Trust Administration

Trust Administration in Florida

The loss of a loved one can be extremely stressful for the survivors of the deceased. In addition to dealing with the grief that accompanies a loved one’s death, there are many things that must be done to settle the deceased’s estate. Probate administration is the legal process of validating the deceased’s Last Will and Testament and administering their estate accordingly. Probate administration is carried out by someone referred to as the executor, personal representative, or an administrator and who has been appointed by the probate.

Similarly, trust administration is the management of trust assets for the benefit of the trust beneficiaries and in accordance with the terms of the trust. Trust administration is usually carried out by an individual or entity referred to as the successor trustee, and who was nominated by the trust settlor to assume management of the trust when the original trustee becomes incapacitated or dies.

Steps a Successor Trustee Must Take to Administer A Trust

There are a number of steps a successor trustee must take to administer a trust, most importantly:

  • Give notice to the beneficiaries of the trust;
  • Collect assets and pay off creditors;
  • Properly appraise, inventory, and manage the trust assets;
  • Make distributions to the trust beneficiaries in accordance with the terms of the trust; and
  • Carefully document all transactions that have anything to do with the trust since beneficiaries are entitled to an accounting

This may sound simple, but there are many laws and procedures that must be followed and, as trustee, you have a fiduciary duty to administer the trust in a manner that both protects and preserves trust’s assets, as well as is in the best interests of the beneficiaries. Breach this duty, and you may be held personally liable to the beneficiaries of the trust.

Types of Trusts

The three most fundamental types of trusts utilized for estate planning in Florida are as follows:

  • Revocable (Living) Trust – allows assets to be transferred in and out of your trust, and for the trust to be revoked or amended during the lifetime of the Settlor, aka the person who created the trust.
  • Irrevocable Trust – a trust that cannot be revoked or amended. This type of legal entity is generally meant to remove a significant amount of control from the settlor regarding any of the assets transferred to the irrevocable trust.
  • Testamentary Trust – a type of trust that comes into existence or goes into effect after death, usually included within the language of a will to define how money and property will be handled for beneficiaries such as minor children.

Revocable vs. Irrevocable Trusts

Both revocable trusts and irrevocable trusts can allow the assets that you transfer into the trust to avoid probate, however the main distinction between the two categories of trusts lies in the asset protection they provide.

Because, a revocable trust allows you full access to and control of your assets, the assets are potentially accessible to your creditors. So, while this type of trust will avoid probate and guardianships, it won’t protect your assets from your own liabilities.

On the other hand, once you transfer assets into an irrevocable trust, you generally cannot take them out. The purpose of an irrevocable trust is to remove control of the assets from their original owner and place that control in the hands of an independent trustee. Due to this structure and the lack of control, your assets are out of the reach of your creditors. Irrevocable trusts are typically utilized to hold life insurance policies, as well to restructure assets for Medicaid eligibility.

The Advantages of a Properly Funded Living Trust

A properly funded revocable living trust will allow you to spare your beneficiaries the time and expense of probate and arrange for the management of your assets in the event you become incapacitated. Furthermore, although it won’t avoid taxes or protect your assets from your creditors, a living trust can provide your beneficiaries with creditor protection.

Trusts are especially important if you have children or other loved ones with disabilities or special needs because they can help them avoid the loss of essential government benefits. In addition, the right trust can allow you to have the maximum assurance that after you die, your assets will be transferred to your beneficiaries in the most efficient and effective manner and that they will be taken care of in the way that you intend.

How A Florida Trust Administration Lawyer Can Help

Trust administration is a process that you may find yourself involved in after the death of a spouse or parent who created the trust before passing away. This comes at a very emotional time and is often accompanied by complicated family and financial issues that need to be sorted out.

What’s important to remember about trust administration is that there are certain documents that must be filed and procedures that must be followed. You should also know, however, that if you lack the time, resources or knowledge to fulfill your role as trustee, there are experienced and knowledgeable trust administration attorneys available to assist you.

An experienced trust administration lawyer can assist you in navigating the complicated legal and tax issues associated with trust administration. A good trust administration attorney will lead you through the trust administration process, working with CPAs, financial planners, and other trusted advisors to value the assets of the trust and assist you in successfully fulfilling your role as trustee.

 

Wills & Trust Administration FAQs

Trusts are stand-alone legal entities, similar to a partnership or a corporation. They have a settlor who creates the trust and transfers assets into it. They have named trustees, and successor trustees, who control the assets and administer it during the settlor’s life or upon death. The trust document will also identify beneficiaries. A trust is a legal entity that can own assets and follows the directions that the settlor sets forth in his trust document.
A trust offers several benefits, such as:

1.) A trust is generally treated as a private document, meaning its provisions are not normally recorded in any public record, such as with the Probate Court. A trust document is confidential among the settlor and his beneficiaries. When assets are correctly titled in the name of the trust, the trustee can manage, sell and distribute assets without any permission from the court. The trust document itself will dictate the power and procedure for administering the trust.

2.) Another benefit is that upon disability or incapacity, the settlor has identified a successor trustees to manage his assets, pay his bills, and handle his trust once he is no longer capable of acting himself. Successfully planning for incapacity or disability allows families to avoid a guardianship process, which can often to tedious and expensive.
Trusts can be established for a variety of reasons. The most common type of trust established in Florida is a revocable trust to avoid probate upon the death of the decedent. The first step to establishing a revocable trust is to draft and execute the document with an estate planning attorney. Once executed, the testator can begin titling assets in the name of the trust, so that their ownership is now controlled by the trust document. This process can be referred to as funding the trust. The type of paperwork that the testator might need to execute to transfer ownership include a deed, assignment, or certificate of title. In order to avoid probate, the decedent should die with no assets titled in his or her sole name. The goal is that all assets will be titled into the name of the trust, or the assets will either by jointly held or have beneficiary designations.
Having a competent personal representative, aka executor, nominated in your estate planning documents will go a long way to ensuring your wishes are honored as far as the distributions of your estate are concerned. However, not just anyone can be appointed as a personal representative by the probate court. There are a few rules that must be adhered to, and it is important to know all of the fundamental elements of the probate process to fully understand who should and can be appointed as a personal representative, aka executor.

In order to be appointed the nominated party must be:

1.) Over the age of 18 2.) Non felon (must not have any felony convictions) 3.) Must be a Florida resident, or if a non-resident he or she must be a family member of the decedent.

It is important to note that the specific limitations as to who may be appointed as personal representative are in place to help ensure that a responsible party will be put in charge of the estate’s finances and will treat all interested parties fairly.

Typically, the nominated personal representative, aka executor, is someone close to the decedent, generally a family member or relative that is also a beneficiary of the estate. In Florida, the executor will owe a fiduciary duty to the estate and should be someone that can live up to this duty. Sometimes more than one person will serve jointly in the role of co-personal representatives.

When a person, agrees to be appointed as the personal representative of a particular estate, they will be required to execute an Oath of Personal Representative in which they swear to follow all applicable laws in order to administer the estate. If the personal representative breaches his fiduciary duty to creditors, or to beneficiaries, the personal representative can be sued on behalf of the estate in order to address the grievance. In extreme situations, the personal representative can even be held personally liable for damages to the estate. For example, if the personal representative collects $1,000,000 of estate assets into a bank account in the name of the estate, and then flees the country with all of that money, the beneficiaries can sue the personal representative and that person will be personally liable for up to $1,000,000, which should have come into the estate.

A personal representative should also execute an Affidavit of No Felony Convictions. If it is discovered that the personal representative does in fact have a felony record, such information should be presented to the probate court and the judge will remove the acting personal representative.
The selection of a competent and reliable fiduciary to represent a decedent’s estate or trust can be pivotal in efficiently transferring assets in a timely and cost effective manner. A fiduciary is responsible for safeguarding the assets on behalf of a beneficiary, and has legal responsibilities to act in the best interest of the beneficiaries as well as other interested parties such as potential creditors. A fiduciary for an estate or probate is referred to as an executor, or a personal representative. A fiduciary for a trust is referred to as a trustee.

It is primarily the responsibility of the personal representative or trustee, to ensure that the provisions of the estate planning documents are honored and that the administration proceeds in a timely fashion. Selecting the wrong fiduciary can cause a number of unnecessary delays in the administration process, as well as frustration for the potential beneficiaries. If the beneficiaries are unsatisfied with how the fiduciary is acting, then they have the option of petitioning the relevant court to intervene in the administration, either by ordering the fiduciary to act, or not act, in some way. In extreme situations, an interested party may need to seek to remove the executor or trustee. Whether due to incompetence, negligence, or intentionally malicious activity, getting an executor or trustee removed can be tedious process, requiring discovery as well as hearings in front of the judge. Florida probate code provides a number of potential factors which may require the removal of a fiduciary.

733.504 Removal of personal representative; causes for removal.—A personal representative shall be removed and the letters revoked if he or she was not qualified to act at the time of appointment. A personal representative may be removed and the letters revoked for any of the following causes:

(1) Adjudication that the personal representative is incapacitated. (2) Physical or mental incapacity rendering the personal representative incapable of the discharge of his or her duties. (3) Failure to comply with any order of the court, unless the order has been superseded on appeal. (4) Failure to account for the sale of property or to produce and exhibit the assets of the estate when so required. (5) Wasting or maladministration of the estate. (6) Failure to give bond or security for any purpose. (7) Conviction of a felony. (8) Insolvency of, or the appointment of a receiver or liquidator for, any corporate personal representative. (9) Holding or acquiring conflicting or adverse interests against the estate that will or may interfere with the administration of the estate as a whole. This cause of removal shall not apply to the surviving spouse because of the exercise of the right to the elective share, family allowance, or exemptions, as provided elsewhere in this code. (10) Revocation of the probate of the decedent’s will that authorized or designated the appointment of the personal representative. (11) Removal of domicile from Florida, if domicile was a requirement of initial appointment. (12) The personal representative was qualified to act at the time of appointment but is not now entitled to appointment.

Considering how costly it can be to the beneficiaries to have to deal with the removal of a fiduciary, it is important that the decedent select a competent person for fulfilling his/her wishes with regard to the estate or trust. Selecting a professional, independent personal representative with no beneficial interest in the estate, can go far to reduce tensions between beneficiaries, and to ensure all interested parties are protected.
It is always recommended that you execute documents to establish an estate plan, often utilizing a Last Will and Testament. In the event you die without a Last Will and Testament, your probate assets will pass according to your state’s intestate statutes. Intestate statutes identify the default family members to receive your assets as beneficiaries of your estate. If at the time of death, you have a spouse and/or child, they will always be first in line to receive funds. Your parents and siblings only inherit in the event there is no spouse and no children.

If you are working with an attorney to draft an estate plan, you should mention children and/or a spouse that you intend to disinherit. If you feel strongly enough that more distant relatives should not have any involvement in your estate, you can certainly mention them, but it’s not typical, unless those distant relatives are in line to inherit as an intestate beneficiary. You can even execute a memorandum to maintain in your files explaining why you intentionally disinherited any particular person. These memorandums can be useful to demonstrate the decedent’s intent if litigation is pursued against the estate by disgruntled relatives. Certain individuals with considerable assets and tumultuous family members, may consider being evaluated by a licensed psychologist on the day of executing their estate planning documents in order to counter any challenge to the estate based on lack of capacity.
No, if a living trust is set up properly, it will help to avoid the probate process entirely. A living trust, also referred to as a revocable living trust, is designed to expedite the administration process after death. The trust document is private, and under normal circumstances, does not have to be filed with any court. The document will dictate who is to act as Trustee, as well as to how they are to collect and distribute the trust assets. This means the probate court does not have to get involved in appointing a fiduciary, nor supervise the administration process. The procedural requirements of the probate court necessitate that an inventory and final accounting be submitted to the court before final distributions can be made and the fiduciary discharged.
Unfortunately, the probate process is tedious and can require an extensive amount of time to complete. To avoid the whole cumbersome process, it’s necessary that your estate plan be set up properly at the time of death, so that there are no assets titled in your sole name. The use of beneficiary designations on accounts is useful, but limited since they can only be utilized on certain assets and the designations do not assist in the event of incapacity. Establishing a revocable trust is the most common means of avoiding probate recommended by the estate planning community. It is critical that your assets actually be titled in the name of the revocable trust before death, in order to avoid the probate process.

Other tools for avoiding probate include transferring your property to your loved ones as a gift during your lifetime. Alternatively, you can establish joint ownership for your assets, so that ownership will be transferred automatically to the surviving owner(s) upon death. These alternative tools for avoiding probate have drawbacks, namely that you must give up complete control of your assets during your lifetime which makes many people are uncomfortable.

Ultimately, before you utilize any steps to avoid probate, consider seeking professional advice from an experienced probate attorney in Boca Raton.
Not every Trustee will automatically be required to provide an accounting of trust assets, but it is prudent practice for all Trustees to maintain documentation as if they will be required to prepare an accounting for the beneficiaries. Vested beneficiaries are legally entitled to receive a full accounting if they make such a request to the Trustee. At a minimum, most beneficiaries want an informal accounting with bank statements to confirm they are receiving a full distribution from the trust.

If you believe you are a beneficiary of a trust, and your interest has vested, which often only occurs once the testator has passed away, it is advisable that you make a formal request for a copy of the trust document, an inventory of trust assets, as well as an accounting. The request should be in writing and should be mailed, via certified mail with tracking, to the Trustee and/or attorney for the Trustee. Putting the request in writing and having proof that the letter was received by the Trustee will be beneficial for evidentiary purposes if you have to petition the court.
A revocable trust, if funded properly prior to death, allows families to avoid the probate process entirely. The probate process, at least in Florida, can be a tedious and lengthy undertaking. It generally takes a month or two to open a formal probate administration and obtain the Letters of Administration appointing a personal representative. Once the estate is open, the 90-day creditor period is initiated in which potential creditors can file claims. Assets of the estate should not be distributed, and the estate cannot be finalized until the creditor period has expired. Due to these procedural requirements, most formal probate administrations last at least 5-6 months and often extend up to 1 year.

By utilizing a revocable trust, the probate process can be bypassed. The successor Trustees named in the trust document should have immediate access to the trust assets and can proceed with administering the trust according the trust provisions. The Trustees also don’t have to wait for the creditor period to expire prior to making distributions to the beneficiaries. So, while a trust can expedite the administration process, the type of assets involved, and the exact provisions of the trust will determine how long it takes to finalize the process.
In an ideal scenario, the original version of the Last Will & Testament will be deposited with the court when probate proceedings are first initiated. In the event that the original Last Will & Testament cannot be located, a copy can be submitted to the court and a few additional pleadings will need to be submitted in order to verify the authenticity of the document. In order for a copy of a Will to be admitted to probate in Florida, one of the witnesses that was present for the original execution must execute an “Oath of Witness” attesting to the authenticity and this document must be signed in front of a probate clerk, often forcing the witness to travel to the local courthouse. If the witness is located out of state, then a commissioner can be appointed to act in lieu of the probate clerk. A commissioner is just a title given to a notary that has been designated and approved by the probate judge to take the Oath of the Witness.

Most families are advised to look for the decedent’s Last Will & Testament in the following places:

1.) The decedent’s home or last residence 2.) Safe deposit box leased by the decedent 3.) The attorney’s office which drafted the estate planning documents

Family members are often surprised to learn that Florida has no central depository for Wills to be held prior to the death of the decedent. While traditionally the estate planning attorney’s office would hold onto the original Wills for their clients, the more modern practice is to release the original documents to the client once the documents are executed and services are complete. If the Last Will & Testament is never found and it is believed that the original Will was last in the possession of the decedent, the default legal assumption is that the testator intentionally destroyed the Will. In this scenario, the surviving family members should move forward with initiating an intestate probate proceeding. If a Will is subsequently discovered, it can be deposited with the court and the judge will decide if it should be admitted to probate.
While the probate process has many benefits such as clearing title issues and eliminating liability associated with potential creditors, there are some people that would prefer their family members not have to deal with the tediousness and time delays inherent to the probate process. In Florida, the most frequently utilized technique for avoiding probate is to establish a revocable trust to hold title to the decedent’s assets prior to death.

Besides the use of a revocable trust, a person can attempt to place beneficiary designations on all assets, which has the effect of acting as a payment on death, POD, feature in order to avoid probate. While POD provisions on bank and brokerage accounts can be set up directly with the financial institutions holding the funds, the process of establishing beneficiary designations for real estate can be more complex. It is advisable to employ an attorney to draft a “lady bird deed,” or a deed held jointly with rights of survivorship, in order to guarantee that a piece of real estate will be transferred properly after the death of the decedent, without engaging the probate court to authorize the sale or transfer. Any deed will need to be properly executed and recorded prior to death in order to avoid probate.

Contact Florida Probate Law Firm for a Free Consultation today.
A person can quit claim a piece of real estate, aka real property, to anyone they want during their lifetime, and this strategy would certainly avoid the need for probate associated with that particular asset. The dilemma with transferring real estate to someone during life is that you lose control of the property and often you cannot take back full possession if circumstances in your life change. For example, if you transfer your home into the name of your daughter, you run the risk that you might end up fighting with your daughter and she moves to evict you from the residence. This would be worst-case scenario, but it illustrates the risk of giving up control of your property during life. Other risks of transferring assets beyond your control include running out of money to pay for your living expenses, or potentially disqualifying yourself for Medicaid eligibility.

Instead of quitclaiming your interest directly to someone else, an alternative strategy involves the use of a “Lady Bird Deed”, which provides the grantor with a life estate in the home and only upon the grantor’s death does the property pass to a designated remainderman. The Lady Bird Deed allows the grantor to maintain complete control over their property, with the power to undo the deed if necessary, while still avoiding the probate process. An additional benefit of Lady Bird Deeds is that the grantor can also maintain their homestead status, as well as eligibility for Medicaid since the residence would be considered an exempt asset for the application process.

You should seek the advice of an experienced attorney before deeding your real estate, aka real property, to anyone.
You can execute a Last Will and Testament in any state, and it can be used for probate purposes in any other state where proceedings may be required. A Last Will and Testament will be considered valid, as long as its execution complies with the requirements of the state in which it was executed. Luckily, almost all states have the same requirements for the execution of a Last Will and Testament. If you do move states, it is recommended that you consult with an estate planning attorney in order to update your estate planning documents.
A Will does not need to be notarized in Florida to be valid. The legal requirements for a valid execution are that the Will is signed by the decedent (the testator for a man, the testatrix for a woman) at the end of the document. The testator must sign in the presence of two disinterested witnesses, and the witnesses must also sign the document in the presence of each other. The notary is only required in order to finalize a self-proving affidavit, which is often attached at the end of the Will. While the self-proving affidavit is recommended, it is not required for the Will to be valid.
In Florida, it is unusual for a Last Will and Testament to be deposited with the court prior to death. Most original Wills are held by the decedent among their personal belongings, so the first place to search for a Will should be inside the decedent’s home, or possibly in a safe deposit box owned by the decedent. You should also contact any estate planning attorney the decedent might have had during life in order to request a copy of the Will. Once the abovementioned routes have been exhausted you can search the probate court docket for the decedent’s name in order to determine if someone deposited a Will, or if anyone initiated a probate. The correct court to contact is the probate court located in the county of the decedent’s last residence. Most counties in Florida have probate court records available online.

Assuming there is no Last Will and Testament on the public record, many families would choose to move forward with an intestate probate administration. If you are certain there is a Will and/or Revocable Trust but the interested parties will not provide you with a copy, you can consult an attorney regarding petitioning the probate court to force production of the document. Keep in mind, you must be an interested party to make such a request. If you are not named in the Last Will and Testament as a beneficiary, you are generally not entitled to a copy simply because you make a request.
Probate is necessary whenever a decedent passes away with assets titled in their sole name, with no beneficiary designations. The probate process is the court proceeding necessary for retitling the decedent’s assets into the names of the correct beneficiaries. Often the probate process involves liquidating or selling the decedent’s assets and distributing the proceeds to the beneficiaries. During a formal probate, the court will appoint a fiduciary, known as a personal representative or executor, to oversee collecting the decedent’s assets and administering the estate.

A living revocable trust avoids probate only if the decedent’s assets are titled in the name of the trust prior to death. The trust document, if drafted properly, will dictate how the trust is to be administered and will stipulate who is to act as the fiduciary over the assets, known as the successor Trustees. A valid trust will allow the Trustee to perform all necessary functions to administer the trust and distribute the assets without the need to request permission from the court.
A revocable living trust avoids probate because the assets titled in the name of the trust are controlled by the trustees, so when a settlor dies, there is no need to go to the court to ask who owns the assets or how they are to be distributed. The trust document itself will dictate all the necessary provisions for administering the trust and eventually making distributions to the identified beneficiaries.
The length of time it takes to settle the trust really depends on the provisions of any particular trust document and what types of assets you’re dealing with. If the assets need to be liquidated, it can take up to six months. If it’s a standard revocable trust making outright distributions, it will take much less time. The trust document can also lock up the assets for a very extended period of time, depending on the desires of the initial settlor.

How the Florida Probate Firm Can Help

Every family’s situation is different––your needs are different, your goals are different, and your estate is comprised of a different set of assets and liabilities. Therefore, the estate plan that is right for you and your family must be specifically designed with you and your family in mind.

When you begin to consider getting your legal and financial affairs in order, the first thing to do is to contact a reputable Florida probate firm that can help you plan for the well-being of your money, your family, and your life by creating an estate plan that is tailored to your specific needs. For more information, contact an experienced Florida Trust Attorney to arrange a no-cost no-obligation consultation.

Give the Florida Probate Firm a call at 561-750-1040 to arrange a free consultation. We look forward to serving you.