Know the Facts Before You Say Yes: Agreeing to Serve as Trustee

When a friend or loved one asks us to do something, we often say yes without giving the request any deep thought. But some requests carry with them responsibility and even potential liability, like being named an agent in a durable power of attorney or the trustee to a trust. If you’re thinking of agreeing to serve as trustee, there are some important factors to consider.

The trust document is a legal document that the trust maker (or settlor) signs to create the trust. Although the trustee’s specific powers may be laid out in the trust document, it’s important to remember that Florida statutes contain important requirements, too.

General Powers.

Going back to the trust document, trustees are supposed to use the authority the settlor wanted them to have. Trusts also can contain limitations on the trustee’s power. For example, the trustee has the following powers unless the trust contains language limiting them:

All powers over the trust property that an unmarried competent owner has over individually owned property.

Any powers appropriate to achieve the proper investment, management, and distribution of the trust property.

A settlor may decide the trustee should not handle certain investments or property and note that in the trust.

A trustee also has a duty to act in good faith at all times and to administer the trust in the best interests of the beneficiaries. When there is more than one beneficiary, the trustee must be impartial when dealing with them.

Specific Powers.

Florida Statute 736.0816 contains a long list of specific powers given to trustees. Generally, though, the powers include the following:

• Trust Property: Trustees will collect and manage trust property. They also may: acquire, sell, repair, alter, demolish, abandon, develop, manage, insure, lease, and rent properties, deposit trust money, borrow for the trust, and mortgage trust property.
• Business-Related Property: Trustees will continue operating businesses. They will act as any other shareholder, member, or property owner, and will exercise ownership rights over stocks and securities.
• The Trust: A trustee will gather claims against the trust and pay trust-related expenses, including taxes and assessments. They may appoint trustees to act for the trust in other jurisdictions. Distributions can be made for special needs beneficiaries, if relevant.

Trustees need to know what to do – and what not to do.

Liability and Consequences.

A trustee may be can be removed at the request of a settlor, co-trustee, beneficiary, or court for any of the following behavior:

• Committing a serious breach of trust;
• Lack of cooperation among co-trustees;
• Failing or becoming unwilling to administer the trust; or
• Anything that causes a court to feel removal is in the best interests of the beneficiaries.

Trustees are generally not personally liable for actions they’ve taken. There are some exceptions, especially if the trustee is personally at fault.

Some Final Thoughts.

Reluctant trustees can decline before accepting the trusteeship. However, trustees who wish to resign while serving may need to give 30 days’ notice or obtain court approval.

John Mangan is an experienced Florida estate planning attorney who has been board certified in Wills, Trusts & Estates by the Florida Bar. At Law Offices of John Mangan, P.A., we help clients develop an estate plan that’s appropriate for their circumstances. Call us at 772-324-9050 to set up an appointment or use our Contact Form. With our office located in Palm City, we also assist clients in surrounding communities like Stuart, Hobe Sound, Jupiter, and Port St. Lucie.