Trustee Provide an Accounting

When Must the Trustee Provide Accounting?

trustee provide accounting to trustFundamental to trust law, a trustee is always under a duty to give information to a beneficiary. So when must the trustee provide accounting? Most states have enacted statutes specifically dealing with this duty to account. In Florida Fla. Stat. 736.0813 provides that a trustee shall provide a trust accounting to the trust beneficiaries at least annually and on the termination of the trust.

The trustee has a whole year to operate as trustee without being required to provide an accounting to the beneficiaries. But, the trustee must provide an accounting annually. This accounting is the primary method a beneficiary can hold a trustee accountable. Without an accounting, a beneficiary is virtually powerless and at the mercy of the trustee.

Calendar for trustee provide accountingMany have asked the question – exactly when is the accounting due? While none of the trust statutes specify a specific time frame when the accounting is due once a year has elapsed, common sense would suggest that a trustee has a reasonable amount of time to provide the accounting.

When must the trustee provide accounting? In my opinion, a reasonable amount of time would approximately 90 days from the close of the accounting period. This provides the trustee sufficient time to gather up the final month’s information and assemble the actual trust accounting.

What if the trustee does not provide the trust accounting? I would suggest that you write to the trustee shortly after the accounting period is up to request an accounting. If the trustee fails or refuses to provide an accounting, you may be justified in arguing that the trustee has committed a breach of fiduciary duty and even a fraud and should at the very least, be removed for intentionally refusing to provide the accounting.

Trustee provide accounting art courtIf the accounting is not forthcoming a beneficiary can compel the accounting by filing a lawsuit for an accounting. I strongly urge trust beneficiaries to be vigilant in monitoring the trustee and making sure a timely accounting is provided.

To schedule an appointment with Jay Fleece:  

Phone: 727-471-5868   jfleece@legacyprotectionlawyers.com  

IRS and Estate Taxes

The IRS, Estate Taxes and Personal Representative

IRS and estate taxesA personal representative has the responsibility to pay estate taxes owed by the decedent or the estate to the IRS.

Estate taxes are normally paid from probate assets in the decedent’s estate, and not by the personal representative from his or her own assets. However, under certain circumstances, the personal representative may be personally liable for taxes due to the IRS  if they are not properly paid.

Estate taxes and the IRSThe estate will not have any tax filing or payment obligations to the State of Florida. However, if the decedent owed Florida intangibles taxes for any year prior to the repeal of the intangibles tax as of January 1, 2007, the personal representative must pay those taxes to the Florida Department of Revenue.

The decedent’s death has two significant tax consequences. It ends the decedent’s last tax year for purposes of filing the decedent’s federal income tax return, and it establishes a new tax entity, the “estate.”

The personal representative may be required to file one or more of the following returns, depending upon the circumstances:

The decedent’s final Form 1040, Federal Income Tax Return, reporting the decedent’s income for the year of the decedent’s death.

  • IRS estate taxesOne or more Forms 1041, Federal Income Tax Returns for the Estate, reporting the estate’s taxable income.
  • Form 709, Federal Gift Tax Return(s), reporting gifts made by the decedent prior to death.
  • Form 706, Federal Estate Tax Return, reporting the decedent’s gross estate, depending upon the value of the gross estate.

The personal representative may also be required to file other returns not specifically mentioned here. 

To schedule an appointment with Jay Fleece:  

Phone: 727-471-5868   jfleece@legacyprotectionlawyers.com  

Trust estate litigation

Trust estate litigation: breach of fiduciary duty

Many of the same contested issues in a probate estate also exist in trust estate litigation matters.

Trust estate litigationThe main difference is that an independent civil action needs to be filed in order to invoke the jurisdiction of the court and have summonses issued to the Defendants. As Florida trust administration is not court-supervised, it is up to the beneficiaries, rather than the probate judge, to make sure the trustee is discharging his duties in accordance with the trust terms and with the law. For the most part, the only way a beneficiary can review what the trustee has done is through the annual accounting which the trustee must provide each qualified beneficiary every year. If the accounting is not provided, the trustee has breached his fiduciary duty to keep beneficiaries informed, which could result in trust estate litigation, and the trustee is held liable.

Duty to Account: A trustee has broad discretion in dealing with trust property, subject to the duty of loyalty, a duty of impartiality and the other fiduciary duties imposed on the trustee. The trustee operates with very little oversight by anyone over the trust’s assets. The trustee is not Trust estate litigation and the trustee's responsibilityunder court supervision unless the court’s jurisdiction is invoked and is only accountable to the beneficiaries of the trust. Practically the only time a beneficiary can review what the trustee has done and have an opportunity to challenge those actions is when the trustee provides an accounting to the beneficiary, if not it is the grounds for trust estate litigation.

As the equitable owner of the trust property, the beneficiary has a vested interest in the management and administration of the trust and has an enforceable right to an accounting from a trustee. Furthermore, because the trustee has a fiduciary obligation to the beneficiary, the beneficiary must be accurately informed as to what the trust property consists and how it is being managed. The beneficiary must be accurately informed about the administration of the trust in order to hold the trustee to the proper standard of care and honesty and to enforce his [the beneficiary’s] rights in the trust.

Trust estate litigation accountingA trustee has a duty to maintain clear, complete and accurate books and records regarding the trust administration and at reasonable intervals must provide beneficiaries with reports or accounting. It is important for the trustee to keep accurate records so that the beneficiary can tell whether the trustee has acted with prudence, loyalty, and impartiality and whether the costs of administration have been reasonable and appropriate.

To schedule an appointment with Jay Fleece:  

Phone: 727-471-5868   jfleece@legacyprotectionlawyers.com  

Estate trustee litigation

Estate and Trust Litigation: Holding the Trustee Accountable

Avoid estate and trust Litigation: TRUSTEE IS UNDER A STRICT FIDUCIARY DUTY TO KEEP AND RENDER A COMPLETE AND ACCURATE RECORD.

A trustee is a person who has broad discretion with very little oversight over someone else’s assets. Practically the only time a beneficiary can review what the trustee has done and have an opportunity to challenge those actions, through possible trust litigation, is when the trustee provides an accounting to the beneficiary. As such, one of the many duties a trustee has is the duty to inform and account. This fiduciary duty is critically important to ensure that the trustee is properly discharging his or her fiduciary duties in managing the affairs of the trust.

A TRUSTEE HAS A DUTY TO INFORM AND TO ACCOUNT

Trust litigation and estate planningThe law of trusts has always imposed a duty on the trustee to keep the beneficiary informed as to the administration of the trust and to account to the beneficiary for all actions taken by the trustee. Without a proper accounting disclosing how the trustee has handled the trust affairs, there is little chance of a trustee being held accountable and therefore, the trustee’s duties could be breached at will without any means of redress.

To avoid estate and trust litigation, the burden of proof is on the fiduciary to show that they have fully performed their duties, and the means for such proof is by providing a sufficient and proper accounting.

To continue reading this article please click here: Avoid Estate Litigation.

“A trustee has a duty to maintain clear, complete, and accurate books and records regarding the trust. It is important for the trustee to keep clear and complete records so that the beneficiary can tell whether the trustee has acted with prudence, loyalty, and impartiality and whether the costs of administration have been reasonable and appropriate.”

Trust and Trustee

Trustee Responsibilities for an Estate.

Trustee: If the decedent had established what is commonly referred to as a “Revocable Trust”. to work properly, assets must be transferred to it. 

Important: Titles must be changed from an “individual” name to the name of the revocable living trust. Because the name is no longer in the titles, there is no reason for the Florida probate court to be involved. What happens if the Trustee becomes incapacitated or when the person dies? The estate assets in the decedent’s revocable trust are a part of his or her gross estate. – Mainly for the purposes of determining federal estate tax liability.

TrustWhen a Revocable Trust is executed, the Trustee is usually the person who executed the trust.

Married couples are often co-trustees. When one dies or becomes incapacitated, the surviving spouse continues to handle the finances with no other actions required. Many people choose to be their own trustee and continue to manage their affairs for as long as they are able. However, they are ultimately responsible to the beneficiaries for prudent management of the trust assets. Therefore they should also consult with an experienced estate planner and trust attorney.

The Settlor of the trust could appoint another person or financial institution as the Trustee of their revocable trust. If you have been named as a current Trustee or Co-trustee, you may already be acting in that capacity. So you need to be aware of your duties and responsibilities as trustee of the estate.

Trustee and Court ClerkThe Trustee is always required to file a “Notice of Trust” with the clerk of the court. It should be in the county in which the decedent resided at the time of the decedent’s death. The purpose of the notice is to make the decedent’s creditors aware of the of the trust’s existence. They have rights to enforce their claims against the trust assets.

All of the tasks which must be performed by a personal representative, in connection with the administration of a probate estate, must also be performed by the Trustee of a revocable trust. They generally will not need to file the same documents with the clerk of the court. Furthermore, if a probate proceeding is not commenced, the assets comprising the decedent’s revocable trust are subject to a two-year creditor’s claim period, rather than the three-month non-claim period available to a personal representative.

To schedule an appointment with Jay Fleece:  

Phone: 727-471-5868   jfleece@legacyprotectionlawyers.com