A trust attorney is a lawyer that drafts, administers, or litigates trusts. Ideally, your trust attorney will have some experience with all three, as each of these areas of trust practice impacts the others.
Trusts are a form of estate planning that avoid probate. The person in charge of a trust is called a “trustee.” The trustee administers the trust, meaning that the trustee is the person who manages property in trust and eventually distributes that property out of trust to the beneficiaries.
Although not required by law, trustees typically should seek legal counsel to assist in the administration of a trust. Otherwise, the trustee might accidentally commit a breach of trust, which can result in the trustee being sued individually. Most trusts allow for the trustee to pay the attorney with trust money, meaning that the trustee does not have to deal with any out-of-pocket expense to get help from a trust attorney.
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Administering a trust requires following certain steps, which may vary based on the jurisdiction and the specific terms of the trust. However, some common parts of trust administration are outlined below.
The trustee must familiarize themselves with the trust that trustee administers. This begins with thoroughly reviewing the trust document. The trustee should also gather all relevant documentation to fully understand the trust’s assets and obligations. This may include:
Bank statements
Deeds
Rental agreements
Life insurance policies
Last will and testament
Additional documents may be required depending on the trust, and the trust document itself should specify what is necessary.
The trustee should use the collected documents to compile an inventory of all trust assets. It’s essential to keep trust assets distinct from personal or individual assets, and it may be necessary to open a separate trust bank account. After identifying the assets, the trustee must secure them by verifying proper titling and documenting the inventory. Additionally, the trustee should evaluate the value of each asset.
Another important step is notifying the beneficiaries named in the trust. The trustee must inform them of their role as trustee and share the terms of the trust. Often deadlines will be put in place by either the Trust Code or by the trust instrument itself.
The trustee must identify and notify any creditors to whom the trust may owe debts. They must obtain and review any claims against the trust to verify their validity. Once confirmed, the trustee should pay off these debts, including any funeral or cremation costs, if applicable. Sometime the debts can be negotiated, and the trustee may be able to pay less than was initially owed.
After settling debts, the trustee can begin distributing the remaining trust assets. Typically, before assets are distributed, beneficiaries must receive a financial accounting of the trust. The trustee must account for all actions taken, including any expenditures or distributions. If they are satisfied with how the trust was managed, they will sign off on the accounting.
The trust document will outline how the assets are to be distributed. Depending on the terms of the trust, the trustee may have some discretion in handling the assets, or the trustee may be required to follow specific instructions.
Trustees in Florida owe a fiduciary duty to the trust beneficiaries. A Florida trustee has a duty to follow the terms of the trust instrument, a duty to treat all beneficiaries impartially, a duty to invest trust assets prudently, and many other duties as well. If a trustee breaches any of these duties, the trustee is liable for a breach of trust. This means that the trustee could be removed as trustee or made to pay money to the beneficiaries, sometimes out of the trustee’s own pocket.
Civil liability is the main reason that most trustees seek legal counsel. It is easy for a trustee to accidentally incur liability. Many trustees have no idea how many restrictions are in place. Without legal counsel, a trustee could easily end up committing a breach of trust without any awareness that anything went wrong. This is why most trust documents explicitly allow for trustees to pay for an attorney using trust money.
The trust instrument (also sometimes called a “declaration of trust”) sets out the general rules that the trustee has to follow when administering the trust. That means understanding the trust instrument is important for the trustee of that trust. Sometimes trustees get into trouble not because they intend to violate the trust terms but because they simply misunderstand those terms. Most trusts instruments are written by attorneys, and those trust instruments typically use legal language and reference trust law. Because of this, trusts are often difficult for non-lawyers to understand without consulting with legal counsel.
One of the roles of a trust attorney is to understand how to interpret trust instruments and to explain to the trustee the best reading of the text. This means that trust lawyers ought to have the ability to explain legal concepts using plain language. To do this, the attorney needs to not only understand trust law but also have the ability to listen when the client asks questions or explains concerns. A good trust attorney will walk the trustee through the trust document, explain the best interpretation of the text, and listen to the trustee to make sure the legal advice is understood.
Trustees are also required to follow the Florida Trust Code, which imposes numerous duties on trustees not usually found in the trust instruments themselves. A proper understanding of the Florida Trust Code requires an understanding of the case law surrounding the Code. It can also be helpful to understand what the trust law was like before the Florida Trust Code was enacted in 2007.
Despite the difficulties associated with reading and understanding the trust code, trustees are still required to follow the rules set out in the code. This is because there is an expectation that trustees will seek legal counsel from a trust attorney. A good trust attorney will explain the requirements to the trustee in simple terms, relieving the trustee of the burden of trying to decipher statutes and case law.
We are happy to meet with any of our clients in our office located in Gainesville, FL. The office is found off of Tower Road. Please make an appointment for your visit.
We are happy to meet with you either by phone or over zoom if you are not in the Gainesville area. Trust Administrations do not require in person conversations with a law firm; we represent clients from all across the state of Florida.
PTM Trust and Estate Law is happy to answer your questions about trust administration. Please call 352-554-5576 or contact us online to schedule a free consultation with a trust attorney. If you do not live near Gainesville, then we will be happy to schedule a free phone meeting instead.
