When setting up an estate plan in Florida, one very helpful instrument is the “Living Trust” (also called a “Revocable Trust” or a “Revocable Living Trust”). The Living Trust is a written document into which the Grantor (the person establishing the Trust) places assets such as real property and financial assets. The Grantor names a Trustee who will oversee and administer the Trust. Usually, the Grantor is the initial Trustee and then the Grantor names one or more successors to administer the Trust after the Grantor dies or becomes incapacitated.
A typical Trustee designation might read like this:
I shall be the initial Trustee of this Trust. Upon my death, resignation or incapacity, the successor Trustee of this Trust shall be my brother, John T. Doe. If John T. Doe is unable or unwilling to serve as successor Trustee, then I appoint my sister, Jane S. Doe, as successor Trustee.
In this example, what happens if the Grantor dies and neither John nor Jane is willing or able to serve as Trustee? Vacancies in the Trusteeship can occur when a Trustee resigns, is disqualified or removed, dies, or is adjudicated to be incapacitated. If one of these situations occurs, how is a successor Trustee determined? Under Florida law, the first place to look in order to answer this question will be in the Living Trust itself. Does it set forth how a successor Trustee will be determined in the event of a vacancy?
Normally, the terms of the Trust will prevail on this issue—if there is such a provision. A typical successor determination provision in a Living Trust might read like this:
If none of the foregoing persons are willing or able to serve as Trustee, then the successor Trustee shall be selected by the majority vote of the qualified beneficiaries named under this Trust; if any beneficiary is under age 18 at the time any such vote is taken, then such beneficiary’s vote shall be made by his or her parent or duly authorized guardian.
A well-drafted Trust will include a provision similar to this—but what if it does not? Will the vacancy go unfilled? Will the Trust fail for lack of a Trustee? Fortunately, section 736.0704 of the Florida Trust Code addresses this situation as follows:
A vacancy in a trusteeship of a noncharitable trust that is required to be filled must be filled in the following order of priority:
(a) By a person named or designated pursuant to the terms of the trust to act as successor trustee.
(b) By a person appointed by unanimous agreement of the qualified beneficiaries.
(c) By a person appointed by the court.
One observation about this statutory provision is worth noting. If the Trust itself does not designate a successor Trustee, then a person appointed by the qualified beneficiaries may be appointed. However, the statute requires unanimous agreement. With some families, getting unanimous agreement on anything is difficult—especially on something involving a deceased family member’s Trust estate. This is good reason that when setting up a Trust, naming multiple alternate successor Trustees is good practice. An experienced estate planning attorney will address this when drafting a Trust.
One option that some Grantors consider is to name the last successor Trustee as a professional such as a bank trust department or a trust company. If all of the family members who are named as Trustee either can’t or won’t serve, then at least the professional Trustee will be available