| 1 | A bill to be entitled |
| 2 | An act relating to trust administration; amending s. |
| 3 | 736.0703, F.S.; providing exceptions to duties and |
| 4 | liabilities of cotrustees for excluded cotrustees under |
| 5 | certain circumstances; relieving excluded cotrustees from |
| 6 | specified liabilities and obligations under certain |
| 7 | circumstances; providing for liabilities and obligations |
| 8 | of included cotrustees; amending s. 736.0802, F.S.; |
| 9 | providing an exception for trustee payments of costs and |
| 10 | attorney's fees from trust assets except pursuant to court |
| 11 | order under certain circumstances; requiring trustees to |
| 12 | provide certain notice to beneficiaries; providing notice |
| 13 | requirements; providing requirements for obtaining such a |
| 14 | court order; specifying remedies; providing for specified |
| 15 | refunds and sanctions; preserving certain court remedies; |
| 16 | amending s. 736.1008, F.S.; specifying periods of repose |
| 17 | barring claims by a beneficiary against a trustee; |
| 18 | providing construction; providing an effective date. |
| 19 |
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| 20 | Be It Enacted by the Legislature of the State of Florida: |
| 21 |
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| 22 | Section 1. Subsection (7) of section 736.0703, Florida |
| 23 | Statutes, is amended, and subsection (9) is added to that |
| 24 | section, to read: |
| 25 | 736.0703 Cotrustees.-- |
| 26 | (7) Except as otherwise provided in subsection (9), each |
| 27 | cotrustee shall exercise reasonable care to: |
| 28 | (a) Prevent a cotrustee from committing a breach of trust. |
| 29 | (b) Compel a cotrustee to redress a breach of trust. |
| 30 | (9) If the terms of a trust instrument provide for the |
| 31 | appointment of more than one trustee but confer upon one or more |
| 32 | of the trustees, to the exclusion of the others, the power to |
| 33 | direct or prevent specified actions of the trustees, the |
| 34 | excluded trustees shall act in accordance with the exercise of |
| 35 | the power. Except in cases of willful misconduct on the part of |
| 36 | the directed trustee of which the excluded trustee has actual |
| 37 | knowledge, an excluded trustee is not liable, individually or as |
| 38 | a fiduciary, for any consequence that results from compliance |
| 39 | with the exercise of the power, regardless of the information |
| 40 | available to the excluded trustees. The excluded trustees are |
| 41 | relieved of any obligation to review, inquire, investigate, or |
| 42 | make recommendations or evaluations with respect to the exercise |
| 43 | of the power. The trustee or trustees having the power to direct |
| 44 | or prevent actions of the trustees shall be liable to the |
| 45 | beneficiaries with respect to the exercise of the power as if |
| 46 | the excluded trustees were not in office and shall have the |
| 47 | exclusive obligation to account to and to defend any action |
| 48 | brought by the beneficiaries with respect to the exercise of the |
| 49 | power. |
| 50 | Section 2. Subsection (10) of section 736.0802, Florida |
| 51 | Statutes, is amended to read: |
| 52 | 736.0802 Duty of loyalty.-- |
| 53 | (10) Payment of costs or attorney's fees incurred in any |
| 54 | trust proceeding from the assets of the trust may be made by the |
| 55 | trustee without the approval of any person and without court |
| 56 | authorization, unless the court orders otherwise as provided in |
| 57 | paragraph (b) except that court authorization shall be required |
| 58 | if an action has been filed or defense asserted against the |
| 59 | trustee based upon a breach of trust. Court authorization is not |
| 60 | required if the action or defense is later withdrawn or |
| 61 | dismissed by the party that is alleging a breach of trust or |
| 62 | resolved without a determination by the court that the trustee |
| 63 | has committed a breach of trust. |
| 64 | (a) If a claim or defense based upon a breach of trust is |
| 65 | made against a trustee in a proceeding, the trustee shall |
| 66 | provide written notice to each qualified beneficiary of the |
| 67 | trust whose share of the trust may be affected by the payment of |
| 68 | attorney's fees and costs of the intention to pay costs or |
| 69 | attorney's fees incurred in the proceeding from the trust prior |
| 70 | to making payment. The written notice shall be delivered by |
| 71 | sending a copy by any commercial delivery service requiring a |
| 72 | signed receipt, by any form of mail requiring a signed receipt, |
| 73 | or as provided in the Florida Rules of Civil Procedure for |
| 74 | service of process. The written notice shall inform each |
| 75 | qualified beneficiary of the trust whose share of the trust may |
| 76 | be affected by the payment of attorney's fees and costs of the |
| 77 | right to apply to the court for an order prohibiting the trustee |
| 78 | from paying attorney's fees or costs from trust assets. If a |
| 79 | trustee is served with a motion for an order prohibiting the |
| 80 | trustee from paying attorney's fees or costs in the proceeding |
| 81 | and the trustee pays attorney's fees or costs before an order is |
| 82 | entered on the motion, the trustee and the trustee's attorneys |
| 83 | who have been paid attorney's fees or costs from trust assets to |
| 84 | defend against the claim or defense are subject to the remedies |
| 85 | in paragraphs (b) and (c). |
| 86 | (b) If a claim or defense based upon breach of trust is |
| 87 | made against a trustee in a proceeding, a party must obtain a |
| 88 | court order to prohibit the trustee from paying costs or |
| 89 | attorney's fees from trust assets. To obtain an order |
| 90 | prohibiting payment of costs or attorney's fees from trust |
| 91 | assets, a party must make a reasonable showing by evidence in |
| 92 | the record or by proffering evidence that provides a reasonable |
| 93 | basis for a court to conclude that there has been a breach of |
| 94 | trust. The trustee may proffer evidence to rebut the evidence |
| 95 | submitted by a party. The court in its discretion may defer |
| 96 | ruling on the motion, pending discovery to be taken by the |
| 97 | parties. If the court finds that there is a reasonable basis to |
| 98 | conclude that there has been a breach of trust, unless the court |
| 99 | finds good cause, the court shall enter an order prohibiting the |
| 100 | payment of further attorney's fees and costs from the assets of |
| 101 | the trust and shall order attorney's fees or costs previously |
| 102 | paid from assets of the trust to be refunded. An order entered |
| 103 | under this paragraph shall not limit a trustee's right to seek |
| 104 | an order permitting the payment of some or all of the attorney's |
| 105 | fees or costs incurred in the proceeding from trust assets, |
| 106 | including any fees required to be refunded, after the claim or |
| 107 | defense is finally determined by the court. If a claim or |
| 108 | defense based upon a breach of trust is withdrawn, dismissed, or |
| 109 | resolved without a determination by the court that the trustee |
| 110 | committed a breach of trust after the entry of an order |
| 111 | prohibiting payment of attorney's fees and costs pursuant to |
| 112 | this paragraph, the trustee may pay costs or attorneys' fees |
| 113 | incurred in the proceeding from the assets of the trust without |
| 114 | further court authorization. |
| 115 | (c) If the court orders a refund under paragraph (b), the |
| 116 | court may enter such sanctions as are appropriate if a refund is |
| 117 | not made as directed by the court, including, but not limited |
| 118 | to, striking defenses or pleadings filed by the trustee. Nothing |
| 119 | in this subsection limits other remedies and sanctions the court |
| 120 | may employ for the failure to refund timely. |
| 121 | (d) Nothing in this subsection limits the power of the |
| 122 | court to review fees and costs or the right of any interested |
| 123 | persons to challenge fees and costs after payment, after an |
| 124 | accounting, or after conclusion of the litigation. |
| 125 | (e) Notice under paragraph (a) is not required if the |
| 126 | action or defense is later withdrawn or dismissed by the party |
| 127 | that is alleging a breach of trust or resolved without a |
| 128 | determination by the court that the trustee has committed a |
| 129 | breach of trust. |
| 130 | Section 3. Subsection (3) of section 736.1008, Florida |
| 131 | Statutes, is amended, subsection (6) of that section is |
| 132 | renumbered as subsection (7), and new subsection (6) is added to |
| 133 | that section, to read: |
| 134 | 736.1008 Limitations on proceedings against trustees.-- |
| 135 | (3) When a trustee has not issued a final trust accounting |
| 136 | or has not given written notice to the beneficiary of the |
| 137 | availability of the trust records for examination and that |
| 138 | claims with respect to matters not adequately disclosed may be |
| 139 | barred, a claim against the trustee for breach of trust based on |
| 140 | a matter not adequately disclosed in a trust disclosure document |
| 141 | is barred as provided in chapter 95 and accrues when the |
| 142 | beneficiary has actual knowledge of: |
| 143 | (a) The facts upon which the claim is based if such actual |
| 144 | knowledge is established by clear and convincing evidence; or |
| 145 | (b) The trustee's repudiation of the trust or adverse |
| 146 | possession of trust assets, and is barred as provided in chapter |
| 147 | 95. |
| 148 |
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| 149 | Paragraph (a) applies to claims based upon acts or omissions |
| 150 | occurring on or after July 1, 2008. |
| 151 | (6)(a) Notwithstanding subsections (1), (2), and (3), all |
| 152 | claims by a beneficiary against a trustee are barred: |
| 153 | 1. Upon the later of: |
| 154 | a. Ten years after the date the trust terminates, the |
| 155 | trustee resigns, or the fiduciary relationship between the |
| 156 | trustee and the beneficiary otherwise ends if the beneficiary |
| 157 | had actual knowledge of the existence of the trust and the |
| 158 | beneficiary's status as a beneficiary throughout the 10-year |
| 159 | period; or |
| 160 | b. Twenty years after the date of the act or omission of |
| 161 | the trustee that is complained of if the beneficiary had actual |
| 162 | knowledge of the existence of the trust and the beneficiary's |
| 163 | status as a beneficiary throughout the 20-year period; or |
| 164 | 2. Forty years after the date the trust terminates, the |
| 165 | trustee resigns, or the fiduciary relationship between the |
| 166 | trustee and the beneficiary otherwise ends. |
| 167 | (b) When a beneficiary shows by clear and convincing |
| 168 | evidence that a trustee actively concealed facts supporting a |
| 169 | cause of action, any existing applicable statute of repose shall |
| 170 | be extended by 30 years. |
| 171 | (c) For purposes of sub-subparagraph (a)1.b., the failure |
| 172 | of the trustee to take corrective action is not a separate act |
| 173 | or omission and does not extend the period of repose established |
| 174 | by this subsection. |
| 175 | (d) This subsection applies to claims based upon acts or |
| 176 | omissions occurring on or after July 1, 2008. |
| 177 | Section 4. This act shall take effect July 1, 2008. |