A Trustee is a fiduciary who is held to a high standard when it comes to administering a Trust. In particular, a Trustee has a duty to act in good faith and in accordance with the terms and purposes of the Trust and of the interests of the beneficiaries. A Trustee cannot act in a way that would be self-dealing. In other words, the Trustee must use the Trust assets as authorized in the Trust document and as allowed under Florida law and his or her actions should be in the best interests of the beneficiaries.
In addition, the Trustee has a duty to inform and account. This means that the Trustee must provide all qualified beneficiaries with the Notice of Trust described below along with a copy of the Trust instrument. It also means that, if requested, the Trustee must provide all beneficiaries with relevant information about the assets and liabilities of the Trust and the particulars relating to administration.
Upon the death of the Grantor, the Trustee you should sign a Notice of Trust as required by Section 736.05055, Florida Statutes. Once signed by the Trustee, the Notice of Trust will be filed with the Clerk of Court in the decedent’s resident county. The Notice of Trust puts the world on notice of the existence of the Trust and of where to contact the Trustee.
The Trustee must designate a principal place of administration for the Trust. In most instances, the Notice of Trust will designate the Trustee’s home or business address as the place of administration.
While the Grantor was alive, the Trust used his/her Social Security number for tax purposes. After the Grantor’s death, the Trust can no longer use the Social Security number; instead a Tax ID Number (also called an EIN number) must be obtained for the Trust from the IRS. Once the Tax Id. number is obtained, all financial accounts (such as checking, savings, money market, brokerage, etc.) must be changed over to this new Tax Id. number. In many instances, the financial institution may require that new accounts be opened in the name of the Trust and using the Tax Id. number.
The Trustee must determine what, if any, income tax returns must be filed and/or taxes paid. In this regard, the Trustee should take into account a couple of considerations. First, there may be a final individual tax return due for the last year of the Grantor’s life. Second, now that the Grantor is deceased, the Trust becomes irrevocable and taxes may need to be paid by the Trust on any income earned by Trust assets. This means that for each year after the Grantor’s death, the Trustee is likely going to be filing a tax return for the Trust. The Trustee should address all tax matters with a Certified Public Accountant (“CPA”). It is advisable to retain a CPA as soon as possible for this purpose.
Once all of the Trust assets are under the Trustee’s control and once the creditors and taxes are identified, the taxes and the valid claims of creditors can be paid. When creditors are paid, it is advisable to have them sign a receipt acknowledging payment and releasing further claim.
After taxes and creditor claims have been paid, the remainder of assets are administered and distributed as described in the Trust. Depending on the terms of the Trust and the circumstances surrounding the Trust, distributions to beneficiaries may be made as either partial or complete (i.e. total). In other words, once the obligations of the Trust are addressed, then the Trustee will be able to determine how much and when he or she can distribute to a beneficiary If a distribution is made to a beneficiary, it is best to have the beneficiary sign a receipt for partial or complete distribution.
When all creditors have been paid and all Trust assets have been distributed, the Trustee should either provide a final accounting for the Trust or get all beneficiaries to execute a waiver of the final accounting. In most instances, after the final accounting is provided to the beneficiaries, they will have six months to object to the final accounting and if they do not, they lose the right to object to it.