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The Florida Senate

2005 Florida Statutes

Power of court to permit deviation or to approve transactions involving conflict of interest.
Section 737.403, Florida Statutes 2005

737.403  Power of court to permit deviation or to approve transactions involving conflict of interest.--

(1)  This part does not affect the power of the court to relieve a trustee for cause from any restrictions on the trustee's power that would otherwise be placed upon the trustee by the trust or by this part.

(a)  Unless expressly provided to the contrary in the trust instrument, the court may permit a trustee:

1.  To consolidate two or more trusts having similar terms into a single trust; or

2.  To sever any trust on a fractional basis into two or more separate trusts for any reason, and to segregate by allocation to a separate account or trust a specific amount from, a portion of, or a specific asset included in the trust property of any trust to reflect a disclaimer, to reflect or result in differences in federal tax attributes, to satisfy any federal tax requirement, to make federal tax elections, to reduce potential generation-skipping transfer tax liability, or for any other tax planning purposes or other reasons.

a.  A separate trust created by severance must be treated as a separate trust for all purposes from the effective date on which the severance is effective. The effective date of the severance may be retroactive to a date before the date on which the court approves the severance.

b.  A trustee who acts in good faith is not liable to any person for taking into consideration differences in federal tax attributes and other pertinent factors in administering the trust property of any separate account or trust, in making applicable tax elections, and making distributions pursuant to the terms of the separate trust.

(b)  A trust created by consolidation or severance under this section must be held on terms and conditions identical to those before the consolidation or severance, or upon such terms or conditions that the aggregate interests of each beneficiary after the consolidation or severance will be reasonably equivalent to that beneficiary's aggregate interests before the consolidation or severance. In determining whether a beneficiary's aggregate interests are reasonably equivalent, the court shall consider the economic value of those interests to the extent that they can be valued, considering such actuarial factors as may be appropriate. If a beneficiary's interest cannot be valued with any reasonable degree of certainty because of the nature of the trust property, the terms of the trust, or other reasons, the court shall base the determination upon such other factors as are reasonable and appropriate under the facts and circumstances applicable to that particular trust, including the purposes of the trust.

(c)  The terms of any trust before consolidation or a severance under paragraph (a) which permit qualification of that trust for an applicable federal tax deduction, exclusion, election, exemption, or other special federal tax status must remain identical in the consolidated trust or in each of the separate trusts created by severance.

(d)  Income earned on a consolidated or severed amount, portion, or specific asset after the consolidation or severance is effective passes with that amount, portion, or specific asset.

(2)  If the duty of the trustee and the trustee's individual interest or his or her interest as trustee of another trust conflict in the exercise of a trust power, the power may be exercised only by court authorization. Under this section, personal profit or advantage to an affiliated or subsidiary company or association is personal profit to any corporate trustee. Court authorization is not required for any of the following:

(a)  The exercise of any power described in s. 737.402(2)(a), (e), (g), (s), or (y);

(b)  The exercise of any power for which the trust instrument acknowledges the trustee's conflict of interest and expressly authorizes the exercise of that power notwithstanding the conflict;

(c)  The exercise of any power consented to in writing by a settlor of the trust while the settlor holds the right of revocation of the trust;

(d)  The exercise of any power consented to in writing by each of the beneficiaries to whom the trustee is required to provide any annual or periodic accounting. Consent under this paragraph may be given by a person who represents the interest of the beneficiary under s. 731.303 or by the legal guardian of the beneficiary or, if there is no legal guardian, by the natural guardian of the beneficiary; or

(e)  Payment of costs or attorney's fees incurred in any trust proceeding from the assets of the trust unless an action has been filed or defense asserted against the trustee based upon a breach of trust. Court authorization is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.

History.--s. 1, ch. 74-106; s. 8, ch. 75-221; s. 16, ch. 95-401; s. 1044, ch. 97-102; s. 4, ch. 2005-85.