CS/HB 1183

1	A bill to be entitled
2	An act relating to the administration of trusts; amending
3	s. 689.071, F.S.; limiting the definition of the term
4	"land trust" to an arrangement in which title to real
5	property is vested in a trustee by a recorded instrument
6	that confers certain authority as prescribed by state law;
7	providing that such a recorded instrument does not itself
8	create an entity; providing that a recorded instrument is
9	effective regardless of whether it refers to beneficiaries
10	of the trust; providing that a recorded instrument vests
11	both legal and equitable title to real property or the
12	interest therein in the trustee; conforming cross-
13	references; amending s. 731.201, F.S.; revising a
14	definition; amending s. 731.303, F.S.; excluding trusts
15	from guidelines regarding administration and judicial
16	proceedings; amending s. 736.0102, F.S.; conforming a
17	cross-reference; amending s. 736.0501, F.S.; limiting the
18	ability of creditors or assignees of a beneficiary to
19	reach the beneficiary's interest in a trust; amending s.
20	736.0502, F.S.; clarifying the application of restrictions
21	on transferring a beneficiary's interest under a
22	spendthrift provision; amending s. 736.0503, F.S.;
23	providing an exception to a provision authorizing the
24	attachment of trust distributions; amending s. 736.0504,
25	F.S.; defining the term "discretionary distribution";
26	prohibiting certain creditors from compelling
27	distributions or attaching a beneficiary's interest or
28	expectancy; amending ss. 736.0813 and 736.1008, F.S.;
29	conforming dates of applicability of the accounting
30	provision and corresponding limitations to the effective
31	date of the code; amending s. 736.1011, F.S.; providing
32	that direct communication of exculpatory terms to the
33	trust settlor or independent attorney of the trust settlor
34	is required only for trusts created on or after July 1,
35	2007; amending s. 736.1106, F.S.; providing that certain
36	antilapse provisions continue to apply to irrevocable
37	trusts created between June 12, 2003, and July 1, 2007;
38	amending s. 736.1204, F.S.; clarifying the use of income
39	interest of a trust; amending ss. 736.1209 and 736.1001,
40	F.S., relating to the release of power by a trustee and
41	removal of a trustee; conforming cross-references;
42	providing an effective date.
43
44	Be It Enacted by the Legislature of the State of Florida:
45
46	Section 1.  Paragraph (d) of subsection (2), subsections
47	(3) and (7), and paragraph (a) of subsection (9) of section
48	689.071, Florida Statutes, as amended by section 21 of chapter
49	2006-217, Laws of Florida, are amended to read:
50	689.071  Florida Land Trust Act.--
51	(2)  DEFINITIONS.--As used in this section, the term:
52	(d)  "Land trust" is not the creation of an entity, but
53	means any express written agreement or arrangement by which a
54	use, confidence, or trust is declared of any land, or of any
55	charge upon land, for the use or benefit of any beneficiary,
56	under which the title to real property, both legal and
57	equitable, is vested in a trustee by a recorded instrument that
58	confers on the trustee the power and authority prescribed in
59	subsection (3). The recorded instrument does not itself create
60	an entity, regardless of whether the relationship among the
61	beneficiaries and the trustee is deemed to be an entity under
62	other applicable law held by a trustee, subject only to the
63	execution of the trust, which may be enforced by the
64	beneficiaries.
65	(3)  OWNERSHIP VESTS IN TRUSTEE.--Every conveyance, deed,
66	mortgage, lease assignment, or other instrument heretofore or
67	hereafter made, hereinafter referred to as the "the recorded
68	instrument," transferring any interest in real property in this
69	state, including, but not limited to, a leasehold or mortgagee
70	interest, to any person or any corporation, bank, trust company,
71	or other entity duly formed under the laws of its state of
72	qualification, in which recorded instrument the person,
73	corporation, bank, trust company, or other entity is designated
74	"trustee," or "as trustee," without therein naming the
75	beneficiaries of such trust, whether or not reference is made in
76	the recorded instrument to the beneficiaries of such trust or to
77	any separate collateral unrecorded declarations or agreements,
78	is effective to vest, and is hereby declared to have vested, in
79	such trustee both legal and equitable title, and full rights of
80	ownership, over the real property or interest therein, with full
81	power and authority as granted and provided in the recorded
82	instrument to deal in and with the property or interest therein
83	or any part thereof; provided, the recorded instrument confers
84	on the trustee the power and authority either to protect, to
85	conserve, and to sell, or to lease, or to encumber, or otherwise
86	to manage and dispose of the real property described in the
87	recorded instrument.
88	(7)  TRUSTEE LIABILITY.--In addition to any other
89	limitation on personal liability existing pursuant to statute or
90	otherwise, the provisions of ss. 736.08125 and 736.1013 s.
91	736.1013 apply to the trustee of a land trust created pursuant
92	to this section.
93	(9)  SUCCESSOR TRUSTEE.--
94	(a)  The provisions of s. 736.0705 s. 737.309 relating to
95	the resignation of a trustee do not apply to the appointment of
96	a successor trustee under this section.
97	Section 2.  Subsection (35) of section 731.201, Florida
98	Statutes, as amended by section 29 of chapter 2006-217, Laws of
99	Florida, is amended to read:
100	731.201  General definitions.--Subject to additional
101	definitions in subsequent chapters that are applicable to
102	specific chapters or parts, and unless the context otherwise
103	requires, in this code, in s. 409.9101, and in chapters 736,
104	738, 739, and 744, the term:
105	(35)  "Trust" means an express trust, private or
106	charitable, with additions to it, wherever and however created.
107	It also includes a trust created or determined by a judgment or
108	decree under which the trust is to be administered in the manner
109	of an express trust. "Trust" excludes other constructive trusts,
110	and it excludes resulting trusts; conservatorships; custodial
111	arrangements pursuant to the Florida Uniform Transfers to Minors
112	Act; business trusts providing for certificates to be issued to
113	beneficiaries; common trust funds; land trusts under s. 689.071,
114	except to the extent provided in s. 689.071(7) 689.05; trusts
115	created by the form of the account or by the deposit agreement
116	at a financial institution; voting trusts; security
117	arrangements; liquidation trusts; trusts for the primary purpose
118	of paying debts, dividends, interest, salaries, wages, profits,
119	pensions, or employee benefits of any kind; and any arrangement
120	under which a person is nominee or escrowee for another.
121	Section 3.  Section 731.303, Florida Statutes, as amended
122	by section 30 of chapter 2006-217, Laws of Florida, is amended
123	to read:
124	731.303  Representation.--In the administration of or in
125	judicial proceedings involving estates of decedents or trusts,
126	the following apply:
127	(1)  Persons are bound by orders binding others in the
128	following cases:
129	(a)1.  Orders binding the sole holder or all coholders of a
130	power of revocation or a general, special, or limited power of
131	appointment, including one in the form of a power of amendment
132	or revocation to the extent that the power has not become
133	unexercisable in fact, bind all persons to the extent that their
134	interests, as persons who may take by virtue of the exercise or
135	nonexercise of the power, are subject to the power.
136	2.  Subparagraph 1. does not apply to:
137	a.  Any matter determined by the court to involve fraud or
138	bad faith by the trustee;
139	b.  A power of a trustee to distribute trust property; or
140	c.  A power of appointment held by a person while the
141	person is the sole trustee.
142	(b)  To the extent there is no conflict of interest between
143	them or among the persons represented:
144	1.  Orders binding a guardian of the property bind the
145	ward.
146	2.  Orders binding a trustee bind beneficiaries of the
147	trust in proceedings to probate a will, in establishing or
148	adding to a trust, in reviewing the acts or accounts of a prior
149	fiduciary, and in proceedings involving creditors or other third
150	parties. However, for purposes of this section, a conflict of
151	interest shall be deemed to exist when each trustee of a trust
152	that is a beneficiary of the estate is also a personal
153	representative of the estate.
154	3.  Orders binding a personal representative bind persons
155	interested in the undistributed assets of a decedent's estate,
156	in actions or proceedings by or against the estate.
157	(c)  An unborn or unascertained person, or a minor or any
158	other person under a legal disability, who is not otherwise
159	represented is bound by an order to the extent that person's
160	interest is represented by another party having the same or
161	greater quality of interest in the proceeding.
162	(2)  Orders binding a guardian of the person shall not bind
163	the ward.
164	(3)  In proceedings involving the administration of estates
165	or trusts, notice is required as follows:
166	(a)  Notice as prescribed by law shall be given to every
167	interested person, or to one who can bind the interested person
168	as described in paragraph (1)(a) or paragraph (1)(b). Notice may
169	be given both to the interested person and to another who can
170	bind him or her.
171	(b)  Notice is given to unborn or unascertained persons who
172	are not represented pursuant to paragraph (1)(a) or paragraph
173	(1)(b) by giving notice to all known persons whose interests in
174	the proceedings are the same as, or of a greater quality than,
175	those of the unborn or unascertained persons.
176	(4)  If the court determines that representation of the
177	interest would otherwise be inadequate, the court may, at any
178	time, appoint a guardian ad litem to represent the interests of
179	an incapacitated person, an unborn or unascertained person, a
180	minor or any other person otherwise under a legal disability, or
181	a person whose identity or address is unknown. If not precluded
182	by conflict of interest, a guardian ad litem may be appointed to
183	represent several persons or interests.
184	(5)  The holder of a power of appointment over property not
185	held in trust may represent and bind persons whose interests, as
186	permissible appointees, takers in default, or otherwise, are
187	subject to the power. Representation under this subsection does
188	not apply to:
189	(a)  Any matter determined by the court to involve fraud or
190	bad faith by the trustee;
191	(b)  A power of a trustee to distribute trust property; or
192	(c)  A power of appointment held by a person while the
193	person is the sole trustee.
194	Section 4.  Section 736.0102, Florida Statutes, is amended
195	to read:
196	736.0102  Scope.--This code applies to express trusts,
197	charitable or noncharitable, and trusts created pursuant to a
198	law, judgment, or decree that requires the trust to be
199	administered in the manner of an express trust. This code does
200	not apply to constructive or resulting trusts; conservatorships;
201	custodial arrangements pursuant to the Florida Uniform Transfers
202	to Minors Act; business trusts providing for certificates to be
203	issued to beneficiaries; common trust funds; land trusts under
204	s. 689.071, except to the extent provided in s. 689.071(7) s.
205	689.05; trusts created by the form of the account or by the
206	deposit agreement at a financial institution; voting trusts;
207	security arrangements; liquidation trusts; trusts for the
208	primary purpose of paying debts, dividends, interest, salaries,
209	wages, profits, pensions, or employee benefits of any kind; and
210	any arrangement under which a person is nominee or escrowee for
211	another.
212	Section 5.  Section 736.0501, Florida Statutes, is amended
213	to read:
214	736.0501  Rights of beneficiary's creditor or
215	assignee.--Except as provided in s. 736.0504, to the extent a
216	beneficiary's interest is not subject to a spendthrift
217	provision, the court may authorize a creditor or assignee of the
218	beneficiary to reach the beneficiary's interest by attachment of
219	present or future distributions to or for the benefit of the
220	beneficiary or by other means. The court may limit the award to
221	such relief as is appropriate under the circumstances.
222	Section 6.  Subsection (1) of section 736.0502, Florida
223	Statutes, is amended to read:
224	736.0502  Spendthrift provision.--
225	(1)  A spendthrift provision is valid only if the provision
226	restrains both voluntary and involuntary transfer of a
227	beneficiary's interest. This subsection does not apply to any
228	trust the terms of which are included in an instrument executed
229	before in existence on the effective date of this code.
230	Section 7.  Subsection (3) of section 736.0503, Florida
231	Statutes, is amended to read:
232	736.0503  Exceptions to spendthrift provision.--
233	(3)  Except as otherwise provided in this subsection and in
234	s. 736.0504, a claimant against which a spendthrift provision
235	may not be enforced may obtain from a court, or pursuant to the
236	Uniform Interstate Family Support Act, an order attaching
237	present or future distributions to or for the benefit of the
238	beneficiary. The court may limit the award to such relief as is
239	appropriate under the circumstances. Notwithstanding this
240	subsection, the remedies provided in this subsection apply to a
241	claim by a beneficiary's child, spouse, former spouse, or a
242	judgment creditor described in paragraph (2)(a) or paragraph
243	(2)(b) only as a last resort upon an initial showing that
244	traditional methods of enforcing the claim are insufficient.
245	Section 8.  Section 736.0504, Florida Statutes, is amended
246	to read:
247	736.0504  Discretionary trusts; effect of standard.--
248	(1)  As used in this section, the term "discretionary
249	distribution" means a distribution that is subject to the
250	trustee's discretion whether or not the discretion is expressed
251	in the form of a standard of distribution and whether or not the
252	trustee has abused the discretion.
253	(2)  Whether or not a trust contains a spendthrift
254	provision, if a trustee may make discretionary distributions to
255	or for the benefit of a beneficiary, a creditor of the
256	beneficiary, including a creditor as described in s.
257	736.0503(2), may not:
258	(a)  Compel a distribution that is subject to the trustee's
259	discretion; or
260	(b)  Attach or otherwise reach the interest, if any, which
261	the beneficiary might have as a result of the trustee's
262	authority to make discretionary distributions to or for the
263	benefit of the beneficiary. Whether or not a trust contains a
264	spendthrift provision, a creditor of a beneficiary may not
265	compel a distribution that is subject to the trustee's
266	discretion, even if:
267	(a)  The discretion is expressed in the form of a standard
268	of distribution; or
269	(b)  The trustee has abused the discretion.
270	(3)(2)  If the trustee's discretion to make distributions
271	for the trustee's own benefit is limited by an ascertainable
272	standard, a creditor may not reach or compel distribution of the
273	beneficial interest except to the extent the interest would be
274	subject to the creditor's claim were the beneficiary not acting
275	as trustee.
276	(4)(3)  This section does not limit the right of a
277	beneficiary to maintain a judicial proceeding against a trustee
278	for an abuse of discretion or failure to comply with a standard
279	for distribution.
280	Section 9.  Subsection (5) of section 736.0813, Florida
281	Statutes, is amended to read:
282	736.0813  Duty to inform and account.--The trustee shall
283	keep the qualified beneficiaries of the trust reasonably
284	informed of the trust and its administration.
285	(5)  This section applies to trust accountings rendered for
286	accounting periods beginning on or after July 1, 2007 January 1,
287	2008.
288	Section 10.  Subsection (6) of section 736.1008, Florida
289	Statutes, is amended to read:
290	736.1008  Limitations on proceedings against trustees.--
291	(6)  This section applies to trust accountings for
292	accounting periods beginning on or after July 1, 2007 January 1,
293	2008, and to written reports, other than trust accountings,
294	received by a beneficiary on or after July 1, 2007 January 1,
295	2008.
296	Section 11.  Subsection (2) of section 736.1011, Florida
297	Statutes, is amended to read:
298	736.1011  Exculpation of trustee.--
299	(2)  An exculpatory term drafted or caused to be drafted by
300	the trustee is invalid as an abuse of a fiduciary or
301	confidential relationship unless:
302	(a)  The trustee proves that the exculpatory term is fair
303	under the circumstances; and that
304	(b)  The term's existence and contents were adequately
305	communicated directly to the settlor or the independent attorney
306	of the settlor. This paragraph applies only to trusts created on
307	or after July 1, 2007.
308	Section 12.  Subsection (5) of section 736.1106, Florida
309	Statutes, is amended to read:
310	736.1106  Antilapse; survivorship with respect to future
311	interests under terms of inter vivos and testamentary trusts;
312	substitute takers.--
313	(5)  Subsections (1) through (4) apply This section applies
314	to all trusts other than trusts that were irrevocable before the
315	effective date of this code. Sections 732.603, 732.604, and
316	737.6035, as they exist on June 30, 2007, continue to apply to
317	other trusts executed on or after June 12, 2003.
318	Section 13.  Paragraph (a) of subsection (4) of section
319	736.1204, Florida Statutes, is amended to read:
320	736.1204  Powers and duties of trustee of a private
321	foundation trust or a split interest trust.--
322	(4)  Paragraphs (3)(b) and (c) shall not apply to a split
323	interest trust if:
324	(a)  All the income interest from income, and none of the
325	remainder interest, of the trust is devoted solely to one or
326	more of the purposes described in s. 170(c)(2)(B) of the
327	Internal Revenue Code, and all amounts in the trust for which a
328	deduction was allowed under s. 170, s. 545(b)(2), s. 556(b)(2),
329	s. 642(c), s. 2055, s. 2106(a)(2), or s. 2522 of the Internal
330	Revenue Code have an aggregate fair market value of not more
331	than 60 percent of the aggregate fair market value of all
332	amounts in the trust; or
333	Section 14.  Section 736.1209, Florida Statutes, is amended
334	to read:
335	736.1209  Election to come under this part.--With the
336	consent of that organization or organizations, a trustee of a
337	trust for the benefit of a public charitable organization or
338	organizations may come under s. 736.1208(5) s. 736.0838(5) by
339	filing with the state attorney an election, accompanied by the
340	proof of required consent. Thereafter the trust shall be subject
341	to s. 736.1208(5).
342	Section 15.  Paragraph (g) of subsection (2) of section
343	736.1001, Florida Statutes, is amended to read:
344	736.1001  Remedies for breach of trust.--
345	(2)  To remedy a breach of trust that has occurred or may
346	occur, the court may:
347	(g)  Remove the trustee as provided in s. 736.0706 s.
348	736.706;
349	Section 16.  This act shall take effect July 1, 2007.

CODING: Words stricken are deletions; words underlined are additions.