When you serve as a trustee, you take on a wide variety of obligations. You are tasked with cataloging and valuing assets, dealing with creditors, and ensuring that beneficiaries get what they are entitled to receive. Throughout this process, you are also expected to deal with the costs and expenses associated with managing the trust.
Paying trust obligations is a trustee’s responsibility, in Coral Gables and elsewhere in Florida, and you can face consequences for any errors. You are limited to using funds only for allowed trust-related purposes. If you are looking for assistance, our committed trust administration attorneys could guide you on remaining compliant with this restriction.
As a trustee in Coral Gables, you can expect to pay numerous obligations during the administration process. There are, naturally, expenses related to maintaining the trust and its assets, and it is your obligation to pay them from trust funds.
Some of these costs are predictable costs that either occur once, or on a monthly or annual basis. This could include any number of services related to the estate, such as tax preparation, legal fees, insurance premiums, or the cost of maintaining real estate. Ultimately, the terms of the trust and specific assets held in trust will determine when these payments are necessary and allowable.
Of course, it is possible that a bill presented to the trustee is not eligible to be paid from trust funds. These expenses are necessary only if they are related to maintaining the trust assets or otherwise benefit the beneficiaries. While trustees have some leeway in how they work to maintain the estate, any expenditures must remain within the scope of their authority.
It is vital to avoid a number of pitfalls when it comes time to pay bills for a trust. As a trustee, you have an obligation to avoid self-dealing and making unauthorized payments, and you must carefully track expenditures. Thankfully, our team is here to help you manage these responsibilities during the process. Some of the most important pitfalls to avoid include the following.
One of the most common—and serious—errors involves mixing trust funds with your own accounts. You should never pay trust expenses with your own money, and using assets from the trust for your own purposes is especially problematic.
Another mistake that is crucial to avoid is simply paying an obligation without verifying that it is a valid expense of the trust. Just because a creditor is seeking funds does not mean they are entitled to them. It is vital that you carefully investigate any bills or claims to ensure they are an actual obligation of the trust.
Communicating with the beneficiaries is vital. Even if you are careful in only paying bills related to the estate, it is a good idea to ensure these payments are not a surprise to any interested parties, especially for large payments.
It is impossible to be confident that you have upheld your obligation to the trust without careful recordkeeping. Any failure to keep track of receipts or expenditures could become a serious problem when it comes time to justify a payment.
While paying trust obligations is only a small part of a trustee’s work, any mistakes can have serious consequences, so you should rely on Coral Gables legal counsel for help avoiding these errors. Handling these tasks on your own is a risk you do not have to take. Contact our firm as soon as possible to discuss your situation.
We evaluate your case and determine how we might be able to help.
We will meet with you to discuss your next options and lay out a plan.
Our team guides you throughout the process so you feel confident about your choices.
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