Trust Settlement

The new Florida Trust Code sets forth the rules of law for the settlement of trusts which are designed in large part to protect the ultimate beneficiaries of the trust from inexperienced (or unscrupulous) trustees and, to a great extent, mirror many of the provisions of the probate code. In protecting the beneficiaries, the Florida trust code places upon the settling trustee significant responsibilities, which if not carried out properly, can result in personal liability. Furthermore, non-professional trustees are generally unfamiliar with how trusts are taxed; the need to file gift, estate, income, and other tax returns for both you and your estate; the necessary or advisable tax elections which must be made (or at least considered); the laws governing required notices and accountings; liability to creditors; and the potential risk of personal financial loss for not adhering to the trust code requirements. It is therefore essential that a trust be settled in consultation with an experienced estate attorney so that the person who has so graciously agreed to settle your trust at your death does not find himself or herself unnecessarily at the center of a court action.

It is important to note that the assets which can be administered (settled) through the trust are limited to the assets which (1) were titled in the trust at the time of the decedent’s death; (2) assets which pay out to the trust as a named beneficiary; and (3) assets which are transferred to the trust through a probate administration. Assets subject to probate administration would be those in the decedent’s name alone, which were not jointly owned with others, which did not have beneficiary designations, and were not titled into the decedent’s trust at the time of his or her death. If you are unsure if assets are properly titled into your trust, or whether the account designations properly name the trust as a beneficiary, you should have an attorney review the titling of the assets to ensure they will be handled through your trust, and not require a probate at your death. Even with a trust, there are still valid reasons which exist in Florida for settling a portion of the decedent’s estate through the probate of his or her will.
 

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