Trustees assume a very distinct role in the estate planning process. Legally, they must abide by not only the directives establish by the trust’s owner, but also the duties established by law in the interests of the trust’s assets and its beneficiaries.
In addition to the legal requirements of age and competency, trustees often hold positions that demand responsibility and require attention to detail. Trustees who breach their legal duties may face legal consequences, including removal.
Legal duties of a trustee fall within three general categories. Each category involves duties to one, or in some cases, multiple parties. They include:
- Record keeping
- Fiduciary duty of loyalty
- Asset and property management
Florida statutes define limits of trust property
A recent court case highlights two of the duties above. A husband and wife established three trusts – two revocable individual trusts and one irrevocable family trust.
Property from the individual trusts were transferred to the family trust upon each parent’s death. After the husband’s death, the wife deeded a residential property from her trust to a life estate in herself with a remainder to her daughter. Shortly thereafter, the wife named the daughter successor trustee.
The son sought damages against his sister for breach of fiduciary duties and an accounting of the trust. He alleged mismanagement and filed a motion to require her to deposit proceeds from the property deeded her by their mother into a restricted account until the court ruled on his petition.
The court analyzed the two statutes the son offered. One failed because the language “estate in administration” did not apply. The mother had transferred the property to her daughter before her death. Thus, the property was not an asset of the trust.
The second applied only to issues addressed after the court ruled on his claim. Ultimately, the court reversed the lower court’s decision and determined the daughter did not have to deposit proceeds into a separate account.
Experience and understanding
The duties and responsibilities of a trustee extend beyond the intent of the terms of the trust. They can involve legal requirements from other areas of law, such as property and financial accounts. An attorney with knowledge and experience can offer guidance.