A trustee has a big responsibility to keep beneficiaries of a trust informed about how the trust is being managed. Florida law says that the trustee has to share their contact information with the beneficiaries, let them know when an irrevocable trust is set up, and give them the opportunity to see the trust document and get financial reports. Even if the person who made the trust (the settlor) wants to keep some information private, Florida law requires the trustee to share it with the “qualified beneficiaries.” This includes not only the people who can receive money from the trust right away, but also those who would get money later on. Unlike some other states, Florida doesn’t let the settlor keep information private for a certain amount of time before sharing it. The law says the trustee has to share the information with the right people. The representation statutes in the Florida Trust Code allow a person to represent and bind a beneficiary and receive important information on their behalf. There are five categories of people who can do this, including someone with a power of appointment, a court-appointed representative, and a designated representative. A designated representative is a person nominated in the trust document who can represent and bind a beneficiary and receive any notices or information on their behalf. The trust document can also designate someone else to nominate a designated representative. This means that the trust document could give someone the power to appoint a designated representative for a beneficiary for a certain period of time or in certain situations. A designated representative is someone who can make decisions for a beneficiary in a trust. They can’t be the same person as the trustee, and they can’t be a beneficiary unless the trust says they can. The trust must specifically allow for a designated representative to serve. The designated representative isn’t responsible to the beneficiary for their actions as long as they act in good faith.
But, if there’s a conflict of interest between the designated representative and the beneficiary, the designated representative could still make decisions for the beneficiary, even if it’s not in the beneficiary’s best interest. This could cause problems because the beneficiary might not even know about the conflict of interest.
In simple terms, a designated representative has certain limitations and might not always act in the best interest of the beneficiary. Sometimes, the only people who might know about a conflict of interest involving the person in charge of handling the trust are the trustee and the court. The trustee can ask the court for guidance on what to do, or they can tell the person the trust is for about the conflict. The trustee might also choose not to be in charge if they would have to make sure the person handling the trust is doing things right. The trust rules can also say that the trustee doesn’t have to check if the person in charge of the trust is doing things in good faith. To avoid conflicts of interest, the trust rules can say that a beneficiary can’t be in charge, or that more than one person has to be in charge at the same time. Also, the trust rules should say if the person in charge gets paid or not, and if they get money back for any expenses they had while in charge. In a trust, the person with the power to make decisions can represent and make decisions for others who might benefit from the trust. This is different in Florida compared to other states because Florida allows for more flexibility and doesn’t require the decision maker to have a specific type of power. The decision maker can only represent others if there’s no conflict of interest. This is to make sure the decision maker doesn’t make choices that benefit themselves at the expense of others. The Florida law on powers of appointment doesn’t follow the same rules as other places. The law says that the person with the power can’t make decisions that affect other people if they are the only trustee. And if the court thinks the trustee is being dishonest, they can’t represent anyone. However, the person who made the trust can change these rules if they want. Using a power of appointment can be a good way to keep financial information private, like if a couple doesn’t want their kids to know about their trust. But it’s important for the person making the trust to know about the power of appointment, because it could cause problems for the family if they don’t. The first step is to figure out how much the person who set up the trust wants to use the power of appointment to represent others. Once we know that, the lawyer needs to make sure the trust document shows how representation is supposed to work, so there’s no confusion. For example, the person setting up the trust might want to give a beneficiary the power to make decisions, but not want them to control who else can get money from the trust. Or they might want to limit what the beneficiary can do with the money in certain ways. The trust document might also say that only certain people, like the settlor’s children, can pick a new trustee. But if it’s not clear, the rules about representation might not be followed correctly, which could go against what the person setting up the trust wanted. In some cases, a person might want to give someone else the power to make decisions about only part of a trust. The law about who can represent the beneficiaries only applies to people affected by this power. For example, if only half of the trust can be decided on by someone else, the other beneficiaries still have the right to get information about the trust. Also, if there isn’t anyone who can make decisions yet, then the law about representation doesn’t apply. This might not be what the person who set up the trust wanted. If someone has a special right to take money out of the trust, this isn’t affected by the person who can make decisions about the rest of the trust. Finally, the group of people who can be chosen to make decisions should be big enough so that the law about representation still applies even if all the people who could make decisions have died. The person who sets up a trust can give someone else the power to make decisions about the trust. This person could be a friend, family member, or advisor. They can do things like control money and assets in the trust, and help the people who are supposed to get the trust money. But in some cases, like when a married couple sets up a trust, the surviving spouse can’t have this power. Sometimes, the person with the power might not want to help the other people in the trust. They have the right to help, but they don’t have to. So, it’s important for the trustee (the person managing the trust) to get a written statement from the person with the power, saying if and how they’ll help the others in the trust. Delegation in trusts means that one trustee can’t pass off their responsibilities to another trustee if the person who set up the trust expected them to work together. A trustee has to make sure the other trustee doesn’t break the rules. If a trustee wants to pass their duties off to another trustee who also has the power to make decisions for other people, they have to be really careful. The trust documents need to specifically say if a trustee can pass off their duties to another trustee in this situation.
When it comes to representing people in a trust, there are differences between using a designated representative and using someone with a power of appointment. A power of appointment holder can only represent and make decisions for certain people, while a designated representative can make decisions for other people. So if someone setting up a trust wants to keep information from certain beneficiaries, they can use a power of appointment holder. But if they want to keep information from a different type of beneficiary, they would need a designated representative. In simple terms, when someone is representing you in a trust, there are two different ways it can be done. One way is with a designated representative, who has to follow certain rules and can’t be a trustee. The other way is with a power of appointment holder, who doesn’t have as many rules to follow and can be a trustee. The designated representative can also expect to get paid, while the power of appointment holder usually doesn’t. No matter which method is used, the trustee doesn’t have to give you information if you’re represented by someone else, unless the trust says they have to. If the person setting up the trust wants to keep information private, they can make rules about who the trustee can give information to. In a trust, a trustee has a duty to keep beneficiaries informed and accountable, and to respond to their requests. However, the trustâs creator can transfer these duties to a designated representative or someone with the power to make decisions. Itâs important for the creator and their lawyer to think about how these changes will affect the trust as a whole. This can be found in Florida Statutes sections 736.0103, 736.0302, and 736.0306. Cindy Basham is a lawyer who specializes in helping people with their wills and trusts. She works at a law firm in Ft. Lauderdale and Miami.
Source: https://www.floridabar.org/the-florida-bar-journal/shedding-light-on-keeping-beneficiaries-in-the-dark/
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