Trusts can be a bit difficult to understand. But boiled down to its essence, a trust is a legal entity that is established by a person (called the “grantor,” “settlor,” or “trustor” depending on where you live), for the benefit of others (the “beneficiaries”). The trust is controlled or run by a third person (or entity) called the “trustee.”
In many cases, the person who creates a revocable living trust, will name himself or herself as trustee of the trust. That way, the grantor (who is also the trustee) can continue to manage his or her affairs until he/she is no longer able or until death. At which time a successor trustee (referred to below as the “Trustee”) will take over.
Because the Trustee is a fiduciary, he has great responsibility and a number of duties to perform.
In today’s post, we will look at only 5 (there are lots more!) of the duties of a Trustee.
1. Duty of loyalty to beneficiaries.
A Trustee has a duty of loyalty to the beneficiaries of the trust. This means that the Trustee must act in the best interests of the beneficiaries and that he or she must properly administer the trust assets. Failure to do so can expose the Trustee to damages caused by incorrect handling of trust assets or improper trust administration.
2. Duty to keep accurate records.
Trustees must keep the trust property separate from the Trustee’s own property and must keep accurate records of the administration of the trust.
3. Duty to act prudently.
Trustees are fiduciaries and, as noted above, must act at all times in the best interests of the beneficiaries. To this end, the Trustee has a duty to act as a prudent person would in the administration of the trust. The Trustee must at all times exercise reasonable skill, care, and caution in administering the trust.
4. Duty to enforce and defend claims.
The Trustee is responsible for enforcing any claims the trust may have, and for defending against any claims brought by anyone against the trust.
5. Duty to inform and account.
A Trustee’s duty to keep the beneficiaries reasonably informed of the administration of the trust and to account to them requires, among other things, that the Trustee provide annual accountings and meet certain statutory deadlines for giving notice of trust acceptance and for informing beneficiaries of their rights regarding the trust.
As noted, a Trustee has many more responsibilities and duties. And trustees (original and successor trustees) who fail to properly carry out their duties can be liable to the beneficiaries for damages. In other words, they can be sued. Administering a trust is a difficult and exacting job. Because of this, Florida law allows a Trustee to hire expert legal counsel as well as tax and accounting professionals to assist him in executing all his duties.
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Don’t leave planning for your future and that of your loved ones to chance. All it takes is one phone call to the Law Offices of Samantha J. Fitzgerald to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well. When you work with the estate planning attorneys at the Law Offices of Samantha J. Fitzgerald, you get more than just an estate plan: you get peace of mind. Call us at 954-580-3690 or email us at: [email protected] today.