The Florida Uniform Directed Trust Act: What You Should Know

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The Florida Uniform Directed Trust can give you more certainty about how your affairs will be handled after your death – even decades later. By using a directed trust and appointing a professional trust director, you can make sure your family’s interests are protected and your assets are put to their best use long after your death.

What is a Directed Trust?

Think of a directed trust as a typical revocable trust, with an extra level of oversight. In a revocable trust, you, the grantor, get to determine what happens to your assets while you’re alive. You can use them, sell them, give them to your children, or save them all as part of your trust. When you die, or become incapacitated, the job of making those decisions passes to a trustee. The trustee must act according to the terms of your trust but beyond that has authority to make different investment decisions and disbursements as long as they don’t conflict with the trust documents themselves.

A directed trust contains an additional section in the trust documents naming someone other than the trustee known as a “trust director” or “trust protector.” This person’s job is to use the instructions laid out in the trust documents to make certain the trustee is administering the estate according to your wishes. Think of them as a supervisor or auditor of your trustee’s choices.

What the Florida Uniform Directed Trust Act Means for You

Estate planning attorneys have been using directed trusts for years. Trust instruments often name a trust protector or “investment manager” in addition to the trustee, to make sure there is someone protecting your beneficiaries’ interests. The Florida Uniform Directed Trust Act, passed in 2021, didn’t introduce anything brand new to Florida estate planning law. But it does clarify that those trust directors (by any other name) owe a fiduciary duty to the beneficiaries of the trust.

But does the Florida Uniform Directed Trust Act apply to your trust? The law says that it applies to any trust created or administered after July 1, 2021 that includes special directive language which has a “principal place of administration” in Florida. It does not apply to decisions made in existing trusts prior to the effective date of the act. In addition, the trust director must be located in Florida – either personally, or as the company’s principal place of business.

Responsibility and Fiduciary Duties of a Trust Director vs Trustee

The Florida Uniform Directed Trust Act says that trust directors are subject to all the same duties, rules, and liabilities as a trustee. They are a “fiduciary” of the trust – meaning they must act for the benefit of the trust and its beneficiaries. So why would you need both?

Increasingly in larger estates, there is a concern that a trustee may not have the objectivity, specialized knowledge, or experience to make full use of trust assets. Especially when a trustee is a member of the family – a surviving spouse, or relative who happens to be a lawyer or accountant – they may need the assistance of someone in the financial industry to make smart investment decisions, and ensure distributions are made without family biases. The trustee has the authority to fully administer the trust, where the trust director only acts under the authority described in that document. The trust director, for example, may be authorized to make investment decisions, or to supervise discretionary disbursements. The two fiduciaries must work together – with the trustee reporting to the trust director – and hold one another responsible for any breach of their respective fiduciary duties.

Make the Florida Directed Trust Act Work for You

The benefit of the Florida Uniform Directed Trust Act is that it holds trust directors accountable to the trust itself. If the trust protector is failing to protect the trust, and violating their fiduciary duties, it allows the beneficiaries or the trustee to sue them and file a motion in probate court to remove them from the trust. On the other hand, if the trust director finds that the trustee is the one behaving badly, they can initiate similar proceedings to remove the trustee and replace them with a successor.

Most fiduciary lawsuits start when someone realizes the trust’s finances are in trouble. Using a trust director can make sure that errors are caught sooner, before they cost the estate more money. At Harrison Estate Law, P.A., our experienced estate and probate team can help you use the Florida Directed Trust Act to your advantage, to ensure your trust protector is doing its job, and help set things right when they fail. Contact us here or call 352-559-9828 to get help today.

Categories: Trusts