Living Trust

 A living trust is an agreement in which the property owner, who is known as the grantor, transfers his property to a trustee to be administered for a beneficiary(s). Typically, the grantor is also the trustee. The grantor is also the initial beneficiary of the trust. Therefore, while the grantor is still the trustee, he can do as he pleases with his assets, including investing in all certificates of deposit or investing in extremely risky, speculative securities. The grantor does not have to account to anyone, including the beneficiary(s) named to receive the trust assets after his death. Unless the grantor is declared incapacitated, then during his lifetime the grantor has the right to amend, change or even revoke the trust agreement.

Everything changes when the successor trustee takes over administration of the trust at the time the grantor is no longer able to serve as trustee. Typically, this would be due to the resignation, incapacity or death of the grantor. The successor trustee is a fiduciary who is responsible for the investment portfolio and the administration of the trust according to its terms and provisions. The successor trustee is suddenly faced with huge responsibilities and significant personal liability if he fails to perform his duties as required by the trust agreement and by Florida law.

The successor trustee is usually a family member or friend who has little or no experience with trust administration and who believe that his only duty is to be fair and honest. While being fair and honest are essential qualities, the successor trustee is also expected to instantly become a trust expert. The successor trustee is held to the same standard as a professional corporate fiduciary, such as a bank trust department. The successor trustee usually cannot continue to follow the investment strategy established by the grantor. The successor trustee does not become the grantor’s replacement, which means that the successor trustee does not have the ability to change the trust’s beneficiary(s) or to amend the terms of the trust.