Are You A Beneficiary of a Trust? What You Need to Know…

Some of you may be in the fortunate position of benefiting from a trust that either a relative or close friend has established for you. Being a beneficiary of a trust is usually a good thing IF you are receiving the assets to which you are entitled. How do you know to what you are entitled and if you receiving such amount timely?

Under Florida law, a trustee of a trust is governed by Chapter 736 of the Florida Statutes (the “Trust Code”). Under the Trust Code, the trustee (the person or corporation handling the trust assets) has certain duties to advise certain qualified beneficiaries. A qualified beneficiary is defined under the Trust Code. Generally, a qualified beneficiary is a beneficiary who will receive income and/or principal from the trust.We will assume that you are a qualified beneficiary.

Under the Trust Code,  you are entitled, upon request, to a copy of the trust document and an inventory (a statement of the assets and the values of those assets) as of the date that the trustee assumes responsibility. If you have made your request for those documents and have not received them because the trustee is not responsive, then you may need to hire an attorney to help you.

Once the trust is “up and running” and the trustee has assumed responsibility, then you are also entitled to an annual (or more often) trust accounting. The trust accounting should detail all receipts, distributions, checks, etc for the period covered. Note that this is a MANDATORY provision in the Trust Code. The trustee MUST provide the trust accounting UNLESS YOU, as a qualified beneficiary, waive such right.  While a waiver may save the trust some expense, you may lose the right to examine the transactions and make sure that the trust is being administered properly.

IF the trustee does provide a trust accounting and wants to take advantage of a shortened time period for you to bring a lawsuit against them, then you MUST carefully review the language in the notice sent with a trust accounting. The language will generally state “An action for breach of trust based on matters disclosed in a trust accounting or other written report of the trustee may be subject to a 6- month statute of limitations from the receipt of the trust accounting or other written report. If you have questions, please consult your attorney”. This is called the 6 month limitation notice.

You MUST carefully read your statements, especially if you have a corporate trustee. The 6 month limitation notice is often in fine print at the end of the monthly trust accounting statements which most of us never read. If you don’t bring an action within such 6 month period, then you are BARRED from bringing an action against the trustee based on anything disclosed in the trust accounting.

For example, for several years, John has been a beneficiary of a trust set up by his mother and is entitled to all trust income. He receives monthly trust accounting statements from the corporate trustee that includes the 6 month limitation notice written in fine print on the last page. Beginning in 2013, the corporate trustee began allocating the investments in a different manner which provided John with MUCH less income. John doesn’t take notice until 2014. If he has received all the 2013 monthly trust accounting statements, yet he does not discover or review them until late 2014, then he CANNOT bring an action against the corporate trustee based on the actions disclosed on those trust accounting statements, which may have disclosed the changes in investments which produced the much lower income!

Advice: CAREFULLY review the trust accountings you receive from your trustee and review the transactions disclosed in such trust accountings. If you have any concerns, then you should have your own attorney or CPA help you review these trust accountings.

New Word of the Week: Per Capita: divided equally among all individuals. In our example last week: A, B, and C are siblings. Each get a 1/3 share of their parent’s D’s estate, PER STIRPES. A dies before D having 2 children E and F. Upon D’s death, A’s children, E and F get A’s 1/3 share or 1/6 each.

IF this was PER CAPITA then E, F B and C all get the same amount. Thus, E and F would each get 1/4 instead of 1/6 in the Per Stirpes example.

To my blog friends I will be out of the country from April 22 until May 2 doing some great diving in Fiji. Will hopefully come back with some great pictures you will be able to see on Facebook. In the mean time remember…
 
GENEROSITY IS A KEY TO HAPPINESS …REACH OUT AND HELP SOMEONE TODAY!