Senate Bill sb2606
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Florida Senate - 2007 SB 2606
By Senator Aronberg
27-766D-07
1 A bill to be entitled
2 An act relating to the administration of
3 trusts; amending s. 689.071, F.S.; limiting the
4 definition of the term "land trust" to an
5 arrangement in which title to real property is
6 vested in a trustee by a recorded instrument
7 that confers certain authority as prescribed by
8 state law; providing that such a recorded
9 instrument does not itself create an entity;
10 providing that a recorded instrument is
11 effective regardless of whether it refers to
12 beneficiaries of the trust; providing that a
13 recorded instrument vests both legal and
14 equitable title to real property or the
15 interest therein in the trustee; conforming
16 cross-references; amending s. 731.201, F.S.;
17 redefining the term "trust"; conforming a
18 cross-reference; amending s. 731.303, F.S.;
19 excluding trusts from guidelines regarding
20 administration and judicial proceedings;
21 amending s. 736.0102, F.S.; conforming a
22 cross-reference; amending s. 736.0501, F.S.;
23 limiting the ability of creditors or assignees
24 of a beneficiary to reach the beneficiary's
25 interest in a trust; amending s. 736.0502,
26 F.S.; clarifying the application of
27 restrictions on transferring a beneficiary's
28 interest under a spendthrift provision;
29 amending s. 736.0503, F.S.; providing an
30 exception to a provision authorizing the
31 attachment of trust distributions; amending s.
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1 736.0504, F.S.; defining the term
2 "discretionary distribution"; prohibiting
3 certain creditors from compelling distributions
4 or attaching a beneficiary's interest or
5 expectancy; amending ss. 736.0813 and 736.1008,
6 F.S.; conforming dates of applicability of the
7 accounting provision and corresponding
8 limitations to the effective date of the code;
9 amending s. 736.1011, F.S.; providing that
10 direct communication of exculpatory terms to
11 the trust settlor is required only for trusts
12 created on or after July 1, 2007; amending s.
13 736.1106, F.S.; providing that certain
14 antilapse provisions continue to apply to
15 irrevocable trusts created between June 12,
16 2003, and July 1, 2007; amending s. 736.1204,
17 F.S.; clarifying the use of income interest of
18 a trust; amending ss. 736.1209 and 736.1001,
19 F.S., relating to the release of power by a
20 trustee and removal of a trustee; conforming
21 cross-references; providing an effective date.
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23 Be It Enacted by the Legislature of the State of Florida:
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25 Section 1. Paragraph (d) of subsection (2),
26 subsections (3) and (7), and paragraph (a) of subsection (9)
27 of section 689.071, Florida Statutes, as amended by section 21
28 of chapter 2006-217, Laws of Florida, are amended to read:
29 689.071 Florida Land Trust Act.--
30 (2) DEFINITIONS.--As used in this section, the term:
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1 (d) "Land trust" is not the creation of an entity, but
2 means any express written agreement or arrangement by which a
3 use, confidence, or trust is declared of any land, or of any
4 charge upon land, for the use or benefit of any beneficiary,
5 under which the title to real property, both legal and
6 equitable, is vested in a trustee by a recorded instrument
7 that confers on the trustee the power and authority prescribed
8 in subsection (3). The recorded instrument does not itself
9 create an entity, regardless of whether the relationship among
10 the beneficiaries and the trustee is deemed to be an entity
11 under other applicable law. held by a trustee, subject only to
12 the execution of the trust, which may be enforced by the
13 beneficiaries.
14 (3) OWNERSHIP VESTS IN TRUSTEE.--Every conveyance,
15 deed, mortgage, lease assignment, or other instrument
16 heretofore or hereafter made, hereinafter referred to as the
17 "the recorded instrument," transferring any interest in real
18 property in this state, including, but not limited to, a
19 leasehold or mortgagee interest, to any person or any
20 corporation, bank, trust company, or other entity duly formed
21 under the laws of its state of qualification, in which
22 recorded instrument the person, corporation, bank, trust
23 company, or other entity is designated "trustee," or "as
24 trustee," without therein naming the beneficiaries of such
25 trust, whether or not reference is made in the recorded
26 instrument to the beneficiaries of such trust or to any
27 separate collateral unrecorded declarations or agreements, is
28 effective to vest, and is hereby declared to have vested, in
29 such trustee both legal and equitable title, and full rights
30 of ownership, over the real property or interest therein, with
31 full power and authority as granted and provided in the
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1 recorded instrument to deal in and with the property or
2 interest therein or any part thereof; provided, the recorded
3 instrument confers on the trustee the power and authority
4 either to protect, to conserve, and to sell, or to lease, or
5 to encumber, or otherwise to manage and dispose of the real
6 property described in the recorded instrument.
7 (7) TRUSTEE LIABILITY.--In addition to any other
8 limitation on personal liability existing pursuant to statute
9 or otherwise, the provisions of ss. 736.08125 and 736.1013 s.
10 736.1013 apply to the trustee of a land trust created pursuant
11 to this section.
12 (9) SUCCESSOR TRUSTEE.--
13 (a) The provisions of s. 736.0705 s. 737.309 relating
14 to the resignation of a trustee do not apply to the
15 appointment of a successor trustee under this section.
16 Section 2. Subsection (35) of section 731.201, Florida
17 Statutes, as amended by section 29 of chapter 2006-217, Laws
18 of Florida, is amended to read:
19 731.201 General definitions.--Subject to additional
20 definitions in subsequent chapters that are applicable to
21 specific chapters or parts, and unless the context otherwise
22 requires, in this code, in s. 409.9101, and in chapters 737,
23 738, 739, and 744, the term:
24 (35) "Trust" means an express trust, private or
25 charitable, with additions to it, wherever and however
26 created. It also includes a trust created or determined by a
27 judgment or decree under which the trust is to be administered
28 in the manner of an express trust. "Trust" excludes other
29 constructive trusts, and it excludes resulting trusts;
30 conservatorships; custodial arrangements pursuant to the
31 Florida Uniform Transfers to Minors Act; business trusts
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1 providing for certificates to be issued to beneficiaries;
2 common trust funds; land trusts under s. 689.071, except to
3 the extent provided in s. 689.071(7) s. 689.05; trusts created
4 by the form of the account or by the deposit agreement at a
5 financial institution; voting trusts; security arrangements;
6 liquidation trusts; trusts for the primary purpose of paying
7 debts, dividends, interest, salaries, wages, profits,
8 pensions, or employee benefits of any kind; and any
9 arrangement under which a person is nominee or escrowee for
10 another.
11 Section 3. Section 731.303, Florida Statutes, is
12 amended to read:
13 731.303 Representation.--In the administration of or
14 in judicial proceedings involving estates of decedents or
15 trusts, the following apply:
16 (1) Persons are bound by orders binding others in the
17 following cases:
18 (a)1. Orders binding the sole holder or all coholders
19 of a power of revocation or a general, special, or limited
20 power of appointment, including one in the form of a power of
21 amendment or revocation to the extent that the power has not
22 become unexercisable in fact, bind all persons to the extent
23 that their interests, as persons who may take by virtue of the
24 exercise or nonexercise of the power, are subject to the
25 power.
26 2. Subparagraph 1. does not apply to:
27 a. Any matter determined by the court to involve fraud
28 or bad faith by the trustee;
29 b. A power of a trustee to distribute trust property;
30 or
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1 c. A power of appointment held by a person while the
2 person is the sole trustee.
3 (b) To the extent there is no conflict of interest
4 between them or among the persons represented:
5 1. Orders binding a guardian of the property bind the
6 ward.
7 2. Orders binding a trustee bind beneficiaries of the
8 trust in proceedings to probate a will, in establishing or
9 adding to a trust, in reviewing the acts or accounts of a
10 prior fiduciary, and in proceedings involving creditors or
11 other third parties. However, for purposes of this section, a
12 conflict of interest shall be deemed to exist when each
13 trustee of a trust that is a beneficiary of the estate is also
14 a personal representative of the estate.
15 3. Orders binding a personal representative bind
16 persons interested in the undistributed assets of a decedent's
17 estate, in actions or proceedings by or against the estate.
18 (c) An unborn or unascertained person, or a minor or
19 any other person under a legal disability, who is not
20 otherwise represented is bound by an order to the extent that
21 person's interest is represented by another party having the
22 same or greater quality of interest in the proceeding.
23 (2) Orders binding a guardian of the person shall not
24 bind the ward.
25 (3) In proceedings involving the administration of
26 estates or trusts, notice is required as follows:
27 (a) Notice as prescribed by law shall be given to
28 every interested person, or to one who can bind the interested
29 person as described in paragraph (1)(a) or paragraph (1)(b).
30 Notice may be given both to the interested person and to
31 another who can bind him or her.
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1 (b) Notice is given to unborn or unascertained persons
2 who are not represented pursuant to paragraph (1)(a) or
3 paragraph (1)(b) by giving notice to all known persons whose
4 interests in the proceedings are the same as, or of a greater
5 quality than, those of the unborn or unascertained persons.
6 (4) If the court determines that representation of the
7 interest would otherwise be inadequate, the court may, at any
8 time, appoint a guardian ad litem to represent the interests
9 of an incapacitated person, an unborn or unascertained person,
10 a minor or any other person otherwise under a legal
11 disability, or a person whose identity or address is unknown.
12 If not precluded by conflict of interest, a guardian ad litem
13 may be appointed to represent several persons or interests.
14 (5) The holder of a power of appointment over property
15 not held in trust may represent and bind persons whose
16 interests, as permissible appointees, takers in default, or
17 otherwise, are subject to the power. Representation under this
18 subsection does not apply to:
19 (a) Any matter determined by the court to involve
20 fraud or bad faith by the trustee;
21 (b) A power of a trustee to distribute trust property;
22 or
23 (c) A power of appointment held by a person while the
24 person is the sole trustee.
25 Section 4. Section 736.0102, Florida Statutes, is
26 amended to read:
27 736.0102 Scope.--This code applies to express trusts,
28 charitable or noncharitable, and trusts created pursuant to a
29 law, judgment, or decree that requires the trust to be
30 administered in the manner of an express trust. This code does
31 not apply to constructive or resulting trusts;
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1 conservatorships; custodial arrangements pursuant to the
2 Florida Uniform Transfers to Minors Act; business trusts
3 providing for certificates to be issued to beneficiaries;
4 common trust funds; land trusts under s. 689.071, except to
5 the extent provided in s. 689.071(7) s. 689.05; trusts created
6 by the form of the account or by the deposit agreement at a
7 financial institution; voting trusts; security arrangements;
8 liquidation trusts; trusts for the primary purpose of paying
9 debts, dividends, interest, salaries, wages, profits,
10 pensions, or employee benefits of any kind; and any
11 arrangement under which a person is nominee or escrowee for
12 another.
13 Section 5. Section 736.0501, Florida Statutes, is
14 amended to read:
15 736.0501 Rights of beneficiary's creditor or
16 assignee.--Except as provided in s. 736.0504, to the extent a
17 beneficiary's interest is not subject to a spendthrift
18 provision, the court may authorize a creditor or assignee of
19 the beneficiary to reach the beneficiary's interest by
20 attachment of present or future distributions to or for the
21 benefit of the beneficiary or by other means. The court may
22 limit the award to such relief as is appropriate under the
23 circumstances.
24 Section 6. Subsection (1) of section 736.0502, Florida
25 Statutes, is amended to read:
26 736.0502 Spendthrift provision.--
27 (1) A spendthrift provision is valid only if the
28 provision restrains both voluntary and involuntary transfer of
29 a beneficiary's interest. This subsection does not apply to
30 any trust the terms of which are included in an instrument
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1 executed before in existence on the effective date of this
2 code.
3 Section 7. Subsection (3) of section 736.0503, Florida
4 Statutes, is amended to read:
5 736.0503 Exceptions to spendthrift provision.--
6 (3) Except as otherwise provided in this subsection
7 and in s. 736.0504, a claimant against which a spendthrift
8 provision may not be enforced may obtain from a court, or
9 pursuant to the Uniform Interstate Family Support Act, an
10 order attaching present or future distributions to or for the
11 benefit of the beneficiary. The court may limit the award to
12 such relief as is appropriate under the circumstances.
13 Notwithstanding this subsection, the remedies provided in this
14 subsection apply to a claim by a beneficiary's child, spouse,
15 former spouse, or a judgment creditor described in paragraph
16 (2)(a) or paragraph (2)(b) only as a last resort upon an
17 initial showing that traditional methods of enforcing the
18 claim are insufficient.
19 Section 8. Section 736.0504, Florida Statutes, is
20 amended to read:
21 736.0504 Discretionary trusts; effect of standard.--
22 (1) As used in this section, the term "discretionary
23 distribution" means a distribution that is subject to the
24 trustee's discretion whether or not the discretion is
25 expressed in the form of a standard of distribution and
26 whether or not the trustee has abused the discretion. Whether
27 or not a trust contains a spendthrift provision, a creditor of
28 a beneficiary may not compel a distribution that is subject to
29 the trustee's discretion, even if:
30 (a) The discretion is expressed in the form of a
31 standard of distribution; or
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1 (b) The trustee has abused the discretion.
2 (2) Whether or not a trust contains a spendthrift
3 provision, if a trustee may make discretionary distributions
4 to or for the benefit of a beneficiary, a creditor of the
5 beneficiary, including a creditor as described in s.
6 736.0503(2), may not:
7 (a) Compel a distribution that is subject to the
8 trustee's discretion; or
9 (b) Attach or otherwise reach the interest, if any,
10 which the beneficiary might have as a result of the trustee's
11 authority to make discretionary distributions to or for the
12 benefit of the beneficiary.
13 (3)(2) If the trustee's discretion to make
14 distributions for the trustee's own benefit is limited by an
15 ascertainable standard, a creditor may not reach or compel
16 distribution of the beneficial interest except to the extent
17 the interest would be subject to the creditor's claim were the
18 beneficiary not acting as trustee.
19 (4)(3) This section does not limit the right of a
20 beneficiary to maintain a judicial proceeding against a
21 trustee for an abuse of discretion or failure to comply with a
22 standard for distribution.
23 Section 9. Subsection (5) of section 736.0813, Florida
24 Statutes, is amended to read:
25 736.0813 Duty to inform and account.--The trustee
26 shall keep the qualified beneficiaries of the trust reasonably
27 informed of the trust and its administration.
28 (5) This section applies to trust accountings rendered
29 for accounting periods beginning on or after July 1, 2007
30 January 1, 2008.
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1 Section 10. Subsection (6) of section 736.1008,
2 Florida Statutes, is amended to read:
3 736.1008 Limitations on proceedings against
4 trustees.--
5 (6) This section applies to trust accountings for
6 accounting periods beginning on or after July 1, 2007 January
7 1, 2008, and to written reports, other than trust accountings,
8 received by a beneficiary on or after July 1, 2007 January 1,
9 2008.
10 Section 11. Subsection (2) of section 736.1011,
11 Florida Statutes, is amended to read:
12 736.1011 Exculpation of trustee.--
13 (2) An exculpatory term drafted or caused to be
14 drafted by the trustee is invalid as an abuse of a fiduciary
15 or confidential relationship unless:
16 (a) The trustee proves that the exculpatory term is
17 fair under the circumstances; and that
18 (b) The term's existence and contents were adequately
19 communicated directly to the settlor. This paragraph applies
20 only to trusts created on or after July 1, 2007.
21 Section 12. Subsection (5) of section 736.1106,
22 Florida Statutes, is amended to read:
23 736.1106 Antilapse; survivorship with respect to
24 future interests under terms of inter vivos and testamentary
25 trusts; substitute takers.--
26 (5) Subsections (1) through (4) apply This section
27 applies to all trusts other than trusts that were irrevocable
28 before the effective date of this code. Sections 732.603,
29 732.604, and 737.6035, as they exist on June 30, 2007,
30 continue to apply to other trusts executed on or after June
31 12, 2003.
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1 Section 13. Subsection (4) of section 736.1204,
2 Florida Statutes, is amended to read:
3 736.1204 Powers and duties of trustee of a private
4 foundation trust or a split interest trust.--
5 (4) Paragraphs (3)(b) and (c) shall not apply to a
6 split interest trust if:
7 (a) All the income interest from income, and none of
8 the remainder interest, of the trust is devoted solely to one
9 or more of the purposes described in s. 170(c)(2)(B) of the
10 Internal Revenue Code, and all amounts in the trust for which
11 a deduction was allowed under s. 170, s. 545(b)(2), s.
12 556(b)(2), s. 642(c), s. 2055, s. 2106(a)(2), or s. 2522 of
13 the Internal Revenue Code have an aggregate fair market value
14 of not more than 60 percent of the aggregate fair market value
15 of all amounts in the trust; or
16 (b) A deduction was allowed under s. 170, s.
17 545(b)(2), s. 556(b)(2), s. 642(c), s. 2055, s. 2106(a)(2), or
18 s. 2522 of the Internal Revenue Code for amounts payable under
19 the terms of the trust to every remainder beneficiary but not
20 to any income beneficiary.
21 Section 14. Section 736.1209, Florida Statutes, is
22 amended to read:
23 736.1209 Election to come under this part.--With the
24 consent of that organization or organizations, a trustee of a
25 trust for the benefit of a public charitable organization or
26 organizations may come under s. 736.1208(5) s. 736.0838(5) by
27 filing with the state attorney an election, accompanied by the
28 proof of required consent. Thereafter the trust shall be
29 subject to s. 736.1208(5).
30 Section 15. Subsection (2) of section 736.1001,
31 Florida Statutes, is amended to read:
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1 736.1001 Remedies for breach of trust.--
2 (2) To remedy a breach of trust that has occurred or
3 may occur, the court may:
4 (a) Compel the trustee to perform the trustee's
5 duties;
6 (b) Enjoin the trustee from committing a breach of
7 trust;
8 (c) Compel the trustee to redress a breach of trust by
9 paying money or restoring property or by other means;
10 (d) Order a trustee to account;
11 (e) Appoint a special fiduciary to take possession of
12 the trust property and administer the trust;
13 (f) Suspend the trustee;
14 (g) Remove the trustee as provided in s. 736.0706 s.
15 736.706;
16 (h) Reduce or deny compensation to the trustee;
17 (i) Subject to s. 736.1016, void an act of the
18 trustee, impose a lien or a constructive trust on trust
19 property, or trace trust property wrongfully disposed of and
20 recover the property or its proceeds; or
21 (j) Order any other appropriate relief.
22 Section 16. This act shall take effect July 1, 2007.
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2 SENATE SUMMARY
3 Limits the definition of "land trust" to an arrangement
in which title to real property is vested in a trustee by
4 a recorded instrument that confers certain authority as
prescribed by state law. Provides that such a recorded
5 instrument does not itself create an entity. Provides
that a recorded instrument is effective regardless of
6 whether it refers to beneficiaries of the trust. Provides
that a recorded instrument vests both legal and equitable
7 title to real property or the interest therein in the
trustee. Limits the ability of creditors or assignees of
8 a beneficiary to reach the beneficiary's interest in a
trust. Extends the grandfathering of testamentary trusts
9 to include those created in wills executed before a
certain date under specified conditions. Provides that
10 the rights given to exception creditors are subservient
to the protection given to beneficiaries of discretionary
11 trusts. Defines the term "discretionary distribution."
Provides protection to discretionary interests from the
12 ability of exception creditors to compel distributions or
attach a beneficiary's interest or expectancy. Provides
13 that direct communication of exculpatory terms to the
trust settlor is required only for trusts created on or
14 after a certain date. Provides that existing antilapse
provisions continue to apply to irrevocable trusts
15 created within a specified period. Conforms dates of
applicability of the accounting provision and
16 corresponding limitations to the effective date of the
trust code. Restores previously codified wording to
17 certain sections of the code.
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