Trustee Duties When Administering A Trust

After you have decided to take the step to form a trust as part of your estate plan, you will be faced with the question of who to designate as the trustee. The trustee will be responsible for administering the trust, and making payments or distributions to your beneficiaries after you pass away. This is why it is so important to pick a trustee you are confident will follow your wishes as expressed when the trust was formed. However, even after you have picked a trustee, a question may linger – how can you be sure the trustee will act in the best interest of your beneficiaries?

Under Florida law, trustees are required to act in good faith, which means following the purposes of the trust and act in the best interest of the beneficiaries. Generally speaking, when the trust creator sets up the trust, he indicates what the purpose of the trust is, and any limitations he has to the distribution of assets to beneficiaries. The law requires the trustee to follow the trust creator’s wishes.

In administering the trust, if the trustee is supposed to invest or otherwise manage the trust assets, the trustee is also supposed to act the way a prudent person would, and protect trust property. This means that the trustee cannot take unreasonable risks when investing that could lead to the trust assets being greatly diminished or depleted. However, if the trustee makes an investment decision that results in a loss of assets, it does not necessarily mean that the trustee did not act as a prudent person. Even prudent people can be victim to market fluctuations.

Beneficiaries have a right to be kept up to date about how the trustee is administering the trust. The beneficiaries can even ask for an accounting of how the trust assets are invested and distributed. If a trustee does not follow the law in administering the trust, and the beneficiaries suspect the trustee is mismanaging the trust, the beneficiaries can sue the trustee and have the trustee removed from his role if a court finds cause to do so. The trustee can be ordered to repay any assets he misused. Most trusts name an alternative trustee who may be allowed to take over the administration of the trust in these situations.

If you, as a trust creator, expect your trustee to get compensated, this provision should be included in the trust document. This will provide a clear expression of your intention, and avoid beneficiaries perceiving any payments to the trustee as inappropriate.

Trustees may be excused from following the trust purposes if the trust purposes are illegal or cannot be enforced under Florida law. This is why it is important to have your trust document drafted by an experienced attorney. Using a boilerplate trust document from the internet or a book may not be the best idea, especially if your estate presents complicated legal issues.

Contact an Experienced Attorney

To discuss trust administration and the best way to use trusts to pass on your assets to your beneficiaries after your death, contact an experienced estate planning attorney in The Villages, Florida by calling the Millhorn Elder Law Planning Group.

Resources:

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0801.html

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0804.html