Photo by Joël de Vriend on Unsplash

Question:

We would like to seek your opinion on our present trust situation? We are both retired and moved to Florida in 2022. We have a trust that was drafted in California in 2016. We understand that we have to somehow amend it to make sure that it complies with the Florida law. We are debating whether to: (1) revoke the trust and start a new one, (2) amend the trust or (3) have a simple will if decide to revoke the trust.

Here is our situation. We have a number of changes we would like done in our trust. We would like to change the beneficiary, change the third-party trustee and update the funding. Sadly to say the we cannot trust both our families, so we named a third-party trustee. However, we discovered that the trustee from California we named has a lot of complaints. We do plan to buy our primary residence later (2024) for which are aware a trust is a better instrument. We have about $2M in our retirement accounts (traditional and Roth IRA and 401K). We have $500,000 from the sale of our properties. Here are our questions:

1. What document (trust or will) do you think is advisable to have based on our situation?
2. Where can we find a list of competent and trusted third-party trustees, if we go with a trust?
3. How are trustees paid? Based on what I read on your website, seems like trustees are paid on a monthly fee or an annual basis depending on the assets. The third-party trustee we named do not get paid until they do the distribution upon death. The fee language in the trust states “reasonable” fee such language makes me a little leery.

Response:

You are right to update your plan since you moved to Florida from California and for the other reasons you state. I’d probably start from scratch with new trusts because California is a community property state and Florida is not, which could indicate significant differences in how the trusts are drafted. While most of your assets are retirement plans that must remain outside the trust, I still prefer a trust to simply relying on wills and durable powers of attorney because they work better in the event of incapacity and they avoid probate. In your case, it also sounds like other than one another you may not have anyone you feel comfortable appointing as a successor agents on your durable powers of attorney.

In terms of finding a third-party professional trustee with whom you are comfortable, I would ask an estate planning attorney with whom you can work where you are in Florida. She should have worked with a number of professional trustees, whether banks, trust companies, or law firms. You could meet with the ones she recommends and decide which would work best for you.

In terms of fees, “reasonable” is the common term put into trusts. However, you can come to an agreement with the trustee you choose ahead of time so that you have some certainty as to what that will be. The idea that a trustee would only be paid upon distribution of trust assets upon your deaths is highly unusual.

Finally, while you cannot transfer your retirement plans into trust now, you may have them payable to trust after one or both of you pass away. This can get complicated, but depending on the circumstances might make sense. You can discuss the advantages and disadvantages of taking this step with the estate planning attorney you engage.

Related Articles

Will Leaving on Vacation from Massachusetts or Florida Affect our State of Residence for Tax Purposes? If I Spend My Winters in Florida Should I have Separate Florida Estate Planning Documents? Does My Father Need a New Trust If He Moves from Florida to New York?