Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2218
Barcode 820792
CHAMBER ACTION
Senate House
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11 The Committee on Banking and Insurance (Posey) recommended the
12 following amendment:
13
14 Senate Amendment (with title amendment)
15 Delete everything after the enacting clause
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17 and insert:
18 Section 1. Subsection (3) of section 660.417, Florida
19 Statutes, as amended by section 18 of chapter 2006-217, Laws
20 of Florida, is amended to read:
21 660.417 Investment of fiduciary funds in investment
22 instruments; permissible activity under certain circumstances;
23 limitations.--
24 (3) The fact that such bank or trust company or an
25 affiliate of the bank or trust company owns or controls
26 investment instruments shall not preclude the bank or trust
27 company acting as a fiduciary from investing or reinvesting in
28 such investment instruments, provided such investment
29 instruments:
30 (a) Are held for sale by the bank or trust company or
31 by an affiliate of the bank or trust company in the ordinary
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1 course of its business of providing investment services to its
2 customers and do not include any such interests held by the
3 bank or trust company or by an affiliate of the bank or trust
4 company for its own account.
5 (b) When Are sold primarily to accounts for which the
6 bank or trust company is not acting as a trustee of a trust as
7 defined in s. 731.201(35):
8 1. Are available for sale to accounts of other
9 customers; and
10 2. If sold to other customers, are not sold to the
11 trust accounts fiduciary upon terms that are less not more
12 favorable to the buyer than the terms upon which they are
13 normally sold to the other customers accounts for which the
14 bank or trust company is acting as a fiduciary.
15 Section 2. Section 736.04117, Florida Statutes, is
16 created to read:
17 736.04117 Trustee's power to invade principal in
18 trust.--
19 (1)(a) Unless the trust instrument expressly provides
20 otherwise, a trustee who has absolute power under the terms of
21 a trust to invade the principal of the trust, referred to in
22 this section as the "first trust," to make distributions to or
23 for the benefit of one or more persons may instead exercise
24 the power by appointing all or part of the principal of the
25 trust subject to the power in favor of a trustee of another
26 trust, referred to in this section as the "second trust," for
27 the current benefit of one or more of such persons under the
28 same trust instrument or under a different trust instrument;
29 provided:
30 1. The beneficiaries of the second trust may include
31 only beneficiaries of the first trust;
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1 2. The second trust may not reduce any fixed income,
2 annuity, or unitrust interest in the assets of the first
3 trust; and
4 3. If any contribution to the first trust qualified
5 for a marital or charitable deduction for federal income,
6 gift, or estate tax purposes under the Internal Revenue Code
7 of 1986, as amended, the second trust shall not contain any
8 provision which, if included in the first trust, would have
9 prevented the first trust from qualifying for such a deduction
10 or would have reduced the amount of such deduction.
11 (b) For purposes of this subsection, an absolute power
12 to invade principal shall include a power to invade principal
13 that is not limited to specific or ascertainable purposes,
14 such as health, education, maintenance, and support, whether
15 or not the term "absolute" is used. A power to invade
16 principal for purposes such as best interests, welfare,
17 comfort, or happiness shall constitute an absolute power not
18 limited to specific or ascertainable purposes.
19 (2) The exercise of a power to invade principal under
20 subsection (1) shall be by an instrument in writing, signed
21 and acknowledged by the trustee, and filed with the records of
22 the first trust.
23 (3) The exercise of a power to invade principal under
24 subsection (1) shall be considered the exercise of a power of
25 appointment, other than a power to appoint to the trustee, the
26 trustee's creditors, the trustee's estate, or the creditors of
27 the trustee's estate, and shall be subject to the provisions
28 of s. 689.225 covering the time at which the permissible
29 period of the rule against perpetuities begins and the law
30 that determines the permissible period of the rule against
31 perpetuities of the first trust.
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Bill No. SB 2218
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1 (4) The trustee shall notify all qualified
2 beneficiaries of the first trust, in writing, at least 60 days
3 prior to the effective date of the trustee's exercise of the
4 trustee's power to invade principal pursuant to subsection
5 (1), of the manner in which the trustee intends to exercise
6 the power. A copy of the proposed instrument exercising the
7 power shall satisfy the trustee's notice obligation under this
8 subsection. If all qualified beneficiaries waive the notice
9 period by signed written instrument delivered to the trustee,
10 the trustee's power to invade principal shall be exercisable
11 immediately. The trustee's notice under this subsection shall
12 not limit the right of any beneficiary to object to the
13 exercise of the trustee's power to invade principal except as
14 provided in other applicable provisions of this code.
15 (5) The exercise of the power to invade principal
16 under subsection (1) is not prohibited by a spendthrift clause
17 or by a provision in the trust instrument that prohibits
18 amendment or revocation of the trust.
19 (6) Nothing in this section is intended to create or
20 imply a duty to exercise a power to invade principal and no
21 inference of impropriety shall be made as a result of a
22 trustee not exercising the power to invade principal conferred
23 under subsection (1).
24 (7) The provisions of this section shall not be
25 construed to abridge the right of any trustee who has a power
26 of invasion to appoint property in further trust that arises
27 under the terms of the first trust or under any other section
28 of this code or under another provision of law or under common
29 law.
30 Section 3. Subsections (2) and (5) of section
31 736.0802, Florida Statutes, are amended to read:
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1 736.0802 Duty of loyalty.--
2 (2) Subject to the rights of persons dealing with or
3 assisting the trustee as provided in s. 736.1016, a sale,
4 encumbrance, or other transaction involving the investment or
5 management of trust property entered into by the trustee for
6 the trustee's own personal account or which is otherwise
7 affected by a conflict between the trustee's fiduciary and
8 personal interests is voidable by a beneficiary affected by
9 the transaction unless:
10 (a) The transaction was authorized by the terms of the
11 trust;
12 (b) The transaction was approved by the court;
13 (c) The beneficiary did not commence a judicial
14 proceeding within the time allowed by s. 736.1008;
15 (d) The beneficiary consented to the trustee's
16 conduct, ratified the transaction, or released the trustee in
17 compliance with s. 736.1012;
18 (e) The transaction involves a contract entered into
19 or claim acquired by the trustee when that person had not
20 become or contemplated becoming trustee; or
21 (f) The transaction was consented to in writing by a
22 settlor of the trust while the trust was revocable; or.
23 (g) The transaction is one by a corporate trustee that
24 involves a money market mutual fund, mutual fund, or a common
25 trust fund described in s. 736.0816(3).
26 (5)(a) An investment by a trustee authorized by lawful
27 authority to engage in trust business, as defined in s.
28 658.12(20), in investment instruments, as defined in s.
29 660.25(6), that are owned or controlled by the trustee or its
30 affiliate, or from which the trustee or its affiliate receives
31 compensation for providing services in a capacity other than
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1 as trustee, is not presumed to be affected by a conflict
2 between personal and fiduciary interests provided the
3 investment otherwise complies with chapters 518 and 660 and
4 the trustee complies with the disclosure requirements of this
5 subsection.
6 (b) A trustee who, pursuant to this subsection,
7 invests trust funds in investment instruments that are owned
8 or controlled by the trustee or its affiliate shall disclose
9 the following to all qualified beneficiaries:
10 1. Notice that the trustee has invested trust funds in
11 investment instruments owned or controlled by the trustee or
12 its affiliate.
13 2. The identity of the investment instruments.
14 3. The identity and relationship to the trustee of any
15 affiliate that owns or controls the investment instruments.
16 (c) A trustee who, pursuant to this subsection,
17 invests trust funds in investment instruments with respect to
18 which the trustee or its affiliate receives compensation for
19 providing services in a capacity other than as trustee shall
20 disclose to all qualified beneficiaries, the nature of the
21 services provided by the trustee or its affiliate, and all
22 compensation, including, but not limited to, fees or
23 commissions paid or to be paid by the account and received or
24 to be received by an affiliate arising from such affiliated
25 investment.
26 (d) Disclosure required by this subsection shall be
27 made at least annually unless there has been no change in the
28 method or increase in the rate at which such compensation is
29 calculated since the most recent disclosure. The disclosure
30 may be given in a trust disclosure document as defined in s.
31 736.1008, in a copy of the prospectus for the investment
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1 instrument, in any other written disclosure prepared for the
2 investment instrument under applicable federal or state law,
3 or in a written summary that includes all compensation
4 received or to be received by the trustee and any affiliate of
5 the trustee and an explanation of the manner in which such
6 compensation is calculated, either as a percentage of the
7 assets invested or by some other method.
8 (e) This subsection shall apply as follows:
9 1. This subsection does not apply to qualified
10 investment instruments or to a trust for which a right of
11 revocation exists.
12 2. For investment instruments other than qualified
13 investment instruments, paragraphs (a), (b), (c), and (d)
14 shall apply to irrevocable trusts created on or after July 1,
15 2007, which expressly authorize the trustee, by specific
16 reference to this subsection, to invest in investment
17 instruments owned or controlled by the trustee or its
18 affiliate.
19 3. For investment instruments other than qualified
20 investment instruments, paragraphs (a), (b), (c), and (d)
21 shall apply to irrevocable trusts created on or after July 1,
22 2007, that are not described in subparagraph 2. and to
23 irrevocable trusts created prior to July 1, 2007, only as
24 follows:
25 a. Such paragraphs shall not apply until 60 days after
26 the statement required in paragraph (f) is provided and a
27 majority of the qualified beneficiaries have provided written
28 consent. All consents must be obtained within 90 days after
29 the date of delivery of the written request. Once given,
30 consent shall be valid as to all investment instruments
31 acquired pursuant to the consent prior to the date of any
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1 withdrawal of the consent no objection is made or any
2 objection which is made has been terminated.
3 (I) An objection is made if, within 60 days after the
4 date of the statement required in paragraph (f), a super
5 majority of the eligible beneficiaries deliver to the trustee
6 written objections to the application of this subsection to
7 such trust. An objection shall be deemed to be delivered to
8 the trustee on the date the objection is mailed to the mailing
9 address listed in the notice provided in paragraph (f).
10 (II) An objection is terminated upon the earlier of
11 the receipt of consent from a super majority of eligible
12 beneficiaries of the class that made the objection or the
13 resolution of the objection pursuant to this subparagraph.
14 (III) If an objection is delivered to the trustee, the
15 trustee may petition the court for an order overruling the
16 objection and authorizing the trustee to make investments
17 under this subsection. The burden shall be on the trustee to
18 show good cause for the relief sought.
19 (I)(IV) Any qualified beneficiary may petition the
20 court for an order to prohibit, limit, or restrict a trustee's
21 authority to make investments under this subsection. The
22 burden shall be upon the petitioning beneficiary to show good
23 cause for the relief sought.
24 (II)(V) The court may award costs and attorney's fees
25 relating to any petition under this subparagraph in the same
26 manner as in chancery actions. When costs and attorney's fees
27 are to be paid out of the trust, the court, in its discretion,
28 may direct from which part of the trust such costs and fees
29 shall be paid.
30 b. The consent objection of a majority of the
31 qualified super majority of eligible beneficiaries under this
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1 subparagraph may thereafter be withdrawn prospectively removed
2 by the written notice consent of a super majority of any one
3 of the class or classes of the qualified those eligible
4 beneficiaries that made the objection.
5 (f)1. The trustee of a trust described in s.
6 731.201(35) may request authority to invest in Any time prior
7 to initially investing in any investment instruments
8 instrument described in this subsection other than a qualified
9 investment instrument, by providing the trustee of a trust
10 described in subparagraph (e)3. shall provide to all qualified
11 beneficiaries a written request statement containing the
12 following:
13 a. The name, telephone number, street address, and
14 mailing address of the trustee and of any individuals who may
15 be contacted for further information.
16 b. A statement that the investment or investments
17 cannot be made without the consent of a majority of each class
18 of the qualified beneficiaries, unless a super majority of the
19 eligible beneficiaries objects to the application of this
20 subsection to the trust within 60 days after the date the
21 statement pursuant to this subsection was delivered, this
22 subsection shall apply to the trust.
23 c. A statement that, if a majority of each class of
24 qualified beneficiaries consent this subsection applies to the
25 trust, the trustee will have the right to make investments in
26 investment instruments, as defined in s. 660.25(6), which are
27 owned or controlled by the trustee or its affiliate, or from
28 which the trustee or its affiliate receives compensation for
29 providing services in a capacity other than as trustee, that
30 such investment instruments may include investment instruments
31 sold primarily to trust accounts, and that the trustee or its
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1 affiliate may receive fees in addition to the trustee's
2 compensation for administering the trust.
3 d. A statement that the consent may be withdrawn
4 prospectively at any time by written notice given by a
5 majority of any class of the qualified beneficiaries.
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7 A statement by the trustee is not delivered if the statement
8 is accompanied by another written communication other than a
9 written communication by the trustee that refers only to the
10 statement.
11 2. For purposes of paragraph (e) and this paragraph:
12 a. "Eligible beneficiaries" means:
13 (I) If at the time the determination is made there are
14 one or more beneficiaries as described in s. 736.0103(14)(c),
15 the beneficiaries described in s. 736.0103(14)(a) and (c); or
16 (II) If there is no beneficiary described in s.
17 736.0103(14)(c), the beneficiaries described in s.
18 736.0103(14)(a) and (b).
19 a.b. "Super Majority of the qualified eligible
20 beneficiaries" means:
21 (I) If at the time the determination is made there are
22 one or more beneficiaries as described in s. 736.0103(14)(c),
23 at least a majority two-thirds in interest of the
24 beneficiaries described in s. 736.0103(14)(a), at least a
25 majority in interest of the beneficiaries described in s.
26 736.0103(14)(b), and at least a majority or two-thirds in
27 interest of the beneficiaries described in s. 736.0103(14)(c),
28 if the interests of the beneficiaries are reasonably
29 ascertainable; otherwise, a majority two-thirds in number of
30 each either such class; or
31 (II) If there is no beneficiary as described in s.
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1 736.0103(14)(c), at least a majority two-thirds in interest of
2 the beneficiaries described in s. 736.0103(14)(a) and at least
3 a majority or two-thirds in interest of the beneficiaries
4 described in s. 736.0103(14)(b), if the interests of the
5 beneficiaries are reasonably ascertainable; otherwise, a
6 majority two-thirds in number of each either such class.
7 b.c. "Qualified investment instrument" means a mutual
8 fund, common trust fund, or money market fund described in and
9 governed by s. 736.0816(3).
10 c.d. An irrevocable trust is created upon execution of
11 the trust instrument. If a trust that was revocable when
12 created thereafter becomes irrevocable, the irrevocable trust
13 is created when the right of revocation terminates.
14 (g) Nothing in this chapter is intended to create or
15 imply a duty for the trustee to seek the application of this
16 subsection to invest in investment instruments described in
17 paragraph (a), and no inference of impropriety may be made as
18 a result of a trustee electing not to invest trust assets in
19 investment instruments described in paragraph (a).
20 (h) This subsection is not the exclusive authority
21 under this code for investing in investment instruments
22 described in paragraph (a). A trustee who invests trust funds
23 in investment instruments described in paragraph (a) is not
24 required to comply with paragraph (b), paragraph (c), or
25 paragraph (f) if the trustee is permitted to invest in such
26 investment instruments pursuant to subsection (2).
27 Section 4. Subsection (3) of section 736.0816, Florida
28 Statutes, is amended to read:
29 736.0816 Specific powers of trustee.--Except as
30 limited or restricted by this code, a trustee may:
31 (3) Acquire an undivided interest in a trust asset,
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1 including, but not limited to, a money market mutual fund,
2 mutual fund, or common trust fund, in which asset the trustee
3 holds an undivided interest in any trust capacity, including
4 any money market or other mutual fund from which the trustee
5 or any affiliate or associate of the trustee is entitled to
6 receive reasonable compensation for providing necessary
7 services as an investment adviser, portfolio manager, or
8 servicing agent. A trustee or affiliate or associate of the
9 trustee may receive compensation for such services in addition
10 to fees received for administering the trust provided such
11 compensation is fully disclosed in writing to all qualified
12 beneficiaries. As used in this subsection, the term "mutual
13 fund" includes an open-end or closed-end management investment
14 company or investment trust registered under the Investment
15 Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended.
16 Section 5. Subsection (6) of section 736.1008, Florida
17 Statutes, is amended to read:
18 736.1008 Limitations on proceedings against
19 trustees.--
20 (6) This section applies to trust accountings for
21 accounting periods beginning on or after July January 1, 2007
22 2008, and to written reports, other than trust accountings,
23 received by a beneficiary on or after July January 1, 2007
24 2008.
25 Section 6. Subsection (2) of section 736.1011, Florida
26 Statutes, is amended to read:
27 736.1011 Exculpation of trustee.--
28 (2) An exculpatory term drafted or caused to be
29 drafted by the trustee is invalid as an abuse of a fiduciary
30 or confidential relationship unless:
31 (a) The trustee proves that the exculpatory term is
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1 fair under the circumstances.
2 (b) and that The term's existence and contents were
3 adequately communicated directly to the settlor or the
4 independent attorney of the settlor. This paragraph applies
5 only to trusts created on or after July 1, 2007.
6 Section 7. This act shall take effect July 1, 2007.
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9 ================ T I T L E A M E N D M E N T ===============
10 And the title is amended as follows:
11 Delete everything before the enacting clause
12
13 and insert:
14 A bill to be entitled
15 An act relating to duties, powers, and
16 liabilities of trustees; amending s. 660.417,
17 F.S.; revising criteria for investments in
18 certain investment instruments; creating s.
19 736.04117, F.S.; providing criteria,
20 requirements, and limitations on a trustee's
21 power to invade the principal of a trust;
22 specifying conditions under which discretionary
23 distributions may be made in further trust;
24 amending s. 736.0802, F.S.; specifying
25 additional trust property transactions not
26 voidable by a beneficiary; revising certain
27 disclosure and applicability requirements;
28 broadening authority for investing in certain
29 investment instruments; revising definitions;
30 excusing trustees from certain compliance
31 requirements under certain circumstances;
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1 amending s. 736.0816, F.S.; defining the term
2 "mutual fund" for certain purposes; amending s.
3 736.1008, F.S.; revising effective dates
4 relating to limitations on proceedings against
5 trustees; amending s. 736.1011, F.S.; providing
6 construction relating to trustee drafts of
7 exculpatory terms in a trust instrument;
8 providing an effective date.
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