The Most Common Mistakes Trustees Make in Florida
Serving as a trustee in Florida is a significant responsibility. While you might feel honored to be selected for this role, you should know that this is a legal obligation that you need to approach with care and diligence. As a trustee, you will be held to high standards under the trust’s terms and state law. You need to be careful not to make mistakes along the way. Even a single mistake is enough to damage relationships and cause legal problems. Unfortunately, even well-intentioned trustees can make costly mistakes. Understanding the most common mistakes trustees make can help you avoid problems and protect the trust you’ve been put in charge of.
Here are some of the most common mistakes our Tampa trust litigation attorneys at Bleakley Bavol Denman & Grace have seen trustees make.
1. Not Understanding Fiduciary Responsibilities
A trustee has a fiduciary duty to act in the best interests of the beneficiaries at all times. Your role as a trustee entails acting with prudence, loyalty, and impartiality. You also need to avoid conflicts of interest. Many trustees fail to understand their fiduciary responsibilities and end up making uninformed or harmful decisions. Taking time to learn about your responsibilities can prevent mistakes that may expose you to serious consequences, including personal liability.
2. Failing To Begin Trust Administration Promptly
In Florida, trustees are expected to act without unnecessary delay once the grantor dies or a triggering event named in the trust happens. However, some trustees wait weeks or even months before taking action. Delaying tasks such as securing trust assets, notifying beneficiaries, or filing the necessary paperwork can lead to complications.
3. Treating Trust Assets Like Personal Property
Another big and dangerous mistake trustees make is treating assets like personal property. Trustees are not allowed to use trust funds for personal expenses, including using trust funds as a personal loan, mixing trust money with personal money, buying items for personal use, or living in trust-owned property for free. Any form of self-dealing is strictly prohibited.
In Florida, if a trustee uses trust assets for personal gain, they can be removed, forced to repay the funds, and held personally liable.
4. Making Unauthorized or Improper Distributions
Sometimes, trustees make distributions that contradict the terms of the trust agreement. This might include giving a beneficiary too much, giving funds to the wrong beneficiary, issuing payments prematurely, or holding back distributions without a valid reason. Trustees are required to follow the instructions in the trust document and applicable state law. If the terms of the trust are unclear, you should consult with an attorney for help interpreting the document.
5. Mismanaging Trust Investments
Trustees are responsible for managing trust investments. Florida law requires trustees to follow the Prudent Investor Rule, which means managing investments with care, caution, and reasonable diversification. If you take unnecessary risks, fail to diversify the trust’s portfolio, or fail to monitor investments, you can put the trust at risk and be found in breach of your duties.
6. Ignoring Tax Obligations
Trustees are responsible for ensuring that the trust complies with all tax laws. Failure to report income, pay taxes, or file tax returns can create significant liability not just for the trust but also for the trustee personally. Work with an accountant or tax professional to ensure you stay compliant.
Contact Our Tampa Trust Litigation Attorneys
If you’re a trustee and need help to avoid making common trustee mistakes, contact our experienced Tampa Trust Litigation Attorneys at Bleakley, Bavol, Denman & Grace today to schedule a consultation.
