As we have mentioned before, the job of a trustee is a critical one.
But it’s not easy.
A trustee is a fiduciary. As such, he or she has a number of duties to fulfill, and he can be held personally liable for the breach of those duties.
Not everyone is qualified to undertake the duties of a trustee and even if you are, there may come a time when you want to resign as trustee.
So, what happens when you’re serving as trustee of a trust and you want to resign?
Luckily, if you are serving as a trustee in Florida, you have 2 ways to resign as trustee which we will discuss in more detail below.
But first, let’s refresh what a trustee does and who can serve as a trustee in Florida.
Who is the Trustee?
Briefly, a trustee is the person who is appointed by the creator of a trust (the “settlor” or “trustmaker”) to administer that trust and distribute the trust assets. The person you appoint as trustee should be someone who is completely honest, moral and reliable because he or she has control over the trustmaker’s property (money, property and other assets).
A trustee is a fiduciary. A fiduciary acts on behalf of another and is obligated to act in that person’s best interests. Fiduciaries are people of utmost honesty and integrity.
Under Florida law, trustees have specific duties that they owe to the trust beneficiaries.
If a trustee breaches his fiduciary duties, for example if he invades the principal of the trust in violation of the trust’s terms, he can be held individually liable to the beneficiaries for any misappropriation of trust assets. The law provides remedies for the breach of a trustee’s duties.
In addition, with the help of an estate and probate lawyer, a surcharge action can be filed against a trustee to impose personal liability for the breach of his fiduciary duties.
Who Can Serve as a Trustee?
Given the great responsibility that comes with being a trustee, it makes sense to ask who can serve as a trustee?
Well, in Florida, the answer is any adult may serve as trustee. The individual does not need to be a Florida resident. Indeed, any family member, friend, or attorney may serve as trustee.
With that said, it is important to stress that you should choose your trustee very carefully. The person you choose should be honest and have integrity. Among other things, the person you choose should have some level of experience, understanding, or ability to handle pressure, make difficult decisions, keep good records, pay taxes, and properly invest assets.
Whoever you choose will be legally bound to follow the trust instructions, act in the best interests of your beneficiaries, and comply with all his/her statutory duties.
2 Ways to Resign as Trustee in Florida
So let’s say you have chosen your trustee. You die, and the trustee begins to administer the trust. Then, for whatever reason (poor health tends to feature here), your trustee wants to resign his/her position as trustee.
Can she do it?
Yes.
Luckily, in Florida, there are 2 ways to resign as a trustee.
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The Trust Instrument
The first way a trustee may resign his/her position depends on the wording of the trust instrument.
This one is straightforward. Read the trust instrument. Quite often the trust terms will provide a procedure that the trustee can follow in order to resign. Typically, this will require the trustee to give notice to the beneficiaries, any co-trustees, any new (or substitute) trustees, or those with authority to appoint a trustee if there are no co-trustees or substitute trustees.
But what happens if there is no procedure specified in the trust instrument?
Luckily, in Florida, there is another way for a trustee to resign. Read on.
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Florida Trustee Resignation Statute
Florida’s recently enacted Trustee Resignation Statute is a mandatory provision of the Florida Trust Code.
The statute gives the trustee the right to resign and provides a procedure by which to do so.
The statute allows the trustee to resign either:
(a) on 30 days’ notice to all beneficiaries, the settlor (if alive) and any co-trustees,
Or,
(b) by petitioning the court for approval.
If the court approves the trustee’s petition, the trustee may resign. Be aware, however, that in approving a petition, the court may impose any reasonable orders or conditions needed to protect the trust property. And resignation will not relieve a trustee who has breached his/her fiduciary duties prior to resignation of liability for those breaches.
The statute also allows a trustee to resign pursuant to the terms of the trust itself. Again, notice must be given to any co-trustees, any successor trustee who has agreed to act, or those with authority to appoint a successor trustee.
Trusts are a wonderful estate planning tool. Yes, the law surrounding them can get a bit complicated, and yes, you must choose your trustee with care, but with the proper guidance, having a well-drafted trust can safeguard your assets and provide you with profound peace of mind.
Plantation, Florida Trust Attorneys
If you have probate or estate planning needs, protecting your family is just one phone call away. At SJF Law Group, we create estate plans as individualized as you are. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well. Connect with us on Facebook or Instagram or call us at 954-580-3690.