Successor Trustee: Duties and Responsibilities

October 29, 2007

You have just been asked to be a successor trustee for a Florida Living Trust. What will your trustee duties and responsibilities be? Do you want to accept? Are their downsides? I ran across an interesting article and have applied some of it to Florida law. This note will help you to understand what some of the common issues are and will help you to discuss your options with a Florida Estate Planning Lawyer. Remember that all Florida trusts are different, and that many of your duties, responsibilities may not be contained in the document. Therefore your document will need to be analyzed with the New Florida Trust code.

First Lets discuss some of the background information that will be necessary to understand your duties and responsibilities.

A Trust is a legal entity. When assets are contributed to the trust, the trust separates the legal ownership (possession) from the beneficial ownership (the principal and income). Often trusts look very much like wills because they include instructions for whom your your assets will benefit after our death. Some trusts are created during the life of the person who creates them ( the settlor or grantor) and some are created after their death (testamentary).

Florida Living Trusts work by separating the equitable ownership (the trustee)from the beneficial ownership (the beneficiary).

Who are the people involved in a Trust? The grantor (also called settlor, trustor, creator or trustmaker) is the person whose trust it is. Married couples who set up one trust together are co-grantors of their trust. Only the grantor(s) can make changes to his or her trust.

The trustee manages the assets that are in the 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 court interference.

A successor trustee is named to step in and manage the trust when the trustee is no longer able to continue (usually due to incapacity or death). Typically, several 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 trust assets after the grantor dies.

What are some of the responsibilities of a Trustee? Each trustee must look to their trust for guidance on what their responsibilities are. In addition, Florida trustees must also look to the statutes as many provisions are retroactive and included in trusts even if they were not written nor necessary in the past.

As a trustee, you have certain responsibilities. For example:

• You must follow the instructions in the trust document.

• You cannot mix trust assets with your own. You must keep separate checking accounts and investments.

• 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, in a way that will result in reasonable growth with minimum risk.

• You are responsible for keeping accurate records, filing tax returns and reporting to the beneficiaries as the trust requires.

Should I be paid for my work as a Trustee? For the answer to this, you will have to look to your trust document. Generally Corporate Trustees are paid. There is nothing to prohibit a family member from being compensated. Some grantors include the ability for the trustees to receive payment and others do not.

For more information on these and other topics please see this article