Information for a Successor Trustee
Trust administration in Florida refers to the duties and procedures by which a successor trustee a living trust carries out the terms of the trust document. A successor trustee of a living trust has a wide range of powers and responsibilities which become effective upon our death or incapacity of the trustmaker or grantor. The trustee has a legal duty to the trust beneficiaries that include proper administration of trust assets. The trustee can be liable for damages caused by incorrect handling of trust assets or improper trust administration.
If you are the successor Trustee after the death of your husband, wife, or surviving parent your primary responsibilities include the following:
Prepare for Trust Administration
To start a trust administration in Florida, you should follow these initial steps:
- Deposit original will with the Court. Florida Statutes 732.901 requires that within ten (10) days of death, the decedent’s original Last Will and Testament be deposited with the Circuit Court-Probate division in the county where we resided at the time of death.
- Order Death Certificates. Death certificates will probably be needed to obtain the proceeds of any life insurance policies and for other transfers. The funeral home will provide certified death certificates for a small fee at your request. You should have at least three or four certified copies of the short form death certificate (which omit the cause of death).
- Review the living trust agreement. The written trust agreement will tell you what to do with trust assets after the death of your spouse. In most cases, your deceased spouse’s share of trust property will be held in further trust for the benefit of a surviving spouse. After the death of both spouses, or parents, trust assets will be distributed to individuals or charities named as trust beneficiaries. Your attorney will review with you the trust agreement and help you with trust accounting.
Notice of Trust
Upon the death of a settlor of a trust Florida Statute 736.05055 requires that the successor trustee file a “notice of trust” with the court of the county of the settlor’s domicile. “Domicile” is where the decedent resided at the time of his death.
The statute requires certain information to be included in the Notice of Trust. The Notice of Trust must contain the settlor’s name, his date of death, the title of the living trust, if any, the date of trust execution, and the successor trustee’s address. A Notice usually also includes a statement that the trust is liable for expenses of probate administration and the decedent’s debts if the probate estate is insufficient to pay all debts.
If the decedent’s personal representative has previously initiated a probate proceeding the Notice of Trust is filed in the probate case. Absent an existing probate the Clerk of Court will file and index the Notice.
The purpose of the Notice of Trust is to give public notice of the trust’s existence and the trustee’s contact information so that creditors are aware of assets available to pay creditor claims.
What assets are in involved in living trust administration?
The successor trustee must first determine what the trust owns. Trust administration involves handling assets titled in the name of the living trust. To discover trust assets the trustee can gather examples of recent periodic financial statements and reports received by email or posted online to see what accounts are owned in the name of the living trust.
Next, the trustee should list assets held in decedent’s personal name. A review of a decedent’s finances may find certain assets held jointly with the surviving spouse or owned in the decedent’s own name. Jointly titled assets will automatically be conveyed to the surviving spouse by operation of law. Any assets owned in the decedent’s own name will have to be administered through probate. The heir of the probate usually will be the living trust because most living trust plans include a “pour over” of the probate estate into the decedent’s living trust.
The successor trustee should check any safe deposit box or house safe owned by the decedent. The trustee needs a copy of the death certificate and a copy of our living trust, together with the safe deposit box key, to gain access to a safe deposit box.
Accounting in Living Trust Administration
A successor trustee should inventory trust assets. A trust inventory includes a list of assets titled in the trust name and the market value of the assets at the date of death. An accurate value of trust assets affects future tax liability when the trust beneficiaries sell the assets. Trust beneficiaries can “step-up” in the basis ( the “tax cost”) of some living trust assets so that the beneficiaries will pay tax on value increase after the date of death rather than the decedent’s original purchase price.
If all or part of a living trust has become irrevocable after the death of a trustmaker the successor trustee must obtain a federal Taxpayer Identification Number for that trust . Use IRS Form SS-4 to get this number. If the trust thereafter has taxable income it may be necessary to file IRS Form 1041S as the trust’s income tax return.
Estate tax reporting is not required for most living trusts. This form will need to be filed only if federal estate taxes are due. If it is necessary to file IRS Form 706 an accountant or tax attorney should prepare the form.
Legal Issues in Trust Administration
It may be appropriate for a trust beneficiary to “disclaim” an interest in all or part of their share of trust property. A disclaimer treats the disclaiming beneficiary as pre-deceasing so that the disclaimed property will automatically pass to the next beneficiary in line. An estate planning or tax attorney can explain the benefits and the procedures for a proper disclaimer under Florida statutes.
Some trust agreements include powers of appointment that give the trust beneficiaries the right to change the allocation of their inherited trust property after the beneficiary’s own death. The appointment must be expressed in the beneficiary’s own will or living trust. An attorney can explain the benefits and procedures for exercising a power of appointment.
A trustee is obligated to keep trust beneficiaries reasonably informed of the progress of trust administration. Upon a beneficiary’s reasonable request, the successor trustee should provide the beneficiary a copy of the decedent’s trust agreement, including amendments, and provide a beneficiary with relevant information about trust assets.
Are Florida Trustees Entitled to Trust Administration Fees?
Florida trust administration is hard work and time consuming. Some trust agreements provide that trustees are entitled to reasonable compensation for their role in trust administration. The amount of “reasonable compensation” depends upon the complexity of trust administration and the trustee’s professional expertise.
Florida Statutes provide that trustees are entitled to trust administration fees based upon a percentage of the value of trust assets and atypical legal issues that are part of trust administration.
There will probably be many other tasks to be done in the administration of a trust, many of which involve legal, financial, or tax issues.