How To Avoid Common Mistakes Made By Trustees
Trust administration in Florida can be a demanding and complicated task. If someone has named you as trustee, you are legally required to manage the property within the trust and distribute it to beneficiaries according to the terms of the trust. It is important that you do not take this responsibility lightly. Even just one honest mistake can result in serious financial and legal consequences. Below, our Daytona Beach trust administration lawyer outlines some of the most common mistakes made and how to avoid them.
Not Understanding Your Fiduciary Duties
One of the biggest mistakes trustees make is not fully understanding their role or duties. Trustees in Florida are fiduciaries, meaning they have an ethical and legal obligation to act in the best interests of the trust and the beneficiaries named within it. This duty is extremely important and means trustees must act with objectivity, honesty, and prudence.
Failing to understand the obligations of the role can result in serious mistakes such as improper distributions, mismanaged assets, or engaging in a conflict of interest. For example, it is a breach of fiduciary duty to use funds in a trust for the trustee’s personal benefit, even for just a short amount of time.
Delaying Trust Administration
It is natural to need time to grieve after losing someone you love. However, trustees are required under Florida law to start trust administration in a timely manner. Delays can complicate matters, frustrate beneficiaries, and result in litigation. Starting the process in a timely manner is also important for practical reasons. Waiting too long can make it more challenging to locate property, collect the necessary documents, and access accounts.
Failing to Properly Manage Trust Assets
As a trustee, you must manage and preserve the property in a trust for beneficiaries. Trustees must act as ‘prudent investors’ under Florida law. This means trustees must invest and manage the funds within a trust with a reasonable degree of caution and care. Failing to properly manage the assets within a trust can result in serious financial losses. For example, it may be considered a breach of duty to leave a large sum of money in a checking account that has a very low interest rate for a long period of time.
Not Considering Tax Obligations
Trustees must also ensure that all tax obligations are met. This may include filing a tax return for the actual trust and filing a final personal income tax return for the decedent. Failing to report income properly or missing a deadline can result in interest charges and other penalties.
Not Working with a Trust Administration Lawyer in Daytona Beach
Trustees have many important responsibilities but you do not have to go through it alone. At Bundza & Rodriguez, our Daytona Beach trust administration lawyer can work with you closely to ensure the document is administered according to the provisions of the trust and state law. Call us now at 386-252-5170 or contact us online to schedule a consultation and to learn more about how we can help.
Source:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/0736.html
