Fiduciary Duties and Responsibilities

Fiduciary Duties:

• To administer the trust agreement, will or durable power of attorney according to law and in accordance with the terms of the document.

• If the fiduciary is given “discretion” with respect to a matter, to exercise that “discretion” in a reasonable manner.

• To impartially administer the trust, will or durable power of attorney for the benefit of the beneficiaries, which include the current beneficiaries as well as the potential remainder beneficiaries. The fiduciary must remain impartial and not favor any beneficiary over another, especially if the fiduciary is also a beneficiary.

• To protect and preserve the assets subject to control by the fiduciary and to ascertain that these assets are invested in a prudent and cautious manner.

• To avoid conflict of interest such as entering into transactions with assets that will result in a profit to the fiduciary personally.

• To understand that if these duties are not properly or competently performed, the fiduciary may have to answer to anyone harmed as a result.

 Fiduciary Responsibilities:

• Understand the terms and provisions in the trust agreement, will or durable power of attorney and administer the document in accordance with these terms and provisions.

• Be able to explain the terms and provisions of the trust agreement, will or durable power of attorney to the beneficiaries.

• Understand fiduciary duties as required by Florida law.

• Review Florida’s Prudent Investor Rule and be able to implement an investment strategy based on this rule.

• Review Florida’s Principal and Income Act and be able to determine how to allocate receipts, disbursements and distributions based on this act.

• A successor trustee of a revocable trust must notify all beneficiaries of acceptance of trustee duties, and upon reasonable request, provide copies of the trust agreement and all amendments to the beneficiaries.

• A successor trustee and a personal representative must obtain a Tax Identification Number for the trust or probate estate from the Internal Revenue Service. However, an attorney in fact can continue to use the principal’s Social Security number.

• Locate all of the assets and determine their values.

• Provide documentation to all relevant financial institutions, banks, brokers, etc., indicating that the fiduciary now has the authority over these assets.

• Keep assets separate from property that is not subject to the trust, will or durable power of attorney.

• Prepare an initial inventory of the assets, showing both the tax cost bases and the current fair market value.

• Collect all receipts and determine whether the receipt is principal or income or should be allocated between both

• Pay all expenses, creditors, and fees and determine whether the expense is principal or income or should be allocated between both

• If the beneficiary receives public assistance benefits, then the fiduciary must also be familiar with the types of disbursements and distributions allowed so as not to jeopardize the beneficiary’s public assistance benefits.

• For an income beneficiary, the fiduciary must calculate the amount of income due and distribute these funds according to the terms of the trust.

• Make discretionary principal distributions based on the terms of the document with consideration for both the current and the potential remainder beneficiaries.

• Prepare annual accountings of the assets in Florida’s required accounting format.

• Provide copies of the annual accountings and required notices to all beneficiaries, including both current and reasonably ascertainable remainder beneficiaries. The beneficiaries, then, have six months from the receipt of the annual accounting and notices to assert a claim.

• If appropriate annual accountings are not prepared and sent to the beneficiaries, there is no statute of limitation barring the beneficiaries from initiating legal proceedings against the fiduciary.

• Preparation and filing of all necessary tax returns, even if no tax is due. If the fiduciary fails to pay taxes that are due, tax law permits the Internal Revenue Service to collect the taxes from the fiduciary’s personal assets. For trusts and probate estates, the most common return is the U.S. Income Tax Return for Estate and Trusts which is IRS Form 1041. This return is significantly more complicated than an individual’s income tax return.

• The fiduciary should retain a certified public accountant, who is familiar with all of the requirements of fiduciary tax returns.