Duties of Trustee
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These are original documents we\'ve been developing over the past year to educate Realtors, US Investors, Foreign Investors, distressed home owners and Retiring Baby Boomers
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Duties of Trustee
- 1. Contract Analysis Workshop Duties of the Trustee and Liability Issues
Editor's Notes
- The responsibility of writing a contract is ominous because it is law making. A contract that you write for yourself and which another person agrees to is a matter of personal law. In a person’s life, the occasion inevitably presents itself to write a contract just to be sure of an agreement between you and another party. The occasion can be a marriage, an automobile purchase, a tax return or the creation of a business. In this case we focus on the discussion of the documentation used in the creation of a Florida Land Trust. A Land Trust Agreement is, in part, one such occasion. This workshop is not intended to make any of you lawyers. It is intended to give you a better understanding of the documentation that arises under the conversion of property into a Land Trust. My Name is Michael Belgeri, I am the course presenter for this on-line workshop
- As we discuss in the Land Trust Illustrated presentation, there are inherent tasks for the Trustee. The Agreement we’ve developed outlines the direction and requirements of those duties covering record keeping, accounting and notifications. While such tasks in the commercial and public use of Land Trust, for example in Pinellas County, is obvious, the issues surrounding a residential or small unit property land trust are just as significant whether it be notices of code violations or probate issues surrounding the death and transfer of ownership by one of the beneficiaries. Or the change in successor trustees.
- The key duty is of course to sign the deed and distribute the wealth in whatever manner is both fair and equitable. Chosing the Trustee who will have no vested interest in those duties is the most significant action of the beneficiaries.
- By 1968 in Florida it had become apparent to the Florida Justice department that a number of criminal elements in the country had also discovered a use for the Land Trust. The privacy veil that a Land Trust offered was being pulled down on the ill gotten wealth of members of organized crime now retiring along the western coast of Florida. The use of the Florida Land Trust was preventing the state’s attorney from seizing the properties of convicted felons. To correct this the legislature made an adjustment to Florida Statute 689.071 requiring that a lien search for racketeering violations and convictions be allowed to ‘pierce the Trust Veil’ of protection and today a RICO search is now required.
- Consideration is simply a fee for service under the contract and it is incorporated as a recital requirement for the Trustee to be paid in some manner for the services he, she or it renders to the trust. The Trustee has no liability for his, her or its actions taken in the name of the trust, but does has a duty of service which if broken through negligence or bad service would constitute both malfeasance and liability for failure to perform. For example, if a code violation occurred and the Trustee was notified but failed to pass through that notification in a timely manner resulting in a negative impact upon the property, the Trustee would be liable for the failure to act, but not liable for the determination against the property.
- Within the Agreement the address of the Trustee becomes the address of the trust. Beneficiary addresses are and must be kept up to date because the Trustee is required by paragraph 9 to maintain a continuous flow of information to the beneficiaries. With the advent of both internet and cellular technology the notification system is considered a virtual activity and can serve as a form of documented communications during the life of the trust.
- Since a trustee can resign at its own pleasure, the agreement requires a thirty day written notice. In actual strategy we recommend that beneficiary’s take preventative steps in light of the nature of the trust itself. Those steps include the naming of a successor Trustee at the inception of the Trust itself and the completion of a termination document for the trustee and signed by the trustee which is also placed in the hands of the beneficiary at the inception of the agreement with notary statement. Remember that under a Trust filed with the state it is the trustees signature that is used to sell, buy or trade property so a clear path must be open to the beneficiaries at all times for the ultimate transactions to be made without conflict.
- The methodology of trustee succession is written into the agreement and given a timeframe for accomplishment. But the nature of the agreement allows for the succession to be predetermined with documents and in the hands of the beneficiaries at all times. One reason for this ability and facility of a signed document to exist that replaces the current trustee is that only in a Land Trust can a beneficiary legally be named a trustee successor. It is not allowed under any other asset protection trust instrument that the Trustee can be beneficiary as well as Trustee. We suggest that the predetermined self-nomination be used only in emergency conditions should they arise, for example the accidental death of a trustee.
- With resignation and succession there are there may be lose ends or unforeseen consequence of actions taken by a trustee under the direction and for the benefit of the beneficiaries. These two sub-paragraphs speak to the successors task as well as the responsibility of the trust to the departing trustee for any service fees that are due at the time of resignation.
- The Exculpation paragraph of the Trust agreement clearly restricts the trustee from any ability to place liability on the part of the beneficiary to their beneficial interest in the trust property or liabilities that may occur as a result of occurrences on the trust property by other parties for which suit may have been filed by either the state or private party.
- The land trusts facility to provide privacy, protection and negotiation is based on common law going back hundreds of years. Familiarity with legal facilitation in legal proceedings in Florida is limited. Illinois court rulings go back to 1899, the year that Illinois created its Land Trust Act. A resulting body of mature court case law rulings serves as interpretive the interpretive guidelines for legal actions involving Florida cases. This paragraph of the Agreement speaks to several key aspects resulting from more than 100 years of legal maturity. The paragraph spells out the unique freedom from liability given the Trustee and the absolute value of the trust document with reference to any and all dealings with the property.
- Under paragraph 15 the Land Trust Agreement’s positioning in the public records of the state and county are at the discretion of the beneficiary’s opinion. We recommend that a public notary witness the document’s conception and signings but it is up to the beneficiary to put the document in the public record. What is necessary for the public record is that the Deed be signed and submitted by the Trustee along with the doc stamp payment if required. Note that when an individual property owners transfers his or her property into a Land Trust naming themselves or their LLC as beneficiary docu stamps are not required because the nature of the Land Trust in Florida affords that right to the beneficiary by law. What would be necessary is the administrative changes in the Title insurance and for that purpose we refer you to a number of insurance firms who can and will provide those changes at transfer of ownership.