ADMINISTRATION OF A LIVING TRUST 

AFTER THE DEATH OF AN INDIVIDUAL TRUSTMAKER©

The administration and distribution of assets held in a living trust following the death of an individual Trustmaker is considerably easier, less time consuming and much less expensive than probate. However, there are still many things that need to be done by the successor Trustee before the assets of the trust can or should be distributed to the beneficiaries.  The trust administration lawyers and attorneys at The Coleman Law Firm, PLLC are experienced in the administration of living trusts after the death of an individual trustmaker.  Fee arrangements for the administration of a trust may be on the basis of hourly rates or a fixed fee depending on circumstances.  If you need assistance in the administration of a living trust after the death of a trustmaker, please contact The Coleman Law Firm, PLLC.

1. Don’t make any rash decisions or act hastily regarding the distribution of any estate assets, at least until after you have consulted with an experienced trust administration attorney or lawyer!  If assets are distributed without proper observance of possible tax liabilities, potential creditors’ claims or precise fulfillment of the trust instructions, the Trustee could be held personally liable for the consequences.
2. Attend to the memorial and funeral arrangements of the deceased Trustmaker if this has not already been done or is not being handled by someone else.
3. Contact the deceased Trustmaker’s estate planning attorney (or if unknown or unavailable, another attorney who specializes in estate planning and trust administration) and schedule an appointment to establish a professional relationship for guidance and direction to properly handle the successor Trustee’s responsibilities.  This does not have to be done immediately, but is recommended within 20 to 30 days after the Trustmaker’s death.
4. The time preceding the trust administration attorney visit should be used to help settle the emotions that follow the death of a family member or close friend and to begin the accumulation of documents and information (described hereafter) that will be needed by the trust administration attorney.

• Obtain and organize all billings or other papers regarding the deceased Trustmaker’s final medical treatments.
• Request several certified copies of the death certificate as such will be needed for various steps in the estate and trust administration and termination process.  Usually, 4 to 6 certified copies will be sufficient.
• If any safe deposit boxes exist (hopefully in the name of the living trust so they will be readily accessible), they should all be checked and all ownership documents, insurance policies and other important papers should be removed for delivery to and review by the estate’s attorney. (This usually cannot be done until the successor Trustee has a certified death certificate and appropriate pages from the trust to present to the bank.)
• Locate the original of the living trust agreement and other documents that make up the Trustmaker’s estate plan. (If not found, the Trustmaker’s estate planning attorney usually has a copy.)
• If the deceased Trustmaker was living alone, the locks should be changed and other steps taken, if necessary, to close and secure the residence. If the residence will be vacant, the insurance carriers should be notified of that fact.
• Automobile insurance and any other pertinent insurance policies should be checked to be certain trust assets are insured against potential loss or liability.
• All life insurance policies should be located or searched out and then compiled for  the eventual filing of claims to recover the proceeds that would now be due to the trust (or other beneficiary if the Trustmaker did not name the trust as the beneficiary).
• A list of all household furniture and furnishings (by major items or categories) should be made, and to be absolutely safe if several beneficiaries are involved, photographs should be taken of the household contents or an unrelated and disinterested witness should be present when the list is made. The witness should then sign the list as to its accuracy and completeness. The list will also be of great help in keeping track of where personal property items are eventually distributed, and to provide a record of compliance with the terms of the trust agreement.
• All other assets of the estate such as automobiles, stocks, bonds, mutual funds, pensions, IRAs and other retirement funds, boats, planes and other vehicles, bank accounts, business or partnership interests, trust deeds or promissory notes payable to the deceased Trustmaker or the trust, etc., etc. should all be inventoried with a description of each and statement of value when the Trustmaker died.  If financial statements from banks or investment companies or similar items are available, they should be compiled as well.
• The names of all institutions or persons holding assets should be included in the inventory with their address and phone numbers and, of course, the account numbers.
• After the inventory is completed, it may become appropriate to consolidate whatever accounts exist depending on the terms and instructions found in the trust and to simplify both distribution to heirs or subsequent accounting of the monies as part of the administration process. However….this should not be done prematurely and is best deferred until after the first meeting with the estate’s trust administration attorney, and possibly later.
• Whatever funds are received or disbursed to satisfy expenses or possibly as a partial distribution of the estate, the transaction must be promptly and accurately written into the check register book or other appropriate accounting record so as to be easily substantiated at a later date if ever challenged. This information is also very important for tax reporting purposes, since if records aren’t kept showing where income came from and what expenses were paid, it’s impossible to determine what income is taxable and what expenses are deductible.
• Although it is not necessary to pay any bills of the estate or the deceased Trustmaker immediately (and sometimes it’s better to wait until everything settles before doing so), all bills should be gathered for evaluation as to their legitimacy and priority status, if any, for eventual payment. Sometimes, a trustee can be held personally liable for debts of the estate if the estate has funds to pay those debts, but fails to do so, or if the trustee distributes the trust funds to other persons. Thus, again, it is safest to determine outstanding liabilities and to complete the inventory of assets before making distributions to beneficiaries, since it is very awkward for a trustee to go back to beneficiaries and ask that the assets be returned.
• If the trust will generate income from the date of death until all trust assets are distributed, (which is generally the case), a tax identification number needs to be obtained for the trust. The estate’s tax or trust attorney will normally attend to that process.
• In other instances, or at least for part of the calendar year in which the Trustmaker died, his or her social security number will continue to be all that is necessary.
• Income tax returns will probably be required for the deceased Trustmaker to the date of his or her death, which would be due the following April 15^th just as normally required for individuals. However, there may also be a need to prepare and file a 1041 trust income tax return for all income received by the trust after the Trustmaker’s death. The estate’s trust administration lawyer and whatever accountant selected to handle the trust administration will direct the successor Trustee on all the accounting and tax return requirements.
• Some states, including  Florida, require that the deceased Trustmaker’s  Will be filed in the Probate Court for safe keeping even though a probate process will not be required. Thus, if the deceased Trustmaker or the trust owned assets in another state, the filing of the Will in that state’s probate court may be necessary.
• Once the above steps are completed and the exact status of the estate is determined, the successor Trustee and the estate’s trust administration attorney will be able to complete the final administration and distribution to heirs that may then be appropriate and called for in the trust, or simply close the transition process in a way that enables the successor Trustee to carry-on with the balance of the trust provisions if the structure does not require full termination. Sometime there will be on-going sub-trusts for the life times of named beneficiaries or to certain ages, etc.
• One important point to remember is that the beginning accounting and inventory established as of the date of death for the deceased Trustmaker must reconcile with the balances taken at the end of the administration period after adjustments for funds or assets received and distributions made during that time. The accounting may then show how assets on hand are to be distributed to beneficiaries based on the plan of distribution specified in the trust agreement.
• When distributions are made, a written receipt and release form should be executed by each beneficiary to complete the record keeping and to protect the trustee from further responsibility or liability. Funds or assets should be distributed to the beneficiaries only when they have signed the receipt and release form. (Once distributions are made, it is much more difficult to obtain signatures, since it is no longer a priority for beneficiaries.) Again, this is a function that will usually be handled or at least directed by the estate’s trust attorney.

This may sound like a complicated and time consuming job. However, it is considerably easier, faster and substantially less expensive than going through the probate process. Also, the successor trustee can access accounts for the trust immediately (once a death certificate is available), which is more convenient than waiting for authorization from the probate court.

Again, however, it is very important not to act without proper professional guidance from an experienced trust administration lawyer, because to do so could easily cause the estate or heirs to lose out on many protections and/or tax benefits that were intended to occur by use of the living trust format.

Final comments on inventories, accountings and tax issues:

In preparing the inventory of assets, it is important to contact each institution holding assets to obtain date of death value, owner, beneficiary (if any), and other pertinent information in regard to the assets. In this way, specific ownership, and beneficiary designations, and other pertinent information can be determined before distributions are made.

It is not acceptable to take values off of statements, since the IRS has specific requirements for ascertaining date of death values, including calculating income earned to date of death even if income has not yet been credited to the account. Written verification of values from institutions holding the assets or a record of the calculations will be very helpful in the event of an audit. A formal inventory also prevents errors, and keeps tax records clean.

CONCLUSION:

• Use and follow the advice of the Trustmaker’s estate planning attorney or trust administration lawyer to avoid or reduce death or income taxes and to protect against personal liability for the successor Trustee.
• Don’t act hastily or distribute assets of the estate without consulting with the estate’s attorney.
• Prepare an inventory and accurately account for all assets and funds that come into the estate.
• Obtain receipts and releases for all distributions when they are eventually made and follow all instructions of the trust in order that once the directed distributions are completed, remaining administration of the trust if required for other possible heirs will be able to continue without difficulty.

TRUSTEE DUTIES AND RESPONSIBILITIES©

The trustee has many duties and responsibilities in the administration of the trust that must be undertaken to fulfill the trustee's fiduciary duty to the beneficiaries of the trust. It is important that the trustee consult with an experienced trust administration lawyer or attorney to avoid potential personal liabilty for the failure to fulfill the duties and responsibilities assumed by the trustee upon accepting that position.

A.  General Overview:

All trustees must follow the terms of the trust instrument unless the provision is illegal or impossible to perform, or if circumstances warrant a court-ordered deviation.

In order to perform the responsibilities of trust administration, all trustees have not only the powers specifically set forth in the trust instrument, but also those provided in the probate code which are automatically granted even though not stated in the trust itself.

If both the specific powers stated in the trust instrument as well as those found in the Florida Trust Code are not sufficient to enable the trustee to complete the instructions of the trust, the trustee can petition the court for additional powers.

Additionally, there may be an omnibus clause in the trust or other implied powers by law, which allow the trustee to do anything necessary to carry out the objectives and purposes of the trust. (Note: Using any powers that go beyond those expressly stated in the trust or provided by statute can be risky to the trustee and should be exercised very cautiously.

B. Terms of the Trust:

The express terms of the trust instrument are controlling of the trustee’s actions.

Any action taken by the trustee which goes contrary to the express language of the trust may expose the trustee to personal liability.

If the language of the trust instrument is ambiguous or unclear, the trustee can refer to verbal or written instructions known to the trustee that are outside of the trust for clarification. However, those extrinsic sources cannot be used to override or take any action that is contradictory to the language of the trust instrument.

Rather than taking any action that is contrary to the trust instrument (even if it appears to be inferred by extrinsic written or oral instructions from the trustmaker), the trustee should consider petitioning a court for direction and guidance. Failure to do so could make the trustee personally liable to beneficiaries or third parties who were negatively effected by the trustee’s conduct.

If any written direction to the trustee outside the trust would have the effect of modifying the language of the trust itself, the trustee would put himself at peril if he followed those instructions unless they meet the formal, legal requirements for trust modification.  Any questions the trustee may have regarding the interpretation or meaning of trust terms should be discussed with the trustee's Florida trust administration attorney.

All trustees have the duties and responsibilities of the trustee position regardless of whether or not they are compensated for their services.

C. Duty of Skill and Care:

In fulfilling his duties, the trustee must do so “with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purpose of the trust as determined from the trust instrument”. This applies to investments, administration and distribution.

If the trustee is considered to be an “expert trustee” with special knowledge, skills and experience dealing with trusts, his duty of care and diligence will be greater.

At least once every year (more often if required by the trust), the trustee is required to give a full accounting of the value of all assets, income received, distributions made, expenses paid, etc., etc. to all beneficiaries to whom income or principal that year was distributable. Any language in the trust going contrary to this requirement is void. However, a beneficiary may voluntarily waive the right to receive that information.

The trustee also must keep beneficiaries reasonably informed of trust activity and administration.

When a trust that was revocable becomes irrevocable (usually on the death of a trustmaker), the trustee must provide a complete copy of the irrevocable portions of the trust to any beneficiary of a deceased trustmaker who requests a copy.

The above duty to provide a copy of the trust includes the responsibility to provide a report about the assets, liabilities and disbursements that are relevant to the beneficiary’s interest. (This does not apply if the trust is revocable.)

The privileges of attorney/client communications and attorney work product remain protected and do not need to be disclosed.

If access to records is given to a beneficiary or potential heir rather than providing copies thereof, the trustee should be present during that review.

Absent contrary instructions in the trust instrument, the trustee has a duty not to delegate to third persons the performance of acts that the trustee can reasonably be required to perform personally. (This does not mean the trustee is prohibited from engaging the services of attorneys, financial advisors, accountants, clerical assistants, etc.) The trustee should consult with an experienced Florida trust attorney to resolve any questions about administering the trust.

D. Notification Requirements:

Notification to all beneficiaries of an irrevocable trust or the irrevocable portion of a trust must be given in the following circumstances:

• When a previously revocable trust becomes irrevocable in full or in part.

• When there is a change of trustees of an irrevocable trust

The persons to receive notification are:

• Each beneficiary of the irrevocable trust or irrevocable portion.

• Each heir of the trustmaker if the event creating the irrevocability is the death of the trustmaker.

• The attorney general if the trust is a charitable trust subject to the supervision by the attorney general.

Identification of said persons is tempered by the ability of the trustee to identify or locate such persons through reasonable diligence.

Notification is to be made by mail to the last known address or by personal delivery within 60-days following the occurrence of the event requiring service of the notification, or 60-days following the trustee becoming aware of the existence of the person entitled to notification.

The notification must contain the following:

• The identity of the trustmaker and the date of the trust.
• The name, mailing address and phone number of each trustee of the trust.
• The address of the physical location serving as the place of administration of the trust.
• Any additional information that may be required by the terms of the trust itself.
• The right of the recipient upon reasonable request to receive a true and complete copy of the terms of the trust as applicable to that person.
• A warning should be set out in a separate paragraph that states, “you may not bring an action to contest the trust more than six months from the date this notification by the trustee is served upon you or six months from the day on which a copy of the terms of the trust is mailed or personally delivered to you in response to your request , whichever is later.” (This warning is not required if notification is served only because of a change of trustee.)

Failure of a trustee to provide the required notice may subject the trustee to all damages, including attorney fees and costs caused by the failure to give the notification unless the trustee has made a good faith effort to comply with that responsibility.  The trustee should consult with an experienced Florida trust administration attorney to ensure compliance with all statutory notice requirements during the trust administration.

E. Duty of Confidentiality:

Every trustee has a duty to keep the affairs of the trust confidential (this applies to the terms of the trust, the identity and interest of the beneficiaries and the nature of the trust assets.) The trustee should consult with an experienced Florida trust attorney to resolve any issues concerning the duty of confidentiality.

Special rules may apply if the trustee is a corporate fiduciary administering a private trust.

In some instances, the duty of confidentiality can be overridden. These include:

• Litigation and rules of discovery or presentation of evidence that may be applicable.

• Possibly government regulations such as the filing of income tax returns or property tax issues.

• When the information that is being disclosed is already of public record.

• The previously described rights of certain beneficiaries or heirs to receive copies or information from the trust.

F. Conflicts of Interest :

The primary duty of every trustee is to administer the trust solely in the interest of the trust beneficiaries. (This means according to the distribution and asset management that is provided in the trust for the beneficiaries.)

Although a trustee can also be a beneficiary of the same trust, doing so may occasionally create a potential conflict of interest with respect to the rights or management of assets for other beneficiaries.

If the trustee has any other financial dealings with the trust such as landlord, creditor, etc., such may also create a potential conflict of interest.

All self-dealings of every nature by the trustee with the trust are prohibited! (This is true even though the transaction causes no actual loss or damage to the trust.)

If the trustee already had an existing relationship business-wise or was a creditor of the trust before becoming trustee, such may continue (though it may create a potential conflict of interest in the administration of trustee duties).

Once the trustee assumes that position, however, no new transactions of any kind that would benefit the trustee personally or for profit are allowed. Thus, the trustee can not even use assets of the trust for personal benefit or enter into new transactions with the trust of any nature that would be beneficial to the trustee.

The trustee may, of course, use the trust assets in the course of carrying out the trustee’s duties and administration of the trust.

This prohibition may also extend to family members or business associates of the trustee.

Sometimes, however, such self-dealing transactions are allowed by language in the trust and if so, may be allowed if the conditions of the trust are fulfilled.

Transactions between the trustee and the trust can also be undertaken if informed consent is contained from all beneficiaries or is approved by the court.

Every trustee is also prohibited from engaging in a business that is in competition with any business of the trust.

Florida Counties and cities in which Ocala Florida probate and trust administration lawyers and probate and trust litigation attorneys offer Ocala Florida probate and trust administration services and probate and trust litigation services, including will contests, inheritance disputes, trust disputes, power of attorney abuse:

Alachua	Gainesville, Alachua, Hawthorne, High Springs, Waldo, Newberry, Micanopy
Bay	Panama City, Panama City, Beach, Lynn Haven, Youngstown
Baker	Macclenny, Glen Saint Mary
Bradford	Starke, Brooker, Hampton
Brevard	Cocoa, Cocoa Beach, Merritt Island, Titusville, Melbourne, Palm Bay, Cape Canaveral, Satellite Beach, Rockledge, Barefoot Bay, Indialantic, Malabar
Broward	Ft. Lauderdale, Davie, Sunrise, Weston, Coral Springs, Pompano Beach, Hollywood, Hallendale, Plantation, Dania Beach, Coconut Creek, Deerfield Beach, Lauderhill, Lighthouse Point, Margate, Miramar, Oakland Park, Pembroke Pines, Tamarac, Wilton Manors, Hillsboro Beach, Pembroke Park, Cooper City, Port Everglades, Sea Ranch Lakes, Southwest Ranches
Calhoun	Blountstown
Charlotte	Punta Gorda, Charlotte, Port Charlotte, Palm Island
Citrus	Crystal River, Homosassa Springs, Inverness
Clay	Orange Park, Middleburg, Green Cove Springs, Keystone Heights, Penny Farms
Collier	Naples, Marco Island, Everglades City, Golden Gate, Immokalee, Palm River Estates, Ochopee
Columbia	Lake City, Fort White
DeSoto	Arcadia, Brownville, Fort Ogden, Hull, Pine Level, Platt
Dixie	Cross City, Horseshoe Beach, Old Town
Duval	Jacksonville, Jacksonville Beach, Atlantic Beach, Neptune Beach
Escambia	Pensacola
Flagler	Palm Coast, Flagler Beach, Bunnell, Beverly Beach, Marineland
Franklin	Apalachicola
Gadsden	Quincy, Chattahoochee
Gilchrest	Trenton
Glades	Moorehaven
Gulf	Port St. Joe, Wewahitchka
Hamilton	Jasper, White Springs
Hardee	Wauchula
Hendry	Clewiston, LaBelle
Hernando	Brooksville, Weeki Wachi
Highlands	Avon Park, Sebring, Lake Placid, Leisure Lakes
Hillsborough	Tampa, Plant City, Temple Terrace, Apollo Beach, Brandon, Lutz, Ruskin, Sun City Center, Riverview, Dover, Thonotosassa, Ybor City
Holmes	Bonifay
Indian River	Vero Beach, Indian River Shores, Fellsmere, Sebastian
Jackson	Marianna
Jefferson	Monticello
Lafayette	Mayo
Lake	Altoona, Clermont, Eustis, Fruitland Park, Lady lake, Leesburg, Minneola, Mount Dora, Tavares, Umatilla
Lee County	Fort Myers, Bonita Springs, Cape Coral, Fort Myers Beach, Sanibel, Boca Grande, Estero, San Carlos Park, Lehigh Acres, Waterway Estates
Leon	Tallahassee
Levy	Bronson, Cedar Key, Chiefland, Williston, Yankeetown
Liberty	Bristol
Madison	Madison
Manatee	Bradenton, Anna Maria Island, Bradenton, Holmes Beach, Longboat Key, Palmetto, Myakka City
Marion	Ocala, Leesburg, Belleview, Citra, Dunnellon, Salt Springs, Weirsdale
Martin	Stuart, Sewall’s Point, Hobe Sound, Jensen Beach, Jupiter Island, Ocean Breeze Park, Palm City
Miami-Dade	Miami, Coral Gables, Coconut Grove, South Miami, Kendall, Homestead, North Miami, North Miami Beach, Miami Beach, Hialeah, Miami Shores, Miami Lakes, Aventura, Bal Harbour, Bay Harbor Islands, Hialeah Gardens, Key Biscayne, Pinecrest, Surfside, Cutler Bay, Doral, Golden Beach, Indian Village, Islandia, Medley, Miami Gardens, North Bay Village, Sunny Isles Beach, Sweetwater, Virginia Gardens, Florida City, Goulds, Biscayne Park
Monroe	Key West, Islamorada, Key Largo, Marathon, Big Pine Key, Key Colony Beach, Sugarloaf Key, Tavernier
Nassau	Fernandina Beach, Amelia Island, Hilliard, Yulee, Callahan
Okaloosa	Fort Walton Beach, Niceville, Cinco Bayou, Destin, Shalimar Valparaiso
Okeechobee	Okeechobee
Orange	Orlando, Lake Buena Vista, Apopka, Edgewood, Maitland, Ocoee, Windemere, Winter Garden, Winter Park, Zellwood
Osceola	Kissimmee, St. Cloud, Celebration
Palm Beach	Palm Beach, West Palm Beach, North Palm Beach, Lake Worth, Boca Raton, Delray Beach, Boynton Beach, Greenacres, Highland Beach, Hypoluxo, Juno Beach, Jupiter, Lake Park, Lantana, Ocean Ridge, Palm Beach Gardens, Royal Palm Beach, Wellington, Pahokee, Tequesta, Riviera Beach, Loxahatchee, Manalapan, Ocean Ridge, Glen Ridge
Pasco	New Port Richey, Bayonet Point, Gulf Harbors, Dade City, Holiday, Hudson, Land O’Lakes, Odessa, St. Leo, Zephyrhills
Pinellas	St. Petersburg, Clearwater, Dunedin, Gulfport, Largo, Oldsmar, Pinellas Park, Safety Harbor, Tarpon Springs, Treasure Island, Belleair, Madeira Beach, North Redington Beach, Seminole, Indian Rocks Beach
Polk	Lakeland, Auburndale. Bartow, Eagle Lake, Fort Meade, Haines City, Lake Alfred, Lake Wales, Winter Haven, Frostproof, Polk City, Highland Park, Indian Lake Estates
Putnam	Palatka, Interlachen
Santa Rosa	Gulf Breeze, Milton
Sarasota	Sarasota, Longboat Key, North Port, Venice
Seminole	Altamonte Springs, Casselberry, Lake Mary, Longwood, Oviedo, Sanford, Winter Springs
St. Johns	St. Augustine, St. Augustine Beach, Ponte Vedra Beach, Nocatee, Crescent City, Melrose, Pomona Park, Welaka
St. Lucie	Fort Pierce, Port St. Lucie
Sumter	Wildwood, Bushnell, The Villages
Suwannee	Live Oak
Taylor	Perry, Steinhatchee
Union	Lake Butler
Volusia	Daytona Beach, Ormond Beach, New Smyrna Beach, Deland, Deltona, Edgewater, Holly Hill, Ponce Inlet, Port Orange
Wakulla
Walton	DeFuniak Springs, Seaside
Washington	Chipley