Life circumstances often require that we rise to the occasion when duty calls. One of these circumstances occurs when a loved one passes and it is time to assume the duty of successor trustee of a family trust. If this is your call of duty, I congratulate you for being entrusted with this important responsibility. Your call of duty as a successor trustee, in legal terms (in Florida) will likely involve a Florida trust administration. This is an area of legal importance for you because, like most legal matters, it carries a risk of legal liability if important steps are missed or if actions are taken without proper care.
Important Legal Requirements For Florida Successor Trustees
Florida Trust Law and Essential Requirements
If you’re a new trustee of a Florida trust, my first bit of advice is DO NOT try to go it alone. Most trusts provide, and the Florida trust law allows, a successor trustee to hire expert legal counsel as well as tax and financial experts. I do encourage this, because as I always say, you simply don’t know what you don’t know. With that said, there are a few more basic steps to consider.
1. Determine if Trust Bills Need to Be Paid
If a house was held within the trust, the mortgage may need to be paid. Likewise, property taxes, insurance, utility bills, vehicle payments and other miscellaneous living expenses may require payment and typically may be paid from the trust.
2. Notify Trust Beneficiaries
Florida trust law requires that beneficiaries receive a notice of trust and that they are entitled to a copy of the trust. It will be up to the trustee to determine who the trust beneficiaries are; however, if the trust was written in legalese, you may need to consult your trust attorney.
3. Inventory Trust Assets
Gathering a record of the assets held by the trust is very important. Often, trustees are not clear about what it means to determine whether the trust holds the assets. This is a question of whether the Florida trust was funded properly by titling the assets in the name of the trust. The titling of assets may have been direct or may have been by designating the trust as beneficiary of a certain assets such as a life insurance policy for estate planning in Florida or an IRA as a Florida trust beneficiary.
4. Determine if Probate of Any Assets is Required
For assets that were not properly titled in the name of the trust, a Florida probate administration may be required to either place that asset in the trust or otherwise to transfer the asset to a designated beneficiary outside of the trust. Whether an asset goes to the trust (or not) will most often depend upon the Florida last will and testament.
5. Do a Preliminary Accounting and Maintain Good Records
After determining where assets are titled in Florida (or elsewhere), whether in trust or not, is the function of the trustee to safeguard and manage the trust assets in Florida. Part of this function is to do an accounting of, not only the assets held in trust, but also the value and balances of any financial accounts held within or otherwise directed to the trust. Accounts held in trust may be simple checking and savings accounts, or may be other investment accounts such as stock trading accounts, mutual funds or CDs. Most of the time, financial accounts such as IRAs and 401ks are not titled in the trust, but may designate the trust as beneficiary as a transfer upon death (TOD) in Florida so that account is thus directed to the trust upon the titled owner’s death.
Maintaining excellent records is essential and this includes balancing the checkbook and keeping a good record of expenditures. Failure to properly account for expenditures or using the trust funds for improper purposes could result in the trustee being deemed liable to the beneficiaries for misappropriation of Trust assets.
Common Pitfalls for Florida Successor Trustees
Neglecting to Get Trust Administration Advice
Common Problems for Successor Trustees Usually Result From Neglecting to Get Professional Advice Concerning A Few Common Areas of Trust Administration As Follows:
At the risk of overemphasizing this point, the following common problems of successor trustees usually relate to a failure to get professional guidance. Typically, professionals would advise caution in the following areas.
- Transferring Assets Out of the Trust
- Handling Estate Debts
- Handling Payment for Estate Expenses and Trustee Fees
- Distributing Assets at the Request of Family Members
1. Transferring assets out of a revocable living trust without proper guidance can create problems for successor trustees.
Assets in Florida are often transferred out of a trust for Florida Medicaid planning or asset protection purposes and this usually occurs during the life of the “settlor” of the trust. As you might imagine, this can also result in disputes and complications with other beneficiaries down the road.
Generally, the rule is that a successor trustee of a Florida trust has absolute discretion to utilize the trust assets for the best interest of the settlor. The backlash here is that the successor trustee isn’t you, and thus the successor trustee may be held to scrutiny by the other trust beneficiaries for actions taken concerning the trust assets even if measures were taken in order to take care of you. This can become a very complex process for a successor trustee.
For example, it may become necessary to transfer assets out of the trust estate in order to reduce the estate for Medicaid planning. To whom these assets will be transferred can become a key questions, particularly if a spouse is no longer alive. Sometimes a trustee will transfer assets to themselves individually and although this may be permissible under certain circumstances, it may be looked at with scrutiny at a later date by other trust beneficiaries.
2. Handling estate debts is can be intimidating for a successor trustee.
A common example, is where the settlor had leveraged the trust assets for loans and the question of whether, in a diminishing estate, it is wise to let the creditor have the asset? Again, although the successor trustee has absolute discretion to allow it, this decision may be second guessed later.
3. Handling estate expenses and determining trustee fees can be confusing for a successor trustee.
Expenses are usually pretty straightforward unless the object of the expense is a non-trust asset. Then the question will become whether it was proper to pay the expense from the trust. A well drafted trust and other documents such as a Florida durable power of attorney usually prevents this confusion. Trustee fees are allowed by state law and range from about 1% to 3% of the trust assets. They must be reasonable given the circumstances and thus 3% may be reasonable for a large and complicated estate requiring years of administration and 1% may be unreasonable for a simpler estate. Again, these are very fact specific and the successor trustee should consider the response of the other trust beneficiaries down the road.
4. Distributing assets to family members or other beneficiaries can be stressful for a successor trustee.
Similarly, sometimes the settlor as offered an item of personal property to a beneficiary and they wish to claim it while the settlor is still living. Again, documentation is key and if possible, getting such gifts in writing from the settlor is always preferred to avoid family disputes over trusts and estates in Florida.
For all of the above, documentation is key for the successor trustee as is always providing a reason for transfers, payments, gifts etc., so these actions can be explained and justified later in the event of an inquiry by other beneficiaries.
As I’ve mentioned, serving as a trustee or other fiduciary in an estate is an important and esteemed role and following these simple tips can keep you from needless scrutiny from loved ones and their lawyers.
Steve Gibbs, Esq.
This is an update to an original post dated May 12, 2016.
If a life insurance policy ( which is a contract and only worth money when one passes away) is removed from a trust when the individual who created it is still alive and there is a trustee handling these affairs after that person has passed and this trustee get’s paid a commission at 3.5% , is this life insurance to be included as a part of that 3.5% commission? The other question I have is: There are two families to split this estate, a house is sold for $ 470,000.00 and to be split by the two families. Are the two trustee’s entitled to the 3.5% commission on the full sale price or only on the split between the two families? Being 3.5% commission on $ 235,000.00? Thanks again, Rick
Hello Rick, thank you for your interest and comment; however, your question is simply to involved for a blog post answer. To provide a solid answer would require reviewing the trust and going through some Q & A to assure that I understand your questions. Feel free to contact our Legal Director Gene to schedule a conversation.
Best,
Steve Gibbs, Esq.
Yes please help. I am a successor trustee of a self-settling declaration of Trust. I’m the third person. Both my parents were the settlors they are the principal and income beneficiary. In 2000 after my father co-trustee passed away the shares of the community trust estate were not split for the Surviving spouse limited access Trust. The IRS election was made I became her dependent all income was at her discretion age 55. The by-pass trust and Trust C does not meet the IRS Code. Mother remarried in 2002 divorced in 2006 with MSA, but in 2013 remarried the same man she was co-dependent living arrangement married in duress out of dying man wish and fears. My sister committed welfare fraud in California in 1997 was arrested I became a victim and labeled a snitch by my sister who through third party cause mutual combat and probation violation led to felony incarceration in 2005 court records and police reports show collusion was committed against me. the argument in this matter is successor trustee is a felon, elective share claim buy surviving spouse who 19 months after also passed away daughters are now claiming the elective share here in Florida and in California the omitted spouse. Decoration of Trust has domiciled in 1997 California under its probate code as well as the will and codicil to the will. I lived in California until 2013 requested to retire from her duties. At that time discovered my sister had been committing elder exploitation and well as her adult children. I called the adult hotline and was told she was not a venerable elder. assumed duties as a successor trustee and in 2017 my sister claimed breach of trust and has been trying to remove me as a Trustee. I am reading through the Florida statues and discovered her attorney did a 768.295 Strategic Lawsuits Against Public Participation (SLAPP) prohibited. there is more to this matter but I know the truth will prevail.
Hello Carlos and thanks for reading and your comment. Unfortunately, we no longer handle trust litigation matters. Best of luck with your efforts.
Steve Gibbs, Esq.
If all trust assets go to a single beneficiary who is also the trustee, can that trustee keep the trust after the settlor’s death? For how long? Is there a time limit for distributions to be made?
Hello Cathie, thanks for reading and commenting. Tough to comment on this without seeing the trust and I can’t offer legal advice in a blog comment. However, in general, if a trust isn’t drafted as a long term trust, the trustee is probably obligated to distribute and close the trust within a reasonable time…a year or 2 perhaps. Although in this case, with 1 trustee and beneficiary it may not be an issue. Another issue is taxes and the trust tax rate. A trust can be created as a longer term trust which can have important asset protection benefits in certain circumstances. Feel free to schedule a formal trust review with Gene at admin@gibbslawfl.com for a more detailed discussion.
Best,
Steve Gibbs, Esq.
Hi Steve – is it true that in Florida the trust beneficiaries can vote to choose an alternate Sucessor Trustee in case of the original Sucessor Trustees incapacity? I am the Sucessor to my mother’s trust. I am also a beneficiary along with my brother and sister. I wanted to make sure my mother’s trust is safe in the event something goes wrong – as I’m traveling out of country. I did read that in Florida law the remaing natural beneficiaries may elect another Sucessor – but that was just a passing comment that was similar in context, but not exactly like, this situation. I can find nothing definative on it. I have to leave tomorrow so this has not been provided for. I literally have about 24 hrs before I have to leave and it suddenly occurred to me “what if”?
I just want to make sure things are covered and my mother’s trust is safe relative to my siblings, and that my husband’s rights as heir behind me are secure. (They should be – married over ten years) But I wouldn’t want anything to have to go through the torturous process of probate being that the trust was established to make things as easy as possible for us after the loss of our mother.
Regardless – you know things can potentiality get “sticky” – especially if one sibling is unpredictable as to his intent & mom didn’t elect that sibling & really should it come to it that sibling should share “joint” administration just to keep things straight.
I considered going to a Notary and at the very least draw up a statement as to the preferred “joint” Sucessor Trustees I would elect in case of my incapacity. (Brother/Brother-in-law/Husband) But I don’t know if that would hold any legal weight. I thought to go to a Notary because in this case a lawyer wouldn’t be an option with such time constraints. (I don’t think? flight pulls out tomorrow at 4)
Can you give me any input Steve?
Thank you for any insight you have.
I truly appreciate it.
Sincerely,
Worried Sucessor Trustee in Florida –
Hello Loni, thanks for reading and your very well described comment. The short answer is the FL trust code provides that beneficiaries may vote to replace or appoint an existing trustee. However, that’s as far as I can comment without reviewing the trust. The notary idea probably wouldn’t accomplish much unless you did a formal amendment, signed with the appropriate formalities and this should be done by a professional. Otherwise you could just create confusion and potential problems. For purposes of your flight, you’re probably okay unless the trust overrides the trust code on that issue which wouldn’t be common in my experience. Best to get it looked it when you can.
Best, Steve Gibbs, Esq.
Thank you Steve. I truly appreciate your replying – especially before I’m leaving. Speaking on Amendments then – I know different firms charge differently – but I noticed after the fact that it lools like I am in one of your florida areas of practice – could you give me a ballpark figure on the cost of an amendment to simply state the Trustees I would appoint in the case of my own incapcity? (Please rely to my email if you would rather reply that way for privacy – if you prefer here on forum then I’m fine with that also.) It a simple trust Steve – no big estate or banking matters involved at all. Only an average market value house is protected so to avoided probate, etc. The will just states general things & we have already decided & divided all those odds & ends. The only thing remaining is the sale of the house in a retirement community. Thank you again Steve. So appreciate it!
– Loni
Loni, trust documents are handled on a flat fee basis. For your case a consult and trust review would be required before proceeding and the cost for that is $395 which is applied toward the cost of services agreed upon. Total amendment costs range from $750 upward depending upon complexity. To get started you can e-mail Gene at admin@gibbslawfl.com or call to schedule at 239-415-7495. Thanks again.
Steve Gibbs, Esq.
When do successor trustees take over in FLorida when the trustee lacks capacity. Do you need to formally establish lack of capacity or is being in a memory care unit suffice. Must each successor formally accept. The trust itself does not address this beyond “lack of capacity”. Does a letter sent to a care facility, by a Dr, stating lack of capacity automatically trigger the successor trustees?
Hello Jennifer, thanks for reading and commenting. The trust would typically specify the conditions for incapacity and this process can tend to vary a bit. I would think a formal acceptance would be good; however, it generally isn’t required if the individual assumes the role, they are the designated successor and the fact of incapacity is clear per the trust requirements. Let us know if we can help in a consult setting by connecting with Gene at admin@gibbslawfl.com.
Best, Steve Gibbs, Esq.
Hello,
Thank you for answering what questions you can for us souls that don’t understand Florida laws.
My questions: Can a Successor Trustee in charge of a Trust account refuse to sign a title transfer for an asset in the trust? Is there a legal obligation that a trustee must follow? The beneficiary has a proving record of not being able to handle their finances therefore, the establishment of trust and trustee. And, can a successor trustee be removed from managing the trust because the beneficiary doesn’t like the trustee’s decision (reference the first questions). Thank you for answering what you can.
Hello Dawn, thanks for reading and commenting. To answer your question, some more questions would need to be addressed such why the title transfer is being demanded? Another question is whether the trustee is deceased, thus rendering the trust irrevocable. That said, the trustees right to refuse in order to protect trust assets could depend on the language of the trust itself and whether it allows the trustee this discretion. Let us know if you’d like to schedule a formal review by e-mailing Gene at admin@gibbslawfl.com.
Best, Steve Gibbs, Esq.
We are having trouble removing a trustee as he is unwilling to communicate sign off on the removal.
The trust is for a secondary property and the person who set up the trust is alive and has requests the trustee be removed however the trustee will not sign documents. The beneficiaries of the trust and co-trustee all want the trustee removed as there is personal issues and legal issues being undertaken in Canada on a separate matter with the trustee. The trustee is the brother of the person who set up the trust and they no longer talk or have any communication since this other legal matter has commenced. What can be done to remedy this and have the trustee removed?
The trustee has been sent many legal letters but refuses to respond.
Hello Nick, thanks for commenting. There are FL trust code guidelines and most likely the trust agreement itself that govern the removal of a trustee. Of course a legal process may need to be taken to make this happen. A next step would be a consultation and you can connect with Gene if you’re inclined to explore this at admin@gibbslawfl.com.
Best, Steve Gibbs, Esq.
Can you submit a request to remove a Trustee(my brother) from a Trust(my father Revocable Trust deceased Aug 2020) by simply submitting a request to the Trustee and the Trust Attorney(my fathers attorney) for misconduct misuse of funds non compliance not communicating with me (beneficiary) at all. Or do you have to submit a petition to remove trustee to the Probate Court? And if it must be to the court can I submit the petition myself after 30 day notice to my brother or must I have an attorney do it.
Thank you,
Hello Lee, thanks for commenting. In general, beneficiaries of a trust can agree to have a trustee removed and replaced. You can certainly approach the attorney on this assuming you have a consensus of beneficiaries. If not, and/or if there is abuse by either the trustee or attorney or both, you may need legal representation to get anywhere. You’ll need to consider the situation objectively and the cost benefit of getting help.
Best, Steve Gibbs, Esq.
Thank you for your reply, One more question if I have called the estate(my fathers) Attorney several times and told her about the misconduct, sold large quantities of livestock way under market value, livestock operation funds missing, farm equipment returned and defaulted on when there should be plenty of funds available to make payments, leasing farm land to his friend way undervalue, and all that she will say is she can not speak to me I must go through my brother the trustee. Is there a conflict of interest for the Estate Attorney to talk to me if she is not my brothers attorney nor mine? Or is it because I am a beneficiary and all communication must go through the Trustee, even though I have told her several times he will not communicate with me. I wanted myself to submit a petition to remove the trustee directly to the Probate court and reappoint to my cousin since neither the estate attorney and Trustee will communicate with me, she refuses to talk to me and my brother will not answer my phone calls or return my calls.
Lee, the short answer is there may be a conflict of interest in speaking to you if an attorney represents the Trustee. Blog correspondence can only go so far, as an educational step. If you’re concerned, I strongly recommend you seek attorney guidance in a consultation setting.
Best, Steve Gibbs, Esq.
Cost Estimate? Roughly, what is a ballpark cost or cost-range for legal services (hourly basis) for settlement of a straightforward irrevocable Trust (no real property, small number of beneficiaries and no conflicts, and Trustee (me) handling non-legal logistics).? Thx.
Hello Eric, I’m not sure what you mean by settlement? If you’re talking about a trust administration, cost range could be anywhere from $2500 up to cover the legal bases necessary and these fees can be paid from the trust. Let us know if we can help by connecting at info@gibbslawfl.com.
Best, Steve Gibbs, Esq.
Any special considerations when the beneficiary of a Florida Trust is another Trust with situs in another state?
It would most likely all depend upon the language of that out of state trust.
Best, Steve Gibbs, Esq.
What is the cost to serve as a trustee and manage a trust? Is it a flat fee, a percentage of assets held in the trust, or based/charged on some other factor such as how much actual work it involves?
Hello Lisa, trustee fees are allowed under the Florida Trust Code and can vary based upon the factors you mentioned. An acceptable ball park is often around 1% of trust asset valuation.
Best, Steve Gibbs, Esq.
Using my single member LLC, need I register as a trust company with the State of Florida?
Hello John, I’m not sure I understand your question; however, there are specific requirements for setting up a trust company vs. other kinds of entities and honestly am not up to speed on all the specifics, as believe it or not, this is the first request I’ve ever received for information about that. Generally, with the exception of banking institutions, most folks serve in an individual capacity and I believe a standard LLC may not be allowed if you’re seeking to operate as a professional trust company. I hope this points you in the right direction.
Best,
Steve Gibbs, Esq.
Great blog, thank you for sharing your knowledge.
When a trustee/owner of a property dies and her brother is the successor trustee; if they want to sell a property that is in the name of the trust who signs the sale document? The beneficiaries or the sucesor trustee (brother)? Should the property get transferred to the beneficiaries name prior to selling or should the sales contract be made between the new buyer and the trust, or between the new buyer and the successor trustee.. would the successor trustee be the only one to sign? confusing. Please advice when you have an opportunity. Thank you!
Hello John, thanks for your question. Generally, the successor trustee has authority to make those decisions and not the beneficiaries; however, the successor trustee, in this discretion, may choose to obtain input from beneficiaries.
Best, Steve Gibbs, Esq.
Is a 1% to 3% fee a one time fee? Can the trustee charge a quarterly fee going forward and what would that be based on assuming an 8 million dollar trust? Thank you.
My client is one of three beneficiary’s to an 8 million dollar fla trust. Her brothers are the two other beneficiary s and the oldest is the trustee. The trustee has not provided financial statements since the trusts inception in 2014 and instead has presented deeply flawed spread sheets with incorrect representations. Besides taking an initial Trustee fee ( approx .75%) he has been charging the Trust 12 to 15 thousand dollars a quarter and paying the taxes on his fees with withdrawals from the trust. I’ve reviewed the Trust and it allows the trustee to charge the going rate in fla for his services and allows the trustee to be reimbursed for expenses caused by his tenure.
Do his fees sound like their in the ballpark for Fla?
Is it proper to use Trust funds to pay the taxes on his quarterly fee?
Does Fla require a trustee for a Florida trust to be domiciled in Fla?
This particular trustee resides out of state.
Thank you for your attention.
Hello Bruce, that percentage in my experience should be an annual fee, so it would be repeated annually. It isn’t uncommon to see firms charging excessive trustee fees so be wary. Let us know if we can help.
Best, Steve Gibbs, Esq.
My dad has a FL revocable living trust. He made a final amendment that grants his successor trustee all of the powers of the Trustor (himself) to amend, revoke, remove or add beneficiaries, etc. The amendment clearly states he knows what he is doing, wants to do it, and revokes all language in the original trust that says these powers are reserved to the Trustor. It also removes language that says upon the death of the Trustor, that the trust becomes irrevocable. Is this legal to do? I have never heard of this before.
Thanks for any input.
Theresa
Hello Theresa, a Trust Protection can operate in the manner you’re describing, though typically not a Trustee unless perhaps they are the same person. This could be a conflict of interest in my opinion, though it is impossible to comment without in depth discussion and further investigation.
Let us know if we can help.
Best, Steve Gibbs, Esq.
I hired an attorney in central FL to set up a family trust that was recommended by the nursing home my mother is in. Not knowing anything about trusts etc., the attorney set up the trust with just mom’s house in it and charged me $8900 to do so. I mentioned this fee to a friend after the fact and was told that fee is highly excessive. If true, do I have any recourse? Thank you.
Hello Gary, I think there is a lot of value in a properly set up trust and folks often don’t properly value their attorney’s time and experience or take it for granted. Strangely, people spend large sums of money on lots of other things like cars and toys without thinking much about it. I can’t speak to your situation directly; however, if the trust works and saves the estate money or exposure to chaos, I’m not sure its going to benefit you to worry about whether you couldn’ve bargained for a cheaper trust. Go back and ask your attorney about it if you’re concerned is my suggestion.
Best, Steve Gibbs, Esq.
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