which you are slated to act as a trustee, and if you will be acting alone as the sole trustee or with someone else as co-trustees.  Your duties as trustee will be discussed in the remainder of this section.

The most important thing to remember when you step in as trustee is that the trust assets are not your assets. You are safeguarding them for others: for the grantor (if living), the grantor’s spouse, and for the beneficiaries, who will receive them after the grantor dies.

As a trustee for a trust administration, you have certain trustee’s duties and responsibilities. For example:

• You must follow the instructions in the revocable trust document.
• You cannot mix, or commingle, trust assets with your own. You must keep separate checking accounts and investments and be able to account for them.
• You cannot use trust assets for your own benefit (unless the trust authorizes it).
• You must treat trust beneficiaries the same; you cannot favor one over another (unless the trust says you can).
• Trust assets must be invested in a prudent (conservative) manner (the “prudent investor rule”), in a way that will result in reasonable growth with minimum risk.
• You are responsible for keeping accurate trust accounting records, filing tax returns and reporting to the beneficiaries as the trust requires, or as the Florida Trust Code requires.

No, you can have professionals help you, especially with the trust accounting and investing to satisfy the prudent investor rule. You will also probably need to consult with an experienced estates and trusts attorney from time to time. However, as trustee, you are ultimately responsible to the beneficiaries for prudent management of the trust assets.

If you would like additional information, or a consultation to determine how to handle your trustee’s duties and responsibilities, please call our Jacksonville trust administration lawyers and attorneys at 904-448-1969 or toll free at 866-510-9099, or email us at Info@TheColemanLawFirm.com.

If you are uncertain, or have questions, about whether the grantor is incapacitated, you should consult with experienced estates and trusts lawyers or attorneys to determine whether the grantor is legally incapacitated.

The trustee’s duties include, first, make sure the grantor is receiving quality care in a supportive environment. Give copies of health care documents (designation of health care surrogate, medical power of attorney, living will, etc.) to the attending physician. If someone has been appointed to make health care decisions other than you, make sure he or she has been notified. You may need to notify the grantor’s employer, friends and relatives.

Next, find and review the trust document. (Hopefully, you already know where it is.) Notify any co-trustees as soon as possible. Also, notify the estates and trusts attorney who prepared the revocable trust document; he or she can be very helpful if you have questions. You may want to meet with the estate planning attorney to review the revocable trust and your duties and responsibilities as trustee. The estate planning attorney can also prepare a certificate of trust, a shortened version of the trust that proves you have legal authority to act as the successor trustee.

You will want to become familiar with the grantor’s insurance (medical and long term care, if any) and understand the benefits and limitations. Assuming the insurance will cover a certain procedure or facility could be a costly mistake.

Have the doctor(s) document the incapacity as required in the trust document. Banks and others may ask to see this and a certificate of trust (sometimes referred to as an “affidavit of successor trustee”) before they let you transact business on behalf of the living trust.

Become familiar with the trustmaker’s finances. You need to know what are the assets are owned by the trust, where the assets are located and the current values of the assets. You will also need to know the grantor’s sources and amounts of income, when it is paid, and the grantor’s regular ongoing expenses. You will want to develop a budget so that you can take appropriate actions to assure that financial resources are available when needed.

If you cannot readily find this information, others (family members, banker, employer, accountant) may be able to help you. Last year’s tax returns will be helpful. If you discover any other assets that were left out of the revocable living trust, the estates and trusts attorney can help you determine if they need to be put into the trust and can then assist you in the funding process.

Apply for disability benefits through the grantor’s employer, social security, private insurance and veteran’s services. Notify the bank and other professionals that you are now the trustee for this person. Put together a team of professionals (attorney, accountant, banker, insurance and financial advisors) to help you. Be sure to consult with them before you sell any assets.

Now you can start to transact the business activities necessary to manage the trust assets, and provide for the financial support of the trustmaker, or others who are beneficiaries of the trust. You can receive and deposit funds, pay bills and, in general, use the person’s assets to take care of him or her and any dependents until recovery or death.

Your trustee’s duties and responsibilities include the need to keep careful records of medical expenses and file claims promptly. Keep a ledger of income received and bills paid. An accountant can show you how to set up these records properly. The revocable trust document may require you to send trust accountings to the trust beneficiaries. Also, don’t forget income taxes (due April 15) and property taxes.

You will have essentially the same duties as an executor named in a will would have. But if all titles and beneficiary designations have been changed to the grantor’s revocable trust, the Florida probate court will not be involved. That means you will be able to act on your schedule instead of the probate court’s.

The trustee for a trust administration is responsible for seeing that everything is done properly and in a timely manner. You may be able to do much of this yourself, but an estates and trusts attorney, corporate trustee and/or accountant can give you valuable guidance and assistance. Here’s an overview of what needs to be done.

Inform the family of your position and offer to assist with the funeral. Read the living trust document and look for specific instructions. Notify a co-trustee as soon as possible.

Make an appointment with an experienced estates and trusts attorney to go over the revocable trust document, trust assets and your responsibilities as soon as possible. Do not sell or distribute any trust assets before you meet with the estates and trusts attorney.

If you need the assistance of an experienced trusts and estates attorney in the Jacksonville, Florida area, please call us toll free at 1-866-510-9099.

Before the meeting, make a preliminary list of the trust assets and their estimated values. You’ll need exact values later, but this will help the estates and trusts attorney know if a federal estate tax return will need to be filed (due no later than nine months after the grantor’s death). If there is a surviving spouse or if the trust has a tax planning provision, the estates and trusts attorney may need to do some tax planning right away. The living trust, which is now irrevocable, may also need its own tax identification number from the Internal Revenue Service.

Collect all death benefits (social security, life insurance, retirement plans, associations) and put them in an interest bearing account until assets are distributed. If the surviving spouse or other trust beneficiary needs money to live on, you can probably make some partial distributions. But do not make any distributions until after you have determined there is enough money to pay all expenses, including federal estate and income taxes.

To finalize the list of trusts assets, you will need exact values as of the date of the grantor’s death. Some trust assets will need to be appraised. A trust estate sale may need to be held to dispose of household goods and personal effects.

Keep careful records of final medical and funeral expenses, and file medical claims promptly. Keep a ledger of bills and income received. Contact an accountant and an estates and trusts attorney to prepare final income and federal estate tax returns, if required. Verify and pay all bills and taxes. Make a final accounting of trust assets and bills paid, and give it to the trust beneficiaries.

If your trustee’s duties require that the trust assets are to be fully distributed, you will divide the cash and transfer titles according to the instructions in the trust document. That’s it…you’re finished and the trust is dissolved.

If the trust assets are to stay in a trust (for minors, for a surviving spouse, for tax purposes or if the trust beneficiaries will receive their inheritances in installments), each testamentary trust will need a new tax identification number, and proper bookkeeping and reporting procedures will need to be established. The estates and trust attorney, and an experienced accountant, should be consulted to ensure these matters are properly handled.

Yes, trustees are entitled to reasonable compensation for their services. The trust document should give guidelines, or you can consult the Florida Trust Code to determine reasonable compensation. You can also discuss reasonable compensation for your trust administration responsibilities with your Florida trusts and estates attorney.

If you feel overwhelmed or the trustee’s duties and responsibilities are more than you feel comfortable handling yourself, consider hiring an experienced Jacksonville, Florida, estates and trusts attorney, bookkeeper, accountant or corporate trustee to help you. (A corporate trustee can manage the investments and do the recordkeeping.) If you feel you cannot handle any of the responsibilities due to work, family demands or any other reason, you can resign and let the next successor trustee step in. If no other successor trustee has been named, or none is willing or able to serve, a corporate trustee can usually be named.

If you are a successor trustee and you would like assistance in evaluating your options with regard to your trustee’s duties and responsibilities, please call our Jacksonville estates and trusts lawyers at (904) 448-1969, or toll free at 866-510-9099, or email us at Info@TheColemanLawFirm,com.

A trustee’s duties and responsibilities when the grantor becomes incapacitated is as follows:

• Oversees care of ill person
• Understands insurance benefits and limitations
• Looks after care of any minors and dependents
• Applies for disability benefits
• Puts together team of advisors, usually including a Florida trusts and estates lawyer, a certified public accountant, often a financial advisor and sometimes a life insurance advisor
• Notifies bank and others
• Transacts necessary business
• Keeps accurate records and accounting

A trustee’s duties and responsibilities at the grantor’s death include the following:

• Contacts Florida estates and trusts attorney to review trust and process
• Keeps beneficiaries informed
• Puts together team of advisors
• Inventories assets, determines current values
• Makes partial distributions if needed
• Collects benefits, keeps records, files tax returns
• Pays bills, does final accounting
• Distributes assets to beneficiaries as trust directs

If you need the assistance of an experienced estates and trusts lawyer in Jacksonville, Florida, please call us at (904) 448-1969, or toll free at 1-866-510-9099, or email us at Info@TheColemanLawFirm.com.