PROBATE CORNER
PROBATE CORNER
Trustee ’ s Duties Post-Termination
DAVID M . GARTEN
What are the trustee ’ s duties and responsibilities post-termination and prior to dissolution of the Trust ?
Pursuant to the Florida Trust Code , upon termination of the trust , the trustee is required to wind up the administration of the trust and distribute the trust property to the persons entitled to the property , subject to the right of the trustee to retain a reasonable reserve for the payment of debts , expenses , and taxes . See §§ 736.0816 ( 25 ) and 736.0817 , F . S . This statutory procedure is consistent with Florida case law :
Although a trust instrument directs termination of the trust and the distribution of the principal to the beneficiaries upon the settlor ' s death , the trustee cannot make complete distribution until provision has been made for all the expenses , claims and taxes the trust may be obligated to pay , and certainly not before these amounts have been fully ascertained . Moreover , when the trust is the beneficiary of the grantor ' s probate estate and is charged with the duty to pay the expenses , claims , and taxes imposed on the probate estate , the trustee cannot make complete distribution of the trust until the probate proceeding has been substantially concluded , which was not the case here .
Parker v . Shullman , 983 So . 2d 643 ( Fla . 4th DCA 2008 ); First Union National Bank v . Jones , 768 So . 2d 1213 ( Fla . 4th DCA 2000 ); Sheaffer v . Trask , 813 So . 2d 1051 ( Fla . 4th DCA 2002 ); Merrill Lynch Trust Co . v . Alzheimer ' s Lifeliners Ass ' n , 832 So . 2d 948 ( Fla . 2d DCA 2002 ).
Florida law is consistent with the Restatement ( Third ) of Trusts , § 89 Powers and Duties on Termination , which reads : “ The powers of a trustee do not end on the trust ' s termination date but may be exercised as appropriate to the performance of the trustee ' s duties in winding up administration , including making distribution , in a manner consistent with the purposes of the trust and the interests of the beneficiaries .” See also Restat 2d of Trusts , § 344 and § 736.0817 (“ The provisions of this section are in addition to and are not in derogation of the rights of a trustee under the common law with respect to final distribution of a trust ”). The Comments to the Restatement ( Third ) of
Trusts , a . – e ., ( summarized below ) are instructive :
A . Termination date : The " termination date " of a trust means the time at which it becomes the duty of the trustee to wind up administration of the trust . This time ordinarily arrives at the expiration of the period for which the trust was created , not at the time when distribution is actually accomplished .
B . Termination date : effect in general . Although the termination date for a trust has arrived , the trustee does not thereby necessarily cease to be trustee but normally continues to serve until the trust is finally wound up . The period for winding up the trust refers to the period after the termination date and before trust administration ends by complete distribution of the trust estate . The duration of this period of continuation properly depends on the circumstances involved .
C . Trustee ' s responsibilities during windup period : in general . While winding up administration of the trust , the trustee is to continue holding and administering the trust estate , except as one or more preliminary distributions can be made without interfering with the windup process .
D . Asset management during the windup period . Although the trust termination date has arrived , the trustee can properly exercise such powers as are reasonable and appropriate for the preservation of the trust property until the process of winding up is completed .
E . Distribution of trust estate . Following a trust ' s termination date , the trustee has a duty within a reasonable time to distribute the trust property to the persons who are entitled to it , and to make preliminary distributions as appropriate within the period for winding up administration .
( Continued on next page )
BAR BULLETIN ADVERTISING
Start advertising today by visiting : https :// www . palmbeachbar . org / bulletin-ads .
For advertising inquries , please contact Derek Loiseau , Publications Coordinator , by email : DLoiseau @ palmbeachbar . org .
PBCBA BAR BULLETIN 17