Florida Senate - 2016 SB 540
By Senator Hukill
8-00335B-16 2016540__
1 A bill to be entitled
2 An act relating to estates; amending s. 731.106, F.S.;
3 providing that the validity and the effect of a
4 specified disposition of real property be determined
5 by Florida law; amending s. 736.0105, F.S.; conforming
6 a provision to changes made by the act; amending s.
7 736.0412, F.S.; providing applicability for
8 nonjudicial modification of irrevocable trust;
9 amending s. 736.0802, F.S.; defining the term
10 “pleading”; authorizing a trustee to pay attorney fees
11 and costs from the assets of the trust without
12 specified approval or court authorization in certain
13 circumstances; requiring the trustee to serve a
14 written notice of intent upon each qualified
15 beneficiary of the trust before the payment is made;
16 requiring the notice of intent to contain specified
17 information and to be served in a specified manner;
18 providing that specified qualified beneficiaries may
19 be entitled to an order compelling the refund of a
20 specified payment to the trust; requiring the court to
21 award specified attorney fees and costs in certain
22 circumstances; authorizing the court to prohibit a
23 trustee from using trust assets to make a specified
24 payment; authorizing the court to enter an order
25 compelling the return of specified attorney fees and
26 costs to the trust with interest at the statutory
27 rate; requiring the court to deny a specified motion
28 unless the court finds a reasonable basis to conclude
29 that there has been a breach of the trust; authorizing
30 a court to deny the motion if it finds good cause to
31 do so; authorizing the movant to show that a
32 reasonable basis exists, and a trustee to rebut the
33 showing, through specified means; authorizing the
34 court to impose such remedies or sanctions as it deems
35 appropriate; providing that a trustee is authorized to
36 use trust assets in a specified manner if a claim or
37 defense of breach of trust is withdrawn, dismissed, or
38 judicially resolved in a trial court without a
39 determination that the trustee has committed a breach
40 of trust; providing that specified proceedings,
41 remedies, and rights are not limited; amending ss.
42 736.0816 and 736.1007, F.S.; conforming provisions to
43 changes made by the act; providing an effective date.
44
45 Be It Enacted by the Legislature of the State of Florida:
46
47 Section 1. Subsection (2) of section 731.106, Florida
48 Statutes, is amended to read:
49 731.106 Assets of nondomiciliaries.—
50 (2) When a nonresident decedent, whether or not a citizen
51 of the United States, provides by will that the testamentary
52 disposition of tangible or intangible personal property having a
53 situs within this state, or of real property in this state,
54 shall be construed and regulated by the laws of this state, the
55 validity and effect of the dispositions shall be determined by
56 Florida law. The validity and the effect of a disposition,
57 whether intestate or testate, of real property in this state
58 shall be determined by Florida law. The court may, and in the
59 case of a decedent who was at the time of death a resident of a
60 foreign country the court shall, direct the personal
61 representative appointed in this state to make distribution
62 directly to those designated by the decedent’s will as
63 beneficiaries of the tangible or intangible property or to the
64 persons entitled to receive the decedent’s personal estate under
65 the laws of the decedent’s domicile.
66 Section 2. Paragraph (k) of subsection (2) of section
67 736.0105, Florida Statutes, is amended to read:
68 736.0105 Default and mandatory rules.—
69 (2) The terms of a trust prevail over any provision of this
70 code except:
71 (k) The ability to modify a trust under s. 736.0412, except
72 as provided in s. 736.0412(4)(b) or (c).
73 Section 3. Section 736.0412, Florida Statutes, is amended
74 to read:
75 736.0412 Nonjudicial modification of irrevocable trust.—
76 (1) After the settlor’s death, a trust may be modified at
77 any time as provided in s. 736.04113(2) upon the unanimous
78 agreement of the trustee and all qualified beneficiaries.
79 (2) Modification of a trust as authorized in this section
80 is not prohibited by a spendthrift clause or by a provision in
81 the trust instrument that prohibits amendment or revocation of
82 the trust.
83 (3) An agreement to modify a trust under this section is
84 binding on a beneficiary whose interest is represented by
85 another person under part III of this code.
86 (4) This section does shall not apply to any trust:
87 (a) Any trust Created prior to January 1, 2001.
88 (b) Any trust Created after December 31, 2000, and before
89 July 1, 2016, if, under the terms of the trust, all beneficial
90 interests in the trust must vest or terminate within the period
91 prescribed by the rule against perpetuities in s. 689.225(2),
92 notwithstanding s. 689.225(2)(f), unless the terms of the trust
93 expressly authorize nonjudicial modification.
94 (c) Created on or after July 1, 2016, during the first 90
95 years after it is created, unless the terms of the trust
96 expressly authorize nonjudicial modification under this section.
97 (d) Any trust For which a charitable deduction is allowed
98 or allowable under the Internal Revenue Code until the
99 termination of all charitable interests in the trust.
100 (5) For purposes of subsection (4), a revocable trust shall
101 be treated as created when the right of revocation terminates.
102 (6) The provisions of this section are in addition to, and
103 not in derogation of, rights under the common law to modify,
104 amend, terminate, or revoke trusts.
105 Section 4. Subsection (10) of section 736.0802, Florida
106 Statutes, is amended to read:
107 736.0802 Duty of loyalty.—
108 (10) Unless otherwise provided in this subsection, payment
109 of costs or attorney attorney’s fees incurred in any proceeding
110 from the assets of the trust may be made by a the trustee from
111 assets of the trust without the approval of any person and
112 without court authorization, unless the court orders otherwise
113 as provided in ss. 736.0816(20) and 736.1007(1) paragraph (b).
114 (a) As used in this subsection, the term “pleading” means a
115 pleading as defined in Rule 1.110 of the Florida Rules of Civil
116 Procedure.
117 (b) If a trustee incurs attorney fees or costs in
118 connection with a claim or defense of breach of trust which is
119 made in a filed pleading, the trustee may pay such attorney fees
120 or costs from trust assets without the approval of any person
121 and without any court authorization. However, the trustee must
122 serve a written notice of intent upon each qualified beneficiary
123 of the trust whose share of the trust may be affected by the
124 payment before such payment is made. The notice of intent does
125 not need to be served upon a qualified beneficiary whose
126 identity or location is unknown to, and not reasonably
127 ascertainable by, the trustee.
128 (c) The notice of intent must identify the judicial
129 proceeding in which the claim or defense of breach of trust has
130 been made in a filed pleading and must inform the person served
131 of his or her right under paragraph (e) to apply to the court
132 for an order prohibiting the trustee from using trust assets to
133 pay attorney fees or costs as provided in paragraph (b) or
134 compelling the return of such attorney fees and costs to the
135 trust. The notice of intent must be served by any commercial
136 delivery service or form of mail requiring a signed receipt; the
137 manner provided in the Florida Rules of Civil Procedure for
138 service of process; or, as to any party over whom the court has
139 already acquired jurisdiction in that judicial proceeding, in
140 the manner provided for service of pleadings and other documents
141 by the Florida Rules of Civil Procedure.
142 (d) If a trustee has used trust assets to pay attorney fees
143 or costs described in paragraph (b) before service of a notice
144 of intent, any qualified beneficiary who is not barred under s.
145 736.1008 and whose share of the trust may have been affected by
146 such payment is entitled, upon the filing of a motion to compel
147 the return of such payment to the trust, to an order compelling
148 the return of such payment, with interest at the statutory rate.
149 The court shall award attorney fees and costs incurred in
150 connection with the motion to compel as provided in s. 736.1004.
151 (e) Upon the motion of any qualified beneficiary who is not
152 barred under s. 736.1008 and whose share of the trust may be
153 affected by the use of trust assets to pay attorney fees or
154 costs as provided in paragraph (b), the court may prohibit the
155 trustee from using trust assets to make such payment and, if
156 such payment has been made from trust assets after service of a
157 notice of intent, the court may enter an order compelling the
158 return of the attorney fees and costs to the trust, with
159 interest at the statutory rate. In connection with any hearing
160 on a motion brought under this paragraph:
161 1. The court shall deny the motion unless it finds a
162 reasonable basis to conclude that there has been a breach of
163 trust. If the court finds there is a reasonable basis to
164 conclude there has been a breach of trust, the court may still
165 deny the motion if it finds good cause to do so.
166 2. The movant may show that such reasonable basis exists,
167 and the trustee may rebut any such showing by presenting
168 affidavits, answers to interrogatories, admissions, depositions,
169 and any evidence otherwise admissible under the Florida Evidence
170 Code.
171 (f) If a trustee fails to comply with an order of the court
172 prohibiting the use of trust assets to pay attorney fees or
173 costs described in paragraph (b) or fails to comply with an
174 order compelling that such payment be refunded to the trust, the
175 court may impose such remedies or sanctions as the court deems
176 appropriate, including, without limitation, striking the
177 defenses or pleadings filed by the trustee.
178 (g) Notwithstanding the entry of an order prohibiting the
179 use of trust assets to pay attorney fees and costs as provided
180 in paragraph (b), or compelling the return of such attorney fees
181 or costs, if a claim or defense of breach of trust is withdrawn,
182 dismissed, or judicially resolved in the trial court without a
183 determination that the trustee has committed a breach of trust,
184 the trustee is authorized to use trust assets to pay attorney
185 fees and costs as provided in paragraph (b) and may do so
186 without service of a notice of intent or order of the court. The
187 attorney fees and costs may include fees and costs that were
188 refunded to the trust pursuant to an order of the court.
189 (h) This subsection does not limit proceedings under s.
190 736.0206 or remedies for breach of trust under s. 736.1001, or
191 the right of any interested person to challenge or object to the
192 payment of compensation or costs from the trust.
193 (a) If a claim or defense based upon a breach of trust is
194 made against a trustee in a proceeding, the trustee shall
195 provide written notice to each qualified beneficiary of the
196 trust whose share of the trust may be affected by the payment of
197 attorney’s fees and costs of the intention to pay costs or
198 attorney’s fees incurred in the proceeding from the trust prior
199 to making payment. The written notice shall be delivered by
200 sending a copy by any commercial delivery service requiring a
201 signed receipt, by any form of mail requiring a signed receipt,
202 or as provided in the Florida Rules of Civil Procedure for
203 service of process. The written notice shall inform each
204 qualified beneficiary of the trust whose share of the trust may
205 be affected by the payment of attorney’s fees and costs of the
206 right to apply to the court for an order prohibiting the trustee
207 from paying attorney’s fees or costs from trust assets. If a
208 trustee is served with a motion for an order prohibiting the
209 trustee from paying attorney’s fees or costs in the proceeding
210 and the trustee pays attorney’s fees or costs before an order is
211 entered on the motion, the trustee and the trustee’s attorneys
212 who have been paid attorney’s fees or costs from trust assets to
213 defend against the claim or defense are subject to the remedies
214 in paragraphs (b) and (c).
215 (b) If a claim or defense based upon breach of trust is
216 made against a trustee in a proceeding, a party must obtain a
217 court order to prohibit the trustee from paying costs or
218 attorney’s fees from trust assets. To obtain an order
219 prohibiting payment of costs or attorney’s fees from trust
220 assets, a party must make a reasonable showing by evidence in
221 the record or by proffering evidence that provides a reasonable
222 basis for a court to conclude that there has been a breach of
223 trust. The trustee may proffer evidence to rebut the evidence
224 submitted by a party. The court in its discretion may defer
225 ruling on the motion, pending discovery to be taken by the
226 parties. If the court finds that there is a reasonable basis to
227 conclude that there has been a breach of trust, unless the court
228 finds good cause, the court shall enter an order prohibiting the
229 payment of further attorney’s fees and costs from the assets of
230 the trust and shall order attorney’s fees or costs previously
231 paid from assets of the trust to be refunded. An order entered
232 under this paragraph shall not limit a trustee’s right to seek
233 an order permitting the payment of some or all of the attorney’s
234 fees or costs incurred in the proceeding from trust assets,
235 including any fees required to be refunded, after the claim or
236 defense is finally determined by the court. If a claim or
237 defense based upon a breach of trust is withdrawn, dismissed, or
238 resolved without a determination by the court that the trustee
239 committed a breach of trust after the entry of an order
240 prohibiting payment of attorney’s fees and costs pursuant to
241 this paragraph, the trustee may pay costs or attorney’s fees
242 incurred in the proceeding from the assets of the trust without
243 further court authorization.
244 (c) If the court orders a refund under paragraph (b), the
245 court may enter such sanctions as are appropriate if a refund is
246 not made as directed by the court, including, but not limited
247 to, striking defenses or pleadings filed by the trustee. Nothing
248 in this subsection limits other remedies and sanctions the court
249 may employ for the failure to refund timely.
250 (d) Nothing in this subsection limits the power of the
251 court to review fees and costs or the right of any interested
252 persons to challenge fees and costs after payment, after an
253 accounting, or after conclusion of the litigation.
254 (e) Notice under paragraph (a) is not required if the
255 action or defense is later withdrawn or dismissed by the party
256 that is alleging a breach of trust or resolved without a
257 determination by the court that the trustee has committed a
258 breach of trust.
259 Section 5. Subsection (20) of section 736.0816, Florida
260 Statutes, is amended to read:
261 736.0816 Specific powers of trustee.—Except as limited or
262 restricted by this code, a trustee may:
263 (20) Employ persons, including, but not limited to,
264 attorneys, accountants, investment advisers, or agents, even if
265 they are the trustee, an affiliate of the trustee, or otherwise
266 associated with the trustee, to advise or assist the trustee in
267 the exercise of any of the trustee’s powers and pay reasonable
268 compensation and costs incurred in connection with such
269 employment from the assets of the trust, subject to s.
270 736.0802(10) with respect to attorney fees and costs, and act
271 without independent investigation on the recommendations of such
272 persons.
273 Section 6. Subsection (1) of section 736.1007, Florida
274 Statutes, is amended to read:
275 736.1007 Trustee’s attorney’s fees.—
276 (1) If the trustee of a revocable trust retains an attorney
277 to render legal services in connection with the initial
278 administration of the trust, the attorney is entitled to
279 reasonable compensation for those legal services, payable from
280 the assets of the trust, subject to s. 736.0802(10), without
281 court order. The trustee and the attorney may agree to
282 compensation that is determined in a manner or amount other than
283 the manner or amount provided in this section. The agreement is
284 not binding on a person who bears the impact of the compensation
285 unless that person is a party to or otherwise consents to be
286 bound by the agreement. The agreement may provide that the
287 trustee is not individually liable for the attorney attorney’s
288 fees and costs.
289 Section 7. This act shall take effect July 1, 2016.