Trust Administration

When someone dies, the administration of their trust can be a daunting task.  A trustee is named to carry out the wishes of the person who created the trust. This is known as trust administration. Trustees have the legal authority, responsibility, and fiduciary duty to manage the trust’s assets.

Types of Trusts

Charitable Remainder Trust  

A Charitable Remainder Trust (CRT) is a trust which allows the trustee to sell assets and reinvest the proceeds while making periodic payments to all named beneficiaries. This payment may be either for life or over a set period up to 20 years. When the final remaining beneficiary dies, or a set deadline is met, the trust ends.  After this, a designee receives the remaining assets. The designee is usually a charitable organization or school of higher education.

Charitable Lead Trust

A Charitable Lead Trust (CLT) differs from a CRT in that it pays a set percentage of the value of the trust’s assets over a set period to a named beneficiary, such as a charity or university.  At the end of the trust’s assigned term, the remaining assets are passed on to any heirs of the donor.

Grantor Retained Annuity Trust

A Grantor Retained Annuity Trust (GRAT) is a trust which allows beneficiaries to receive large gifts without exposure to federal gift taxation regulations. This is accomplished by creating a trust that is an annuity. Under this, the donor paid a set yearly payment over a set number of years. Once the designated number of years have elapsed, any remaining assets are passed on to the beneficiary as a gift.

Domestic Asset Protection Trust  

A Domestic Asset Protection Trust (DAPT) protects assets from creditors. These trusts are a popular alternative to pre-nuptial agreements. In a DAPT, assets are transferred to the trust. Despite this, the transferee can still receive benefits. This is because the settlor can legally name himself as the beneficiary of the trust. The trust must be irrevocable, and a trustee must be appointed with independent discretion to administer the trust. This trustee is required to be a resident of the jurisdiction in which the trust is formed.

Qualified Domestic Trust

Qualified Domestic Trusts (QDT) are used to avoid estate taxes upon the death of the spouse who is a United States citizen, but the surviving spouse is not a US citizen. After the death of the surviving spouse, the trust’s assets are then subject to the estate tax as if they had been included in the estate of the first spouse to die.

Trust Administration Duties and Liabilities

According to Florida Statute 736, trustees have many duties and liabilities for which they are subject. These duties state that the trustee:

  • Has a duty to administer the trust in good faith. This responsibility includes the terms and purposes of the trust and in the interests of the beneficiaries.
  • Owes the trust beneficiaries a duty of loyalty to administer the Trust “solely in the interests of the beneficiaries.”
  • Owes the trust beneficiaries a duty to “act impartially in administering the trust property. This means giving due regard to the beneficiaries’ respective interests.”
  • Shall administer the trust as a prudent person would. This entails considering the purposes, terms, distribution requirements and other circumstances of the Trust. It also means they shall exercise reasonable care, skill, and caution.
  • Should take reasonable steps to protect the trust property and assets.
  • Who has special skills or knowledge, or is named trustee in reliance on the trustee’s representation that the trustee has special skills or expertise, shall use those special skills or knowledge.
  • Owes a duty to keep the beneficiaries of the trust reasonably informed about all monies, funds, assets and personal property that came into his possession as Trustee, and which were distributed, as well as to account for all assets, income, expenses, gains or losses of the Trust.

Additional Duties and Liabilities

Also, a trustee of a trust administration has a duty to:

  • Provide the trust beneficiaries with relevant information about the assets and liabilities of the Trust and the particulars relating to the administration of the Trust.
  • Enforce claims, to defend actions, to preserve Trust property, and to exercise reasonable care and skill in the administration of the Trust.
  • Take reasonable steps to take control of and protect the trust property.
  • Inform each of the trust beneficiaries and account for the assets and liabilities of the trust and the particulars relating to the trust administration in a trust accounting at least on an annual basis and the termination of the trust or change of the Trustee.

Contact an Experienced Trust Administrator Attorney Today

If you have been named as the trustee of a Trust in the State of Florida, you should seek legal counsel immediately. In addition, make sure you get a trusted and experienced trust administration attorney who is willing to fight for your rights. Call The Berman Law Group right now at (800) 375-5555 for your free consultation.

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