CODING: Words stricken are deletions; words underlined are additions.House Bill 1411e1
HB 1411, First Engrossed
1 A bill to be entitled
2 An act relating to the administration of trusts
3 and estates; amending s. 689.225, F.S.;
4 providing a statement of the rule against
5 perpetuities; amending s. 709.08, F.S.;
6 authorizing certain corporations to serve as an
7 attorney in fact; amending s. 733.707, F.S.;
8 increasing the ceiling on funeral expenses;
9 defining the term "right of revocation" with
10 respect to the order of payment of expenses and
11 obligations of an estate; amending s. 737.111,
12 F.S.; revising provisions with respect to
13 execution requirements for express trusts;
14 providing for the application of the section;
15 amending s. 737.2041, F.S., relating to
16 trustee's attorney's fee; revising procedures
17 for determining attorney's fees; providing for
18 determining fees for an attorney who is
19 retained for limited services; revising the
20 list of services that constitute ordinary
21 services in an initial trust administration;
22 deleting an exception from the applicability of
23 presumptive fees for a corporate fiduciary that
24 serves as a trustee or cotrustee; amending s.
25 737.303, F.S.; revising provisions with respect
26 to the duty of the trustee to inform and
27 account to beneficiaries to require information
28 to the grantor with respect to certain trusts;
29 amending s. 737.308, F.S.; providing for
30 specified notice to the trustee and caveator;
31 amending s. 518.112, F.S.; providing for
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HB 1411, First Engrossed
1 delegation of investment functions; amending s.
2 733.817, F.S.; revising provisions of law with
3 respect to the apportionment of estate taxes;
4 amending s. 738.12, F.S.; providing conditions
5 under which a trust beneficiary is considered
6 an income beneficiary; amending s. 744.441,
7 F.S.; increasing the ceiling on funeral
8 expenses; amending ss. 655.936 and 733.604,
9 F.S.; providing requirements on opening certain
10 safe-deposit boxes; requiring an inventory;
11 requiring filing of inventories with the court;
12 providing an effective date.
13
14 Be It Enacted by the Legislature of the State of Florida:
15
16 Section 1. Paragraph (e) is added to subsection (2) of
17 section 689.225, Florida Statutes, to read:
18 689.225 Statutory rule against perpetuities.--
19 (2) STATEMENT OF THE RULE.--
20 (e) If, in measuring a period from the creation of a
21 trust or other property arrangement, language in a governing
22 instrument (i) seeks to disallow the vesting or termination of
23 any interest or trust beyond, (ii) seeks to postpone the
24 vesting or termination of any interest or trust until, or
25 (iii) seeks to operate in effect in any similar fashion upon,
26 the later of
27 1. the expiration of a period of time not exceeding 21
28 years after the death of a specified life or the survivor of
29 specified lives, or upon the death of a specified life or the
30 death of the survivor of specified lives in being at the
31 creation of the trust or other property arrangement, or
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HB 1411, First Engrossed
1 2. the expiration of a period of time that exceeds or
2 might exceed 21 years after the death of the survivor of lives
3 in being at the creation of the trust or other property
4 arrangement,
5 that language is inoperative to the extent it produces a
6 period of time that exceeds 21 years after the death of the
7 survivor of the specified lives.
8 Section 2. Subsection (2) of section 709.08, Florida
9 Statutes, is amended to read:
10 709.08 Durable power of attorney.--
11 (2) WHO MAY SERVE AS ATTORNEY IN FACT.--The attorney
12 in fact must be a natural person who is 18 years of age or
13 older and is of sound mind, or a financial institution, as
14 defined in chapter 655, with trust powers, having a place of
15 business in this state and authorized to conduct trust
16 business in this state. A not-for-profit corporation,
17 organized for charitable or religious purposes in this state,
18 which has qualified as a court-appointed guardian prior to
19 January 1, 1996, and which is a tax-exempt organization under
20 26 U.S.C. s. 501(c)(3), may also act as an attorney in fact.
21 Notwithstanding any contrary clause in the written power of
22 attorney, no assets of the principal may be used for the
23 benefit of the corporate attorney in fact, or its officers or
24 directors.
25 Section 3. Subsections (1) and (3) of section 733.707,
26 Florida Statutes, are amended to read:
27 733.707 Order of payment of expenses and
28 obligations.--
29 (1) The personal representative shall pay the expenses
30 of the administration and obligations of the estate in the
31 following order:
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1 (a) Class 1.--Costs, expenses of administration, and
2 compensation of personal representatives and their attorneys'
3 fees.
4 (b) Class 2.--Reasonable funeral, interment, and grave
5 marker expenses, whether paid by a guardian under s.
6 744.441(16), the personal representative, or any other person,
7 not to exceed the aggregate of $6,000 $3,000.
8 (c) Class 3.--Debts and taxes with preference under
9 federal law.
10 (d) Class 4.--Reasonable and necessary medical and
11 hospital expenses of the last 60 days of the last illness of
12 the decedent, including compensation of persons attending him.
13 (e) Class 5.--Family allowance.
14 (f) Class 6.--Arrearage from court-ordered child
15 support.
16 (g) Class 7.--Debts acquired after death by the
17 continuation of the decedent's business, in accordance with s.
18 733.612(22), but only to the extent of the assets of that
19 business.
20 (h) Class 8.--All other claims, including those
21 founded on judgments or decrees rendered against the decedent
22 during his lifetime, and any excess over the sums allowed in
23 paragraphs (b) and (d).
24 (3) Any portion of a trust with respect to which a
25 decedent who is the grantor has at the decedent's death a
26 right of revocation, as defined in paragraph (e) (c), either
27 alone or in conjunction with any other person, is liable for
28 the expenses of the administration of the decedent's estate
29 and enforceable claims of the decedent's creditors to the
30 extent the decedent's estate is insufficient to pay them as
31 provided in s. 733.607(2).
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1 (a) For purposes of this subsection, any trusts
2 established as part of, and all payments from, either an
3 employee annuity described in s. 403 of the Internal Revenue
4 Code of 1986, as amended, an Individual Retirement Account, as
5 described in s. 408 of the Internal Revenue Code of 1986, as
6 amended, a Keogh (HR-10) Plan, or a retirement or other plan
7 established by a corporation which is qualified under s. 401
8 of the Internal Revenue Code of 1986, as amended, shall not be
9 considered a trust over which the decedent has a right of
10 revocation.
11 (b) For purposes of this subsection, any trust
12 described in s. 664 of the Internal Revenue Code of 1986, as
13 amended, shall not be considered a trust over which the
14 decedent has a right of revocation.
15 (c) This subsection shall not impair any rights an
16 individual has under a qualified domestic relations order as
17 that term is defined in s. 414(p) of the Internal Revenue Code
18 of 1986, as amended.
19 (d) For purposes of this subsection, property held or
20 received by a trust to the extent that the property would not
21 have been subject to claims against the decedent's estate if
22 it had been paid directly to a trust created under the
23 decedent's will or other than to the decedent's estate, or
24 assets received from any trust other than a trust described in
25 this subsection, shall not be deemed assets of the trust
26 available for the payment of the expenses of administration of
27 and enforceable claims against the decedent's estate.
28 (e) For purposes of this subsection, a "right of
29 revocation" is a power retained by the decedent, held in any
30 capacity, to:
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1 1. Amend or revoke the trust and revest the principal
2 of the trust in the decedent; or
3 2. Withdraw or appoint the principal of the trust to
4 or for the decedent's benefit.
5 Section 4. Section 737.111, Florida Statutes, is
6 amended to read:
7 737.111 Execution requirements for express trusts.--
8 (1) The testamentary aspects of a trust defined in s.
9 731.201(33), are invalid unless the trust instrument is
10 executed by the settlor with the formalities required for the
11 execution of a will.
12 (2) The testamentary aspects of a trust created by a
13 nonresident of Florida, either before or after this law takes
14 effect, are not invalid because the trust does not meet the
15 requirements of this section, if the trust is valid under the
16 laws of the state or country where the settlor was at the time
17 of execution.
18 (3) The testamentary aspects of an amendment to a
19 trust are invalid unless the amendment is executed by the
20 settlor with the same formalities as a will.
21 (4) For the purposes of this section, the term
22 "testamentary aspects" means those provisions of the trust
23 that dispose of the trust property on or after the death of
24 the settlor other than to the settlor's estate.
25 (5) This section shall not apply to trusts established
26 as part of an employee annuity described in s. 403 of the
27 Internal Revenue Code of 1986, as amended, an Individual
28 Retirement Account as described in s. 408 of the Internal
29 Revenue Code of 1986, as amended, a Keogh (HR-10) Plan, or a
30 retirement or other plan that is qualified under s. 401 of the
31 Internal Revenue Code of 1986, as amended.
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1 (6) This section shall not apply to trust instruments
2 executed prior to October 1, 1995.
3 Section 5. Section 737.2041, Florida Statutes, is
4 amended to read:
5 737.2041 Trustee's attorney's fees.--
6 (1) If The attorney retained by the trustee of a trust
7 described in s. 733.707(3) retains an attorney to render legal
8 services in connection with the initial administration of the
9 trust, the attorney is shall be entitled to reasonable
10 compensation for those legal services, rendered in the initial
11 administration of the trust payable from the assets of the
12 trust without court order. If the trustee of a trust described
13 in s. 733.707(3) retains an attorney to render legal services
14 in connection with the initial administration of a trust, the
15 trustee and the attorney may agree to compensation that is
16 determined in a manner or amount other than the manner or
17 amount provided in this section. The agreement is not binding
18 upon a person who bears the impact of the compensation unless
19 that person is a party to or otherwise consents to be bound by
20 the agreement. The agreement may provide that the trustee is
21 not individually liable for the attorney's fees and costs.
22 (2) The attorney, the trustee, and persons bearing the
23 impact of the compensation may agree to compensation
24 determined in a different manner than provided in this
25 section.
26 (2)(3) Unless otherwise agreed, compensation for
27 ordinary services based upon the value of the trust assets
28 immediately following the settlor's death and the income
29 earned by the trust during initial administration at the rate
30 of 75 percent of the schedule provided in s.
31 733.6171(3)(a)-(h) is presumed to be reasonable total
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1 compensation for ordinary services of all attorneys employed
2 generally to advise trustees concerning their duties in
3 initial trust administration.
4 (3) An attorney who is retained to render only limited
5 and specifically defined legal services shall be compensated
6 as provided in the retaining agreement. If the amount or
7 method of determining compensation is not provided in the
8 agreement, the attorney is entitled to a reasonable fee,
9 taking into account the factors set forth in subsection (6).
10 (4) Ordinary services of the attorney in an initial
11 trust administration for a trustee include legal advice and
12 representation concerning the trustee's duties where
13 applicable, relating to:
14 (a) Review of the trust instrument and each amendment
15 for legal sufficiency and interpretation.
16 (b) Implementation of substitution of the successor
17 trustee.
18 (c) Persons who must or should be served with required
19 notices and the method and timing of such service.
20 (d) The obligation of a successor to require a former
21 trustee to account.
22 (e) The trustee's duty to protect, insure, and manage
23 trust assets and the trustee's liability relating to these
24 duties.
25 (f) The trustee's duty regarding investments imposed
26 by the prudent investor rule.
27 (g) Contributions due to the personal representative
28 of settlor's estate for payment of administrative expenses or
29 creditor claims and estate taxes.
30 (h) The trustee's obligation to inform and account to
31 beneficiaries and the method of satisfaction of these
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HB 1411, First Engrossed
1 obligations; the liability of the trust and trustee to the
2 settlor's creditors; the advisability or necessity for probate
3 proceedings to bar creditors; and the contribution
4 requirements to the settlor's probate estate.
5 (i) Creditor procedures and direct payment or
6 compromise and satisfaction of claims against the trust
7 assets.
8 (i)(j) Identifying tax returns required to be filed by
9 the trustee, the trustee's liability for payment of taxes, and
10 the due date of returns.
11 (j)(k) Obtaining nontaxable certificate and receipt,
12 if not done by a personal representative.
13 (k)(l) Order of payment of expenses of administration
14 of the trust, contribution to the settlor's estate or claims
15 filed against trust assets, and order and priority of
16 abatement of bequests and legacies in the trust.
17 (l)(m) Distribution of income or principal to
18 beneficiaries or funding of further trusts provided in the
19 governing instrument.
20 (m)(n) Preparation of any legal documents required to
21 effect distribution.
22 (n)(o) Fiduciary duties, avoidance of self-dealing,
23 conflicts of interest, duty of impartiality, and obligations
24 to beneficiaries.
25 (o)(p) If there is a conflict of interest between a
26 trustee who is a beneficiary and other beneficiaries of the
27 trust, advice to the trustee on limitations of certain
28 authority of the trustee regarding discretionary distributions
29 or exercise of certain powers and alternatives for appointment
30 of an independent trustee and appropriate procedures.
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1 (p)(q) Procedures for trustee's discharge from
2 liability for administration of trust upon termination or
3 resignation.
4 (5) When a corporate fiduciary is serving as trustee
5 or cotrustee of a trust described in s. 733.707(3), the
6 presumptive fee for ordinary services and the list of what
7 constitutes ordinary services in subsections (3) and (4) shall
8 not apply, and what constitutes ordinary services and
9 reasonable compensation for those services shall instead be
10 determined under the particular facts and circumstances
11 applicable to that trust. In addition to the attorney's fees
12 for ordinary services, the attorney for the trustee shall be
13 allowed further reasonable compensation for any extraordinary
14 service. What is an extraordinary service may vary depending
15 on many factors, including the size of the trust.
16 Extraordinary services may include, but are not limited to:
17 (a) Involvement in a trust contest, trust
18 construction, a proceeding for determination of beneficiaries,
19 a contested claim, elective share proceedings, apportionment
20 of estate taxes, or other adversary proceedings or litigation
21 by or against the trust.
22 (b) Representation of the trustee in audit or any
23 proceeding for adjustment, determination, or collection of any
24 taxes.
25 (c) Tax advice on postmortem tax planning, including,
26 but not limited to, disclaimer, renunciation of fiduciary
27 commission, alternate valuation date, allocation of
28 administrative expenses between tax returns, the QTIP or
29 reverse QTIP election, allocation of GST exemption,
30 qualification for Internal Revenue Code ss. 303 and 6166
31 privileges, deduction of last illness expenses, distribution
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HB 1411, First Engrossed
1 planning, asset basis considerations, throwback rules,
2 handling income or deductions in respect of a decedent,
3 valuation discounts, special use and other valuation, handling
4 employee benefit or retirement proceeds, prompt assessment
5 request, or request for release of personal liability for
6 payment of tax.
7 (d) Review of estate tax return and preparation or
8 review of other tax returns required to be filed by the
9 trustee.
10 (e) Preparation of decedent's federal estate tax
11 return. If this return is prepared by the attorney, a fee of
12 one-half of 1 percent up to a value of $10 million and
13 one-fourth of 1 percent on the value in excess of $10 million,
14 of the gross estate as finally determined for federal estate
15 tax purposes, is presumed to be reasonable compensation for
16 the attorney for this service. These fees shall include
17 services for routine audit of the return, not beyond the
18 examining agent level, if required.
19 (f) Purchase, sale, lease, or encumbrance of real
20 property by the trustee or involvement in zoning, land use,
21 environmental, or other similar matters.
22 (g) Legal advice regarding carrying on of decedent's
23 business or conducting other commercial activity by the
24 trustee.
25 (h) Legal advice regarding claims for damage to the
26 environment or related procedures.
27 (i) Legal advice regarding homestead status of trust
28 real property or proceedings involving the status.
29 (j) Involvement in fiduciary, employee, or attorney
30 compensation disputes.
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1 (k) Considerations of special valuation of trust
2 assets, including discounts for blockage, minority interests,
3 lack of marketability, and environmental liability.
4 (6) Upon petition of any interested person in a
5 proceeding to review the compensation paid or to be paid to
6 the attorney for the trustee, the court may increase or
7 decrease the compensation for ordinary services of the
8 attorney for the trustee or award compensation for
9 extraordinary services if the facts and circumstances of the
10 particular administration warrant. In determining reasonable
11 compensation, the court shall consider all of the following
12 factors giving such weight to each as it may determine to be
13 appropriate:
14 (a) The promptness, efficiency, and skill with which
15 the initial administration was handled by the attorney.
16 (b) The responsibilities assumed by, and potential
17 liabilities of, the attorney.
18 (c) The nature and value of the assets that are
19 affected by the decedent's death.
20 (d) The benefits or detriments resulting to the trust
21 or its beneficiaries from the attorney's services.
22 (e) The complexity or simplicity of the administration
23 and the novelty of issues presented.
24 (f) The attorney's participation in tax planning for
25 the estate, the trust, and the trust's beneficiaries and tax
26 return preparation or review and approval.
27 (g) The nature of the trust assets, the expenses of
28 administration, and the claims payable by the trust and the
29 compensation paid to other professionals and fiduciaries.
30 (h) Any delay in payment of the compensation after the
31 services were furnished.
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1 (i) Any other relevant factors.
2 (7) The court may determine reasonable attorney's
3 compensation without receiving expert testimony. Any party
4 may offer expert testimony after notice to interested persons.
5 If expert testimony is offered, an expert witness fee may be
6 awarded by the court and paid from the assets of the trust.
7 The court may, in its discretion, direct from what part of the
8 trust it shall be paid.
9 (8) If a separate written agreement regarding
10 compensation exists between the attorney and the settlor, the
11 attorney shall furnish a copy to the trustee prior to
12 commencement of employment and, if employed, shall promptly
13 file and serve a copy on all interested persons. Neither a
14 separate agreement nor a provision in the trust suggesting or
15 directing the trustee to retain a specific attorney will
16 obligate the trustee to employ the attorney or obligate the
17 attorney to accept the representation, but if the attorney who
18 is a party to the agreement or who drafted the trust is
19 employed, the compensation paid shall not exceed the
20 compensation provided in the agreement.
21 (9) Court proceedings to determine compensation, if
22 required, are a part of the trust administration process, and
23 the costs, including fees for the trustee's attorney, shall be
24 determined by the court and paid from the assets of the trust
25 unless the court finds the attorney's fees request to be
26 substantially unreasonable. The court shall direct from which
27 part of the trust they shall be paid.
28 (10) "Initial trust administration" as used in this
29 section means administration of a trust described in s.
30 733.707(3) during the period which begins with the death of
31 the settlor and ends upon the final distribution of trust
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1 assets outright or to continuing trusts created under the
2 trust agreement, but if an estate tax return is required, not
3 until after issuance of an estate tax closing letter or other
4 evidence of termination of the estate tax proceeding. This
5 initial period is not intended to include continued regular
6 administration of the trust.
7 (11) This section shall apply to trusts of settlors
8 who die on or after July 1, 1995.
9 Section 6. Paragraphs (c) and (e) of subsection (4) of
10 section 737.303, Florida Statutes, are amended to read:
11 737.303 Duty to inform and account to
12 beneficiaries.--The trustee shall keep the beneficiaries of
13 the trust reasonably informed of the trust and its
14 administration. The trustee's duty to inform and account
15 includes, but is not limited to, the following:
16 (4)
17 (c) In the case of a trust described in s. 733.707(3),
18 the trustee's duties under paragraph (a) extend only to the
19 grantor or beneficiary or the legal representative of the
20 grantor or beneficiary during the grantor's lifetime.
21 (e) All rights provided a beneficiary under this
22 section may be asserted by a legal representative or natural
23 guardian of the beneficiary. Notice under subsection (1) and a
24 statement of accounts under paragraph (a) provided to a
25 representative of the beneficiary as defined in s. 731.303
26 shall bind the beneficiary and the trustee shall not be
27 required to provide such notice or statement of accounts to
28 any beneficiary who would be bound by an order binding on a
29 representative of the beneficiary under s. 731.303, if such
30 notice or statement of accounts, respectively, is provided to
31 that representative.
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1 Section 7. Section 737.308, Florida Statutes, is
2 amended to read:
3 737.308 Notice of trust.--
4 (1) Upon the death of a settlor of a trust described
5 in s. 733.707(3), the trustee must file a notice of trust with
6 the court of the county of the settlor's domicile and the
7 court having jurisdiction of the settlor's estate.
8 (2) The notice of trust must contain the name of the
9 settlor, the settlor's date of death, the title of the trust,
10 if any, the date of the trust, and the name and address of the
11 trustee.
12 (3) If the settlor's probate proceeding has been
13 commenced, the clerk must notify the trustee in writing of the
14 date of the commencement of the probate proceeding and the
15 file number.
16 (4) The clerk shall file and index the notice of trust
17 in the same manner as a caveat, unless there exists a probate
18 proceeding for the settlor's estate in which case the notice
19 of trust must be filed in the probate proceeding and the clerk
20 shall send a copy to the personal representative.
21 (5) The clerk shall send a copy of any caveat filed
22 regarding the settlor to the trustee, and the Notice of Trust
23 to any caveator, unless there is a probate proceeding pending
24 and the personal representative and the trustee are the same.
25 (6)(5) In any proceeding affecting the expenses of the
26 administration of the estate, or any claims described in s.
27 733.702(1), the trustee of a trust described in s. 733.707(3)
28 is an interested person in the administration of the grantor's
29 estate.
30 (7)(6) Any proceeding affecting the expenses of the
31 administration of the estate or any claims described in s.
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1 733.702(1) prior to the trustee filing a notice of trust are
2 binding upon the trustee.
3 (8)(7) The trustee's failure to file the notice of
4 trust does not affect the trustee's obligation to pay expenses
5 of administration and enforceable claims as provided in s.
6 733.607(2).
7 Section 8. Section 518.112, Florida Statutes, is
8 amended to read:
9 518.112 Delegation of investment functions.--
10 (1) A fiduciary may delegate any part or all of the
11 investment functions, with regard to acts constituting
12 investment functions that a prudent investor of comparable
13 skills might delegate under the circumstances, and with regard
14 to all or part of those investment functions, to an investment
15 agent as provided in subsection (3)(2), if the fiduciary
16 exercises reasonable care, judgment, and caution in selecting
17 the investment agent, in establishing the scope and specific
18 terms of any delegation, and in reviewing periodically the
19 agent's actions in order to monitor overall performance and
20 compliance with the scope and specific terms of the
21 delegation.
22 (2)(a) The requirements of subsection (1)
23 notwithstanding, a fiduciary that administers an insurance
24 contract on the life or lives of one or more persons may
25 delegate without any continuing obligation to review the
26 agent's actions, certain investment functions with respect to
27 any such contract as provided in subsection (3), to any one or
28 more of the following persons as investment agents:
29 1. The trust's settlor if the trust is one described
30 in s. 733.707(3);
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1 2. Beneficiaries of the trust or estate, regardless of
2 the beneficiary's interest therein, whether vested or
3 contingent;
4 3. The spouse, ancestor, or descendant of any person
5 described in subparagraphs 1. or 2.;
6 4. Any person or entity nominated by a majority of the
7 beneficiaries entitled to receive notice under subsection
8 (3)(b); or
9 5. An investment agent if the fiduciary exercises
10 reasonable care, judgment, and caution in selecting the
11 investment agent and in establishing the scope and specific
12 terms of any delegation.
13 (b) The delegable investment functions under this
14 subsection include:
15 1. A determination of whether any insurance contract
16 is or remains a proper investment;
17 2. A determination of whether or not to exercise any
18 policy option available under such contracts;
19 3. A determination of whether or not to diversify such
20 contracts relative to one another or to other assets, if any,
21 administered by the fiduciary; or
22 4. An inquiry about changes in the health or financial
23 condition of the insured or insureds relative to any such
24 contract.
25 (c) Until the contract matures and the policy proceeds
26 are received, a fiduciary that administers insurance contracts
27 under this subsection is not obligated to diversify nor
28 allocate other assets, if any, relative to such insurance
29 contracts.
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1 (3)(2) A fiduciary may delegate investment functions
2 to an investment agent under subsections (1) or (2) pursuant
3 to subsection (1), if:
4 (a) The fiduciary exercises reasonable care, judgment,
5 and caution in selecting the investment agent, in establishing
6 the scope and specific terms of any delegation, and in
7 reviewing periodically the agent's actions in order to monitor
8 overall performance and compliance with the scope and specific
9 terms of the delegation.
10 (a)(b) In the case of a guardianship, the fiduciary
11 has obtained court approval.
12 (b)(c) In the case of a trust or estate, the fiduciary
13 has given written notice, of its intention to begin delegating
14 investment functions under this section, to all the
15 beneficiaries, or their legal representative, eligible to
16 receive income from the trust or distributions from the trust
17 or estate within 30 days of the delegation unless such notice
18 is waived by the eligible beneficiaries entitled to receive
19 such notice. This notice shall thereafter, until or unless
20 the beneficiaries eligible to receive income from the trust or
21 distributions from the estate at the time are notified to the
22 contrary, authorize the trustee or legal representative to
23 delegate investment functions pursuant to this subsection.
24 This discretion to revoke the delegation does not imply under
25 subsection (2) any continuing obligation to review the agent's
26 actions.
27 1. Notice to beneficiaries eligible to receive
28 distributions income from the trust or distributions from the
29 estate, or their legal representatives at the time of
30 delegation, shall be sufficient notice to all persons who may
31 join the eligible class of beneficiaries in the future.
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1 2. Additionally, as used herein, legal representative
2 includes one described in s. 731.303, without any requirement
3 of a court order, an attorney-in-fact under a durable power of
4 attorney sufficient to grant such authority, a legally
5 appointed guardian, or equivalent under applicable law, any
6 living, natural guardian of a minor child, or a guardian ad
7 litem. In the case of a minor, notice may be sent to a parent
8 or legal guardian of the minor.
9 3. Written notice shall be:
10 (a) By any form of mail or by any commercial delivery
11 service, approved for service of process by the chief judge of
12 the judicial circuit in which the trust has its principal
13 place of business at the date of notice, requiring a signed
14 receipt;
15 (b) As provided by law for service of process; or
16 (c) By an elisor as may be provided in the Florida
17 Rules of Civil Procedure.
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19 Notice by mail or by approved commercial delivery service is
20 complete on receipt of notice. Proof of notice must be by
21 verified statement of the person mailing or sending notice,
22 and there must be attached thereto the signed receipt or other
23 satisfactory evidence that delivery was effected on the
24 addressee or on the addressee's agent. Proof of notice must be
25 maintained among the trustee's permanent records. In the case
26 of an otherwise incapacitated person, notice may be given to
27 the guardian of such person or to such person's donee under a
28 durable power of attorney that is sufficient to grant such
29 authority.
30 (4)(3) If all requirements of subsection (3)(2) are
31 satisfied, the fiduciary shall not be responsible otherwise
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HB 1411, First Engrossed
1 for the investment decisions nor or actions or omissions of
2 the investment agent to which the investment functions are
3 delegated.
4 (5)(4) The investment agent shall, by virtue of
5 acceptance of its appointment, be subject to the jurisdiction
6 of the courts of this state.
7 (6)(5) In performing a delegated function, the
8 investment agent shall be subject to the same standards as the
9 fiduciary.
10 (6) This section applies to all existing and future
11 fiduciary relationships subject to this section, but only as
12 to acts or omissions occurring after October 1, 1993.
13 Section 9. Section 733.817, Florida Statutes, is
14 amended to read:
15 (Substantial rewording of section. See
16 s. 733.817, F.S., for present text.)
17 733.817 Apportionment of estate taxes.--
18 (1) For purposes of this section:
19 (a) "Fiduciary" means a person other than the personal
20 representative in possession of property included in the
21 measure of the tax who is liable to the applicable taxing
22 authority for payment of the entire tax to the extent of the
23 value of the property in his possession.
24 (b) "Governing instrument" means a will, trust
25 agreement, or any other document that controls the transfer of
26 an asset on the occurrence of the event with respect to which
27 the tax is being levied.
28 (c) "Gross estate" means the gross estate, as
29 determined by the Internal Revenue Code with respect to the
30 federal estate tax and the Florida estate tax, and as such
31 concept is otherwise determined by the estate, inheritance, or
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HB 1411, First Engrossed
1 death tax laws of the particular state, country, or political
2 subdivision whose tax is being apportioned.
3 (d) "Included in the measure of the tax" means that
4 for each separate tax that an interest may incur, only
5 interests included in the measure of that particular tax are
6 considered. The term "included in the measure of the tax" does
7 not include any interest, whether passing under the will or
8 not, to the extent the interest is initially deductible from
9 the gross estate, without regard to any subsequent diminution
10 of the deduction by reason of the charge of any part of the
11 applicable tax to the interest. The term "included in the
12 measure of the tax" does not include interests or amounts that
13 are not included in the gross estate but are included in the
14 amount upon which the applicable tax is computed, such as
15 adjusted taxable gifts with respect to the federal estate tax.
16 If an election is required for deductibility, an interest is
17 not "initially deductible" unless the election for
18 deductibility is allowed.
19 (e) "Internal Revenue Code" means the Internal Revenue
20 Code of 1986, as amended from time to time.
21 (f) "Net tax" means the net tax payable to the
22 particular state, country, or political subdivision whose tax
23 is being apportioned, after taking into account all credits
24 against the applicable tax except as provided in this section.
25 With respect to the federal estate tax, "net tax" is
26 determined after taking into account all credits against the
27 tax except for the credit for foreign death taxes.
28 (g) "Nonresiduary devise" means any devise that is not
29 a residuary devise.
30
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1 (h) "Nonresiduary interest" in connection with a trust
2 means any interest in a trust which is not a residuary
3 interest.
4 (i) "Recipient" means, with respect to property or an
5 interest in property included in the gross estate, an heir at
6 law in an intestate estate, devisee in a testate estate,
7 beneficiary of a trust, beneficiary of an insurance policy,
8 annuity, or other contractual right, surviving tenant, taker
9 as a result of the exercise or in default of the exercise of a
10 general power of appointment, person who receives or is to
11 receive the property or an interest in the property, or person
12 in possession of the property.
13 (j) "Residuary devise" has the meaning set forth in s.
14 731.201(30).
15 (k) "Residuary interest," in connection with a trust,
16 means an interest in the assets of a trust which remain after
17 provision for any distribution that is to be satisfied by
18 reference to a specific property or type of property, fund,
19 sum, or statutory amount.
20 (l) "Revocable trust" means a trust as defined in s.
21 731.201(33) created by the decedent to the extent that the
22 decedent had at his or her death the power to alter, amend, or
23 revoke the trust either alone or in conjunction with any other
24 person.
25 (m) "State" means any state, territory, or possession
26 of the United States, the District of Columbia, and the
27 Commonwealth of Puerto Rico.
28 (n) "Tax" means any estate tax, inheritance tax,
29 generation skipping transfer tax, or other tax levied or
30 assessed under the laws of this or any other state, the United
31 States, any other country, or any political subdivision of the
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1 foregoing, as finally determined, which is imposed as a result
2 of the death of the decedent, including, without limitation,
3 the tax assessed pursuant to s. 4980A of the Internal Revenue
4 Code. The term also includes any interest and penalties
5 imposed in addition to the tax. Unless the context indicates
6 otherwise, the term "tax" means each separate tax.
7 (o) "Temporary interest" means an interest in income
8 or an estate for a specific period of time or for life or for
9 some other period controlled by reference to extrinsic events,
10 whether or not in trust.
11 (p) "Tentative Florida tax" with respect to any
12 property means the net Florida estate tax that would have been
13 attributable to that property if no tax were payable to any
14 other state in respect of that property.
15 (q) "Value" means the pecuniary worth of the interest
16 involved as finally determined for purposes of the applicable
17 tax after deducting any debt, expense, or other deduction
18 chargeable to it for which a deduction was allowed in
19 determining the amount of the applicable tax. A lien or other
20 encumbrance is not regarded as chargeable to a particular
21 interest to the extent that it will be paid from other
22 interests. The value of an interest shall not be reduced by
23 reason of the charge against it of any part of the tax.
24 (2) An interest in homestead property shall be exempt
25 from the apportionment of taxes if such interest passes to a
26 person to whom inures the decedent's exemption from forced
27 sale under the State Constitution.
28 (3) The net tax attributable to the interests included
29 in the measure of each tax shall be determined by the
30 proportion that the value of each interest included in the
31 measure of the tax bears to the total value of all interests
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1 included in the measure of the tax. Notwithstanding the
2 foregoing:
3 (a) The net tax attributable to interests included in
4 the measure of the tax by reason of s. 2044 of the Internal
5 Revenue Code shall be determined in the manner provided for
6 the federal estate tax in s. 2207A of the Internal Revenue
7 Code, and the amount so determined shall be deducted from the
8 tax to determine the net tax attributable to all remaining
9 interests included in the measure of the tax.
10 (b) The foreign tax credit allowed with respect to the
11 federal estate tax shall be allocated among the recipients of
12 interests finally charged with the payment of the foreign tax
13 in reduction of any federal estate tax chargeable to the
14 recipients of the foreign interests, whether or not any
15 federal estate tax is attributable to the foreign interests.
16 Any excess of the foreign tax credit shall be applied to
17 reduce proportionately the net amount of federal estate tax
18 chargeable to the remaining recipients of the interests
19 included in the measure of the federal estate tax.
20 (c) The reduction in the Florida tax on the estate of
21 a Florida resident for tax paid to other states shall be
22 allocated as follows:
23 1. If the net tax paid to another state is greater
24 than or equal to the tentative Florida tax attributable to the
25 property subject to tax in the other state, none of the
26 Florida tax shall be attributable to that property.
27 2. If the net tax paid to another state is less than
28 the tentative Florida tax attributable to the property subject
29 to tax in the other state, the net Florida tax attributable to
30 the property subject to tax in the other state shall be the
31 excess of the amount of the tentative Florida tax attributable
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1 to the property over the net tax payable to the other state
2 with respect to the property.
3 3. Any remaining net Florida tax shall be attributable
4 to property included in the measure of the Florida tax
5 exclusive of property subject to tax in other states.
6 4. The net federal tax attributable to the property
7 subject to tax in the other state shall be determined as if it
8 were located in the state.
9 (d) The net tax attributable to a temporary interest,
10 if any, shall be regarded as attributable to the principal
11 that supports the temporary interest.
12 (4)(a) Except as otherwise effectively directed by the
13 governing instrument, if the Internal Revenue Code including,
14 but not limited to, ss. 2032A(c)(5), 2206, 2207, 2207A, 2207B,
15 and 2603 of the Internal Revenue Code applies to apportion
16 federal tax against recipients of certain interests, all net
17 taxes, including taxes levied by the state attributable to
18 each type of interest, shall be apportioned against the
19 recipients of all interests of that type in the proportion
20 that the value of each interest of that type included in the
21 measure of the tax bears to the total of all interests of that
22 type included in the measure of the tax.
23 (b) The provisions of this subsection do not affect
24 allocation of the reduction in the Florida tax as provided in
25 this section with respect to estates of Florida residents
26 which are also subject to tax in other states.
27 (5) Except as provided above or as otherwise directed
28 by the governing instrument, the net tax attributable to each
29 interest shall be apportioned as follows:
30 (a) For property passing under the decedent's will:
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1 1. The net tax attributable to nonresiduary devises
2 shall be charged to and paid from the residuary estate whether
3 or not all interests in the residuary estate are included in
4 the measure of the tax. If the residuary estate is
5 insufficient to pay the net tax attributable to all
6 nonresiduary devises, the balance of the net tax attributable
7 to nonresiduary devises shall be apportioned among the
8 recipients of the nonresiduary devises in the proportion that
9 the value of each nonresiduary devise included in the measure
10 of the tax bears to the total of all nonresiduary devises
11 included in the measure of the tax.
12 2. The net tax attributable to residuary devises shall
13 be apportioned among the recipients of the residuary devises
14 included in the measure of tax in the proportion that the
15 value of each residuary devise included in the measure of the
16 tax bears to the total of all residuary devises included in
17 the measure of the tax.
18 (b) For property passing under the terms of any trust
19 other than a trust created in the decedent's will:
20 1. The net tax attributable to nonresiduary interests
21 shall be charged to and paid from the residuary portion of the
22 trust, whether or not all interests in the residuary portion
23 are included in the measure of the tax. If the residuary
24 portion of the trust is insufficient to pay the net tax
25 attributable to all nonresiduary interests, the balance of the
26 net tax attributable to nonresiduary interests shall be
27 apportioned among the recipients of the nonresiduary interests
28 in the proportion that the value of each nonresiduary interest
29 included in the measure of the tax bears to the total of all
30 nonresiduary interests included in the measure of the tax.
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HB 1411, First Engrossed
1 2. The net tax attributable to residuary interests
2 shall be apportioned among the recipients of the residuary
3 interests included in the measure of the tax in the proportion
4 that the value of each residuary interest included in the
5 measure of the tax bears to the total of all residuary
6 interests included in the measure of the tax.
7 (c) The net tax attributable to an interest in
8 homestead property which is exempt from apportionment pursuant
9 to subsection (2) shall be apportioned against the recipients
10 of other interests in the estate or passing under any
11 revocable trust in the following order:
12 1. Class I: Recipients of interests not disposed of
13 by the decedent's will or revocable trust which are included
14 in the measure of the federal estate tax.
15 2. Class II: Recipients of residuary devises and
16 residuary interests that are included in the measure of the
17 federal estate tax.
18 3. Class III: Recipients of nonresiduary devises and
19 nonresiduary interests that are included in the measure of the
20 federal estate tax. The net tax apportioned to a class, if
21 any, pursuant to this paragraph shall be apportioned among the
22 recipients in the class in the proportion that the value of
23 the interest of each bears to the total value of all interests
24 included in that class.
25 (d) In the application of this subsection, paragraphs
26 (a), (b), and (c) shall be applied to apportion the net tax to
27 the recipients of the estate and the recipients of the
28 decedent's revocable trust as if all recipients, other than
29 the estate or trusts themselves, were taking under a common
30 instrument.
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HB 1411, First Engrossed
1 (e) The net tax imposed under s. 4980A of the Internal
2 Revenue Code shall be apportioned among the recipients of the
3 interests included in the measure of that tax in the
4 proportion that the value of the interest of each bears to the
5 total value of all interests included in the measure of that
6 tax.
7 (f) The net tax that is not apportioned under
8 paragraphs (a), (b), and (c), including, but not limited to,
9 the net tax attributable to interests passing by intestacy,
10 jointly held interests passing by survivorship, insurance,
11 properties in which the decedent held a reversionary or
12 revocable interest, and annuities, shall be apportioned among
13 the recipients of the remaining interests that are included in
14 the measure of the tax in the proportion that the value of
15 each such interest bears to the total value of all the
16 remaining interests included in the measure of the tax.
17 (g) If the court finds that it is inequitable to
18 apportion interest, penalties, or both, in the manner provided
19 in paragraphs (a)-(f), the court may assess liability for the
20 payment thereof in the manner it finds equitable.
21 (h)1. To be effective as a direction for payment of
22 tax in a manner different from that provided in this section,
23 the governing instrument must direct that the tax be paid from
24 assets that pass pursuant to that governing instrument, except
25 as provided in this section.
26 2. If the decedent's will provides that the tax shall
27 be apportioned as provided in the decedent's revocable trust
28 by specific reference to the trust, the direction in the
29 revocable trust shall be deemed to be a direction contained in
30 the will and shall control with respect to payment of taxes
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HB 1411, First Engrossed
1 from assets passing under both the will and the revocable
2 trust.
3 3. A direction in the decedent's will to pay tax from
4 the decedent's revocable trust is effective if a contrary
5 direction is not contained in the trust agreement.
6 4. For a direction in a governing instrument to be
7 effective to direct payment of taxes attributable to property
8 not passing under the governing instrument from property
9 passing under the governing instrument, the governing
10 instrument must expressly refer to this section, or expressly
11 indicate that the property passing under the governing
12 instrument is to bear the burden of taxation for property not
13 passing under the governing instrument. A direction in the
14 governing instrument to the effect that all taxes are to be
15 paid from property passing under the governing instrument
16 whether attributable to property passing under the governing
17 instrument or otherwise shall be effective to direct the
18 payment from property passing under the governing instrument
19 of taxes attributable to property not passing under the
20 governing instrument.
21 5. If there is a conflict as to payment of taxes
22 between the decedent's will and the governing instrument, the
23 decedent's will controls, except as follows:
24 a. The governing instrument shall be given effect with
25 respect to any tax remaining unpaid after the application of
26 the decedent's will.
27 b. A direction in a governing instrument to pay the
28 tax attributable to assets that pass pursuant to the governing
29 instrument from assets that pass pursuant to that governing
30 instrument shall be effective notwithstanding any conflict
31 with the decedent's will, unless the tax provision in the
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HB 1411, First Engrossed
1 decedent's will expressly overrides the conflicting provision
2 in the governing instrument.
3 (6) The personal representative or fiduciary shall not
4 be required to transfer to a recipient any property in
5 possession of the personal representative or fiduciary which
6 he or she reasonably anticipates may be necessary for the
7 payment of taxes. Further, the personal representative or
8 fiduciary shall not be required to transfer any property in
9 possession of the personal representative or fiduciary to the
10 recipient until the amount of the tax due from the recipient
11 is paid by the recipient. If property is transferred before
12 final apportionment of the tax, the recipient shall provide a
13 bond or other security for his apportioned liability in the
14 amount and form prescribed by the personal representative or
15 fiduciary.
16 (7)(a) The personal representative may petition at any
17 time for an order of apportionment. If no administration has
18 been commenced at any time after 90 days from the decedent's
19 death any fiduciary may petition for an order of apportionment
20 in the court in which venue would be proper for administration
21 of the decedent's estate. Formal notice of the petition for
22 order of apportionment shall be given to all interested
23 persons. At any time after 6 months from the decedent's death,
24 any recipient may petition such court for an order of
25 apportionment.
26 (b) The court shall determine all issues concerning
27 apportionment. If the tax to be apportioned has not been
28 finally determined, the court shall determine the probable tax
29 due or to become due from all interested persons, apportion
30 the probable tax, and retain jurisdiction over the parties and
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HB 1411, First Engrossed
1 issues to modify the order of apportionment as appropriate
2 until after the tax is finally determined.
3 (8)(a) If the personal representative or fiduciary
4 does not have possession of sufficient property otherwise
5 distributable to the recipient to pay the tax apportioned to
6 the recipient, whether under this section, the Internal
7 Revenue Code, or the governing instrument, if applicable, the
8 personal representative or fiduciary shall recover the
9 deficiency in tax so apportioned to the recipient:
10 1. From the fiduciary in possession of the property to
11 which the tax is apportioned, if any; and
12 2. To the extent of any deficiency in collection from
13 the fiduciary, or to the extent collection from the fiduciary
14 is excused pursuant to subsection (9) and in all other cases,
15 from the recipient of the property to which the tax is
16 apportioned, unless relieved of this duty as provided in
17 subsection (9).
18 (b) In any action to recover the tax apportioned, the
19 order of apportionment shall be prima facie correct.
20 (c) In any action for the enforcement of an order of
21 apportionment, the court shall award taxable costs as in
22 chancery actions, including reasonable attorney's fees, and
23 may award penalties and interest on the unpaid tax in
24 accordance with equitable principles.
25 (d) This subsection shall not authorize the recovery
26 of any tax from any company issuing insurance included in the
27 gross estate, or from any bank, trust company, savings and
28 loan association, or similar institution with respect to any
29 account in the name of the decedent and any other person which
30 passed by operation of law on the decedent's death.
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HB 1411, First Engrossed
1 (9)(a) A personal representative or fiduciary who has
2 the duty under this section of collecting the apportioned tax
3 from recipients may be relieved of the duty to collect the tax
4 by an order of the court finding:
5 1. That the estimated court costs and attorney's fees
6 in collecting the apportioned tax from a person against whom
7 the tax has been apportioned will approximate or exceed the
8 amount of the recovery;
9 2. That the person against whom the tax has been
10 apportioned is a resident of a foreign country other than
11 Canada and refuses to pay the apportioned tax on demand; or
12 3. That it is impracticable to enforce contribution of
13 the apportioned tax against a person against whom the tax has
14 been apportioned in view of the improbability of obtaining a
15 judgment or the improbability of collection under any judgment
16 that might be obtained, or otherwise.
17 (b) A personal representative or fiduciary shall not
18 be liable for failure to attempt to enforce collection if the
19 personal representative or fiduciary reasonably believes it
20 would have been economically impracticable.
21 (10) Any apportioned tax that is not collected shall
22 be reapportioned in accordance with this section as if the
23 portion of the property to which the uncollected tax had been
24 apportioned had been exempt.
25 (11) Nothing in this section shall limit the right of
26 any person who has paid more than the amount of the tax
27 apportionable to such person, calculated as if all apportioned
28 amounts would be collected, to obtain contribution from those
29 who have not paid the full amount of the tax apportionable to
30 them, calculated as if all apportioned amounts would be
31 collected, and that right is hereby conferred. In any action
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HB 1411, First Engrossed
1 to enforce contribution, the court shall award taxable costs
2 as in chancery actions, including reasonable attorney's fees.
3 (12) Nothing herein contained shall be construed to
4 require the personal representative or fiduciary to pay any
5 tax levied or assessed by any foreign country, unless specific
6 directions to that effect are contained in the will or other
7 instrument under which the personal representative or
8 fiduciary is acting.
9 Section 10. Section 738.12, Florida Statutes, is
10 amended to read:
11 738.12 Underproductive property.--
12 (1)(a) If the total principal of a trust does not in
13 any year yield a net income of at least 3 percent of its
14 market value (including as income the value of any beneficial
15 use of the property by the income beneficiary), the trustee
16 shall pay to the income beneficiary an amount equal to the
17 excess of 3 percent of the value of the principal, based upon
18 the market value at the beginning of the calendar year, over
19 the trust income paid to the income beneficiary in that year.
20 This amount shall be paid to the income beneficiary using the
21 first principal cash available.
22 (b) In the event of a termination or initiation of a
23 trust, or the termination of a beneficial income interest of a
24 trust, for a period of less than 12 months, the amount to be
25 paid to the income beneficiary shall be prorated
26 proportionately with the length of the time of his interest in
27 the trust and in accordance with s. 738.03.
28 (c) For purposes of this subsection, a beneficiary is
29 considered to be an income beneficiary only if the trust
30 instrument is irrevocable and requires that the net income
31 from the trust be paid to the beneficiary. Payment under this
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HB 1411, First Engrossed
1 subsection may not be made to a beneficiary who may receive
2 trust income only in the discretion of the trustee.
3 (2) Upon the sale of the property the income
4 beneficiary shall not be entitled to any portion of the
5 proceeds of sale, except that any amount determined in
6 subsection (1) that remains unpaid at the time of sale shall
7 be paid therefrom.
8 (3) If by the terms of the trust any portion of the
9 income is to be retained by the trustee or disposed of other
10 than by payment to an income beneficiary, such portion of the
11 amount determined in subsection (1) shall be retained or
12 disposed of as provided by the terms of the trust.
13 Section 11. Subsection (16) of section 744.441,
14 Florida Statutes, is amended to read:
15 744.441 Powers of guardian upon court approval.--After
16 obtaining approval of the court pursuant to a petition for
17 authorization to act, a plenary guardian of the property, or a
18 limited guardian of the property within the powers granted by
19 the order appointing the guardian or an approved annual or
20 amended guardianship report, may:
21 (16) Pay reasonable funeral, interment, and grave
22 marker expenses for the ward from the ward's estate, up to a
23 maximum of $6,000 $3,000.
24 Section 12. Subsection (4) is added to section
25 655.936, Florida Statutes, to read:
26 655.936 Delivery of safe-deposit box contents or
27 property held in safekeeping to personal representative.--
28 (4) Notwithstanding other provisions of this section,
29 the initial opening of any safe-deposit box of the decedent
30 must be conducted in the presence of an employee of the
31 institution where the box is located and the personal
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1 representative. The inventory of the contents of the box also
2 must be conducted in the presence of the employee and the
3 personal representative, each of whom must verify the contents
4 of the box by signing a copy of the inventory. The personal
5 representative shall file the safe-deposit box inventory with
6 the court within 10 days after the box is opened.
7 Section 13. Subsection (1) of section 733.604,
8 Florida Statutes, is amended to read:
9 733.604 Inventory.--
10 (1)(a) Within 60 days after issuance of letters, a
11 personal representative who is not a curator or a successor to
12 another personal representative who has previously discharged
13 the duty shall file an inventory of property of the estate,
14 listing it with reasonable detail and including for each
15 listed item its estimated fair market value at the date of the
16 decedent's death. Unless otherwise ordered by the court for
17 good cause shown, any such inventory or amended or
18 supplementary inventory is subject to inspection only by the
19 clerk of the court or his representative, the personal
20 representative and his attorney, and other interested persons.
21 (b) The initial opening of any safe-deposit box of the
22 decedent must be conducted in the presence of an employee of
23 the institution where the box is located and the personal
24 representative. The inventory of the contents of the box also
25 must be conducted in the presence of the employee and the
26 personal representative, each of whom must verify the contents
27 of the box by signing a copy of the inventory. The personal
28 representative shall file the safe-deposit box inventory with
29 the court within 10 days after the box is opened.
30 Section 14. This act shall take effect upon becoming a
31 law, except that section 9 of this act shall take effect
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1 October 1, 1998, and shall apply to the estates of decedents
2 dying on or after October 1, 1998, and section 10 of this act
3 shall take effect upon becoming law and shall be applicable to
4 all trusts, whenever executed.
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