Trust Administration in Florida
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The revocable living trust has become a popular item for asset protection and avoidance of probate. However, at the time of the decedent’s death the new trustee and beneficiaries are often lost as to their responsibilities.
Even if the new trustee can build a “Sort of” complete “To Do List” the trustee often has little clue as to how to carry out the trustee responsibilities. This can lead to delays, and costly mistakes.
Often the successor trustee incorrectly believes that he need simply “wrap things up” with a distribution of the trust assets. However, if there are assets still held in a revocable trust at the time of the trustee’s death, the successor trustee has many of the same duties that a probate personal representative has during probate.
Under Florida law, upon death of the decedent trustee, the successor trustee duties include:
- Marshaling the assets of trust;
- Changing title of the accounts from the decedent trustee to the successor trustee;
- Obtaining value of all trust assets based upon value at time of death;
- Observing the “prudent investor rule” by preservation of the trust assets during trust administration;
- Satisfying all legitimate and correct creditor claims of the trust;
- Filing all necessary trust tax returns and ensuring that taxes are paid;
- Preparing and filing accounting to the beneficiaries; and
- Making distributions to the beneficiaries or establish the testamentary trusts created under the terms of the trust.
Difference between Probate and Trust Administration
The primary difference between a personal representatives role in probate, and a successor trustee role upon death of the decedent trustee is that probate administration is supervised and must be approved by the court. Probate is a public process that must await a judge’s order for each action. The court approval process has a tendency to stop a potential error before it occurs or at least early in the process. However, to begin a probate administration a filing is required and a significant fee must be paid to the Probate Court. As a result, probate is commonly more time consuming and costly when compared to the cost of trust administration.
However a critical issue is dealing with creditors. Through probate, the time limit for creditor filing is 90 days. However a creditor may file against a trust for two (2) years. Florida’s trust administration statutes do not contain a corresponding legal function to clear creditors in the relatively short 90 day limit as it exists under Florida’s Probate Code. If the trustee makes final distribution before the two year window expires, then he could be personally responsible to satisfy a creditor.
The Probate Code also contains provisions to deal with creditor disputes through its objection to creditor claims statutes. Florida’s trust administration statutes do not provide the same protections.
A Florida trust attorney for the trustee can assist the trustee in limiting the trustee’s liability by taking advantage of Florida’s statutory limitation language. If the appropriate language is properly placed on the appropriate accounting documents, a beneficiary is limited to a period of six months to challenge the accounting.
This is not an exhaustive list of the items that we consider when our Broward, Miami Dade, and Palm Beach County trust lawyers administer your trust. We work closely with your successor trustee to accomplish the goals that your trust set out to achieve when you created it.
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