As has been pointed out previously, the use of trusts as a tool for estate planning purposes has been on the rise over the last few decades, both in Florida and the United States as a whole. The flexibility and protection that a properly drafted trust instrument can provide suggests that this popularity is not destined to wane any time soon. This also means that the demand for trustees will likely continue to grow, and the chances that a Florida resident may need to understand his or her rights as a beneficiary under a trust may similarly increase.
Trustees have many duties with regard to the trust itself and its beneficiaries. The most important of these is the fiduciary duty to utilize the trust assets in a reasonable way and not harm the financial standing of the trust unnecessarily. There are, however, other duties that are more procedural in nature. One of these is the trustee’s duty to provide a beneficiary with a “trust accounting.” Once a year, and upon a change of trustee or termination of the trust, a beneficiary is entitled to such an accounting. So, what does this mean?
Florida Statutes 736.08135 sets out the requirements of a proper trust accounting. Most importantly, the law requires that the accounting be reasonably understandable and not an arcane document that requires special training to decipher. The accounting document will identify the trust, the trustee, and the period that the accounting covers, which will be the period since the last accounting or the creation of the trust if it is the first accounting. It will contain a record of all transactions, of property or cash, including compensation of the trustee. All wealth that comes in or goes out of the account needs to be disclosed. Further, the accounting must identify the value of the assets and liabilities of the trust, and for assets, both the original and current values. Finally, the accounting needs to show other changes, such as name changes, stock splits, and other transactions that don’t necessarily affect the amounts for which the trustee is accountable.
As can be seen, there’s a lot of information that must be contained in a trust accounting. While the statute stipulates that the accounting must be reasonably understandable, the sheer complexity of some trusts may be confusing to some beneficiaries. If you have a question about a trust instrument as a beneficiary or a trustee, or want more information about how a trust might benefit an estate plan, you may wish to consider talking to an experienced Florida estate planning attorney.