5 Must Do Tips for the New Florida Trustee

Uncategorized • Nov 1, 2013

How do I serve as a Florida trustee?

Are you asking yourself this question?

Being a trustee in Florida is no easy business if you are an individual. After all, you aren’t a bank or trust company with bricks and mortar, a fiduciary committee, portfolio managers, economists and a team of trust administrators. You’re, well,….alone. Maybe your aunt May died in Boca Raton and left you in charge of her revocable trust which is now irrevocable. Maybe you live in Des Moines and have never even been to Florida. Well if you are new to Florida trust law, and new to Florida trust administration, here are 5 tips for the first time or new Florida trustee.

Hire a trust lawyer. Seriously, you need one. Find an experienced trust lawyer who handles not only trust administration, but who also has at least some trust litigation experience so she can watch out for you and protect you if things start to turn sour. Look for a trust lawyer with at least 20 years experience whose law practice is limited to trusts and estates—a specialist. If your trust lawyer is on it, everything you tell him or her can’t be discovered by anyone who sues you, even the beneficiaries. Oh yes, the trust will pay for her attorneys fees. But be reasonable and remember: you are the Florida trustee, not the attorney. You can get advise but being trustee is your job.
Hire an investment manager. Do you really have the time and experience to investment a million dollar trust? Individual trustees should not pick individual stocks. Hire a pro: someone who can read and understand a trust and Florida’s prudent investor rule. Don’t hire your boyfriend or girlfriend or your neighbor or son in law. The trust can pay that investment manager and if you delegate investment authority properly, it’s insurance against a lawsuit if the beneficiaries get angry or the market turns south. But your trust lawyer can tell you all about how to do this.
Hire a trust accountant. You will need someone to file trust income tax returns, known as Form 1041, each year. You will also be required to keep track of each and every single penny and also file an accounting on an annual basis. Florida trust accountings may not be what you think they are. Florida trust accountings are NOT a process of mailing monthly statements to beneficiaries. Accountings require specific data, specific entries, for specific time periods. The trust will pay the accountant’s fees. www.ficpa.org
Be humble. A trustee is a fiduciary. Florida law holds a trustee to the highest standards and duties found in the law. This is serious stuff. Among other obligations, which you agree to when you agree to be trustee, you owe a beneficiary a duty of loyalty. You are required to look out for the beneficiary and place his or her interests above everyone else’s, INCLUDING YOUR OWN. You are a service provider although not a servant. If your ego can’t take the fact that you work for your beneficiaries, then resign. If you have visions of talking tough, doing what you want with trust assets and telling beneficiaries “no”…..think again.
Disclose, disclose, disclose. Trustees get into trouble when they try to hide stuff from beneficiaries. Not good. After all, the trust beneficiaries are the ones you agreed to serve when you took this job. Disclose information to the beneficiaries on a regular basis. Give them monthly statements: even if the law only requires you to account once a year. Tell them what’s going on, in writing. Answer their calls, promptly. You’ll be glad you did. Judges and juries will hammer you if you appear that you hid something from a beneficiary or only told them half the truth. And remember, in Florida when someone like a trustee who has a duty to disclose information doesn’t disclose everything, that amounts to fraud. That’s right: you can’t play cute and tell beneficiaries “some” of what’s going on. They need the whole story. When you don’t do that is when trustees get into a lot of trouble.

For more information, please look for my upcoming book due out in December, 2013: The Trustees Book.