Last Will And Testament, Revocable Trusts And Irrevocable Trusts
Responsibilities Of A Trustee And Personal Representative
The trustee of your Trust and the personal representative under your Last Will and Testament is charged with the responsibility to manage, invest, reinvest and protect the trust and estate assets; to prepare and file annual trust and estate income tax returns; to pay the taxes and expenses of administration out of the Trust and estate; and to distribute the trust and estate income and assets in the manner directed by your Trust and Last Will and Testament.
A personal representative must observe the same standards of care in the administration of a probate estate as a trustee managing a trust. The most important duties of a personal representative in probating your will are as follows:
- Locate your Last Will and Testament
- Confer with the lawyer who will serve as attorney for your estate and arrange with the lawyer for probate of your Last Will and Testament
- Talk with family members to determine their immediate financial needs
- Make tentative arrangements for support and maintenance payments to be paid to your loved ones during the settlement period
- Seek court authority to serve as your personal representative
- Manage your property, including your business, during the settlement period
- Distribute your property according to the directions in your Last Will and Testament
- File your final personal income tax return
- Choose a tax year for your estate
- File your estate’s federal income tax returns
- File any state income and death tax returns
- Complete and file the federal estate tax return
- Become a party to litigation, if any, relating to the estate
- Sell assets, such as real estate, stocks and bonds if necessary
- Invest assets that are not needed immediately for distribution or expenses
- Report all actions taken during administration to the beneficiaries
To learn more about choosing trustees and personal representatives, call our Clearwater office at 727-900-7276 or fill out our online contact form.
Duties Of The Personal Representative And Trustee
Any trustee or personal representative should exercise good judgment, diligence, fairness, honesty and have reasonable skill and experience in the management of the types of assets included in your Trust and Last Will and Testament. If the trustee or personal representative lacks there skills or qualities, they should have the good sense to obtain assistance from someone qualified to manage your assets under the terms of your Trust and Last Will and Testament.
Others who might serve as your trustee or personal representative include a bank or trust company, your accountant, an investment advisor, a relative, a personal friend (who must be a resident of Florida to be a personal representative) or a business associate.
Avoiding Potential Conflicts For Your Trust Or Estate
Many of our clients are uncertain about who to choose as their personal representative and/or trustee. Their family members may not be mature enough to handle those responsibilities or they feel their assets may be too small to hire a corporate trustee. Some clients do not want friends to “know their business,” or the client wants complete secrecy and does not want anyone to know their business except their CPA and attorney. There are myriad reasons why the “normal” trustee or personal representative may not be palatable to a client. We are typically able to help clients identify a capable person, but some clients prefer a legal professional in the role of a personal representative or trustee.
At Griffin & Van Pelt, P.A., our policy is to advise clients against appointing an attorney in the firm as their personal representative/trustee. A lawyer’s independence may be compromised when he or she acts as both trustee, personal representative and lawyer for the Trust or estate. The normal checks and balances which exist when two unrelated parties serve separately as trustee, personal representative and lawyer for the trustee and personal representative are absent. However, if a client asks, we are willing to undertake this responsibility.
In accepting this responsibility, there are certain ethical considerations and potential conflicts of interest that must be discussed before any planning documents are drafted. We would obtain our client’s written consent to act in this role before beginning the estate planning process.
Unless a court is asked to intervene, there may not be an independent, impartial review to determine if the trustee or personal representative is exercising an appropriate level of care, skill, diligence and prudence in the administration of your Trust and estate. There may not be an independent impartial evaluation as to whether or not the fees and expenses charged by the trustee and personal representative, and the fees and expenses charged by the law firm, are reasonable. Other potential conflicts may arise which cannot be anticipated at this time.
Compensation To The Lawyer Nominated As Trustee And Personal Representative
The trustee, personal representative and the lawyer for the trustee and personal representative are entitled to compensation for services performed on behalf of your Trust and estate. When a lawyer has been nominated as personal representative, he or she can receive compensation for performing services as both personal representative and lawyer provided that he or she charges only once for services rendered, and provided the total compensation for serving as both personal representative and lawyer is reasonable.
If an attorney in our Clearwater law firm serves as personal representative and trustee, then it is our practice to charge the Florida Statutory rate for personal representative fees, trustee fees and attorney fees. You can find the relevant statutes in Sections 733.617, 733.6171, 736.1007 and 736.0708 of the Florida Statutes. In addition to this compensation, our firm would also be entitled to reimbursement for all out-of-pocket expenses. All or substantially all of the personal representative fees and trustee fees will be tax-deductible in some form to your estate, trust or its beneficiaries.
It is also our practice to engage our law firm to represent the named trustee or personal representative and to charge a percentage as provided under the Florida Statutes. Additionally, my firm is entitled to reimbursement for all out-of-pocket expenses. Anytime you wish to discuss fee arrangements under these scenarios we are happy to discuss the same.
Waiver Of Bond And Use Of Exculpatory Language
When individual fiduciaries are appointed, it is not uncommon for a Trust or Will to include language relieving the trustee or personal representative from the obligation to post a trustee’s or personal representative’s bond for the faithful performance of his or her obligations. This includes language absolving the trustee and personal representative from liability for actions not involving gross negligence, fraud or bad faith. In many cases, a Trust or a Last Will and Testament will provide that the trustee or personal representative is not to be charged with investment losses resulting from decisions made by the trustee or personal representative if the trustee or personal representative exercised reasonable care, diligence and prudence in making investment decisions.
When a Trust or Last Will and Testament nominates the lawyer who prepared the Trust and the Last Will and Testament to act as trustee or personal representative there is a potential conflict of interest if the lawyer incorporates provisions in a Trust and Last Will and Testament that relieves the lawyer from the obligation to post bond, or which absolve the lawyer from liability for his or her own actions. Our firm normally includes language that relieves the trustee and personal representative from any obligation to post bond and language which exonerates the trustee and personal representative from liability only for decisions made in the exercise of reasonable care, diligence and prudence.
It is your choice whether or not to waive the trustee’s and personal representative’s bond, and whether we include or exclude language exonerating the trustee and personal representative from liability as your trustee and personal representative.
Consulting Independent Counsel
Because our firm would have a conflict of interest in advising you with regard to the decision to nominate an attorney in our firm to act as trustee under your Trust and personal representative under your Last Will and Testament, and the inclusion or exclusion of language relieving an attorney in our firm of any potential liability, we always advise our clients to feel free to discuss these matters with another Clearwater attorney.
Many times clients may find they need an independent person to review various legal documents and/or tax returns or other various documents. Ms. Griffin has had four decades of experience as a Florida certified public accountant, working with Price Waterhouse in Atlanta and in Tampa. She worked as an auditor for 1½ years and in the tax department in Tampa for 1½ years. With her experience with a then “Big Eight Firm” and her masters in tax law, LL.M. and her J.D., she can review documents and perhaps give you a new perspective on those documents. Our firm has worked with other attorneys in various matters and in “fixing” situations that may arise after someone’s death.
An advantage of being “locals” and growing up in the Clearwater and Seminole areas, our attorneys have a unique ability to provide you with local referrals in other areas of the law as well as in other professions. We have dealt with professionals in the area for the past 26 years. We are always glad to provide referrals to make your life easier.
Organizational And Detail Services
All of our firm’s employees are extremely organized and detail-oriented. We hire individuals who are highly fact and follow through driven. If, at any time, you find yourself needing someone to help you get through all that paperwork or help you with any banking or document organization, then contact us. Under certain situations, while we never suggest acting, if necessary, an attorney in our firm can act as attorney-in-fact under your Durable Power of Attorney. We will be able to provide you with help at a rate less than our attorney’s hourly rate. We KNOW how hard it is to keep everything organized. We LOVE organization and details. We are here to help you!