Florida Senate - 2016                CS for CS for CS for SB 540
       
       
        
       By the Committees on Rules; Banking and Insurance; and
       Judiciary; and Senator Hukill
       
       595-02130-16                                           2016540c3
    1                        A bill to be entitled                      
    2         An act relating to estates; creating s. 731.1055,
    3         F.S.; providing that the validity and the effect of a
    4         specified disposition of real property be determined
    5         by Florida law; amending s. 731.106, F.S.; conforming
    6         provisions to changes made by the act; amending s.
    7         736.0802, F.S.; defining the term “pleading”;
    8         authorizing a trustee to pay attorney fees and costs
    9         from the assets of the trust without specified
   10         approval or court authorization in certain
   11         circumstances; requiring the trustee to serve a
   12         written notice of intent upon each qualified
   13         beneficiary of the trust before the payment is made;
   14         requiring the notice of intent to contain specified
   15         information and to be served in a specified manner;
   16         providing that specified qualified beneficiaries may
   17         be entitled to an order compelling the refund of a
   18         specified payment to the trust; requiring the court to
   19         award specified attorney fees and costs in certain
   20         circumstances; authorizing the court to prohibit a
   21         trustee from using trust assets to make a specified
   22         payment; authorizing the court to enter an order
   23         compelling the return of specified attorney fees and
   24         costs to the trust with interest at the statutory
   25         rate; requiring the court to deny a specified motion
   26         unless the court finds a reasonable basis to conclude
   27         that there has been a breach of the trust; authorizing
   28         a court to deny the motion if it finds good cause to
   29         do so; authorizing the movant to show that a
   30         reasonable basis exists, and a trustee to rebut the
   31         showing, through specified means; authorizing the
   32         court to impose such remedies or sanctions as it deems
   33         appropriate; providing that a trustee is authorized to
   34         use trust assets in a specified manner if a claim or
   35         defense of breach of trust is withdrawn, dismissed, or
   36         judicially resolved in a trial court without a
   37         determination that the trustee has committed a breach
   38         of trust; providing that specified proceedings,
   39         remedies, and rights are not limited; amending ss.
   40         736.0816 and 736.1007, F.S.; conforming provisions to
   41         changes made by the act; providing an effective date.
   42          
   43  Be It Enacted by the Legislature of the State of Florida:
   44  
   45         Section 1. Section 731.1055, Florida Statutes, is created
   46  to read:
   47         731.1055 Disposition of real property.—The validity and
   48  effect of a disposition, whether intestate or testate, of real
   49  property in this state shall be determined by Florida law.
   50         Section 2. Subsection (2) of section 731.106, Florida
   51  Statutes, is amended to read:
   52         731.106 Assets of nondomiciliaries.—
   53         (2) When a nonresident decedent, whether or not a citizen
   54  of the United States, provides by will that the testamentary
   55  disposition of tangible or intangible personal property having a
   56  situs within this state, or of real property in this state,
   57  shall be construed and regulated by the laws of this state, the
   58  validity and effect of the dispositions shall be determined by
   59  Florida law. The court may, and in the case of a decedent who
   60  was at the time of death a resident of a foreign country the
   61  court shall, direct the personal representative appointed in
   62  this state to make distribution directly to those designated by
   63  the decedent’s will as beneficiaries of the tangible or
   64  intangible property or to the persons entitled to receive the
   65  decedent’s personal estate under the laws of the decedent’s
   66  domicile.
   67         Section 3. Subsection (10) of section 736.0802, Florida
   68  Statutes, is amended to read:
   69         736.0802 Duty of loyalty.—
   70         (10) Unless otherwise provided in this subsection, payment
   71  of costs or attorney attorney’s fees incurred in any proceeding
   72  from the assets of the trust may be made by a the trustee from
   73  assets of the trust without the approval of any person and
   74  without court authorization, unless the court orders otherwise
   75  as provided in ss. 736.0816(20) and 736.1007(1) paragraph (b).
   76         (a) As used in this subsection, the term “pleading” means a
   77  pleading as defined in Rule 1.100 of the Florida Rules of Civil
   78  Procedure.
   79         (b) If a trustee incurs attorney fees or costs in
   80  connection with a claim or defense of breach of trust which is
   81  made in a filed pleading, the trustee may pay such attorney fees
   82  or costs from trust assets without the approval of any person
   83  and without any court authorization. However, the trustee must
   84  serve a written notice of intent upon each qualified beneficiary
   85  of the trust whose share of the trust may be affected by the
   86  payment before such payment is made. The notice of intent does
   87  not need to be served upon a qualified beneficiary whose
   88  identity or location is unknown to, and not reasonably
   89  ascertainable by, the trustee.
   90         (c) The notice of intent must identify the judicial
   91  proceeding in which the claim or defense of breach of trust has
   92  been made in a filed pleading and must inform the person served
   93  of his or her right under paragraph (e) to apply to the court
   94  for an order prohibiting the trustee from using trust assets to
   95  pay attorney fees or costs as provided in paragraph (b) or
   96  compelling the return of such attorney fees and costs to the
   97  trust. The notice of intent must be served by any commercial
   98  delivery service or form of mail requiring a signed receipt; the
   99  manner provided in the Florida Rules of Civil Procedure for
  100  service of process; or, as to any party over whom the court has
  101  already acquired jurisdiction in that judicial proceeding, in
  102  the manner provided for service of pleadings and other documents
  103  by the Florida Rules of Civil Procedure.
  104         (d)If a trustee has used trust assets to pay attorney fees
  105  or costs described in paragraph (b) before service of a notice
  106  of intent, any qualified beneficiary who is not barred under s.
  107  736.1008 and whose share of the trust may have been affected by
  108  such payment is entitled, upon the filing of a motion to compel
  109  the return of such payment to the trust, to an order compelling
  110  the return of such payment, with interest at the statutory rate.
  111  The court shall award attorney fees and costs incurred in
  112  connection with the motion to compel as provided in s. 736.1004.
  113         (e)Upon the motion of any qualified beneficiary who is not
  114  barred under s. 736.1008 and whose share of the trust may be
  115  affected by the use of trust assets to pay attorney fees or
  116  costs as provided in paragraph (b), the court may prohibit the
  117  trustee from using trust assets to make such payment and, if
  118  such payment has been made from trust assets after service of a
  119  notice of intent, the court may enter an order compelling the
  120  return of the attorney fees and costs to the trust, with
  121  interest at the statutory rate. In connection with any hearing
  122  on a motion brought under this paragraph:
  123         1. The court shall deny the motion unless it finds a
  124  reasonable basis to conclude that there has been a breach of
  125  trust. If the court finds there is a reasonable basis to
  126  conclude there has been a breach of trust, the court may still
  127  deny the motion if it finds good cause to do so.
  128         2. The movant may show that such reasonable basis exists,
  129  and the trustee may rebut any such showing by presenting
  130  affidavits, answers to interrogatories, admissions, depositions,
  131  and any evidence otherwise admissible under the Florida Evidence
  132  Code.
  133         (f) If a trustee fails to comply with an order of the court
  134  prohibiting the use of trust assets to pay attorney fees or
  135  costs described in paragraph (b) or fails to comply with an
  136  order compelling that such payment be refunded to the trust, the
  137  court may impose such remedies or sanctions as the court deems
  138  appropriate, including, without limitation, striking the
  139  defenses or pleadings filed by the trustee.
  140         (g) Notwithstanding the entry of an order prohibiting the
  141  use of trust assets to pay attorney fees and costs as provided
  142  in paragraph (b), or compelling the return of such attorney fees
  143  or costs, if a claim or defense of breach of trust is withdrawn,
  144  dismissed, or judicially resolved in the trial court without a
  145  determination that the trustee has committed a breach of trust,
  146  the trustee is authorized to use trust assets to pay attorney
  147  fees and costs as provided in paragraph (b) and may do so
  148  without service of a notice of intent or order of the court. The
  149  attorney fees and costs may include fees and costs that were
  150  refunded to the trust pursuant to an order of the court.
  151         (h) This subsection does not limit proceedings under s.
  152  736.0206 or remedies for breach of trust under s. 736.1001, or
  153  the right of any interested person to challenge or object to the
  154  payment of compensation or costs from the trust.
  155         (a) If a claim or defense based upon a breach of trust is
  156  made against a trustee in a proceeding, the trustee shall
  157  provide written notice to each qualified beneficiary of the
  158  trust whose share of the trust may be affected by the payment of
  159  attorney’s fees and costs of the intention to pay costs or
  160  attorney’s fees incurred in the proceeding from the trust prior
  161  to making payment. The written notice shall be delivered by
  162  sending a copy by any commercial delivery service requiring a
  163  signed receipt, by any form of mail requiring a signed receipt,
  164  or as provided in the Florida Rules of Civil Procedure for
  165  service of process. The written notice shall inform each
  166  qualified beneficiary of the trust whose share of the trust may
  167  be affected by the payment of attorney’s fees and costs of the
  168  right to apply to the court for an order prohibiting the trustee
  169  from paying attorney’s fees or costs from trust assets. If a
  170  trustee is served with a motion for an order prohibiting the
  171  trustee from paying attorney’s fees or costs in the proceeding
  172  and the trustee pays attorney’s fees or costs before an order is
  173  entered on the motion, the trustee and the trustee’s attorneys
  174  who have been paid attorney’s fees or costs from trust assets to
  175  defend against the claim or defense are subject to the remedies
  176  in paragraphs (b) and (c).
  177         (b) If a claim or defense based upon breach of trust is
  178  made against a trustee in a proceeding, a party must obtain a
  179  court order to prohibit the trustee from paying costs or
  180  attorney’s fees from trust assets. To obtain an order
  181  prohibiting payment of costs or attorney’s fees from trust
  182  assets, a party must make a reasonable showing by evidence in
  183  the record or by proffering evidence that provides a reasonable
  184  basis for a court to conclude that there has been a breach of
  185  trust. The trustee may proffer evidence to rebut the evidence
  186  submitted by a party. The court in its discretion may defer
  187  ruling on the motion, pending discovery to be taken by the
  188  parties. If the court finds that there is a reasonable basis to
  189  conclude that there has been a breach of trust, unless the court
  190  finds good cause, the court shall enter an order prohibiting the
  191  payment of further attorney’s fees and costs from the assets of
  192  the trust and shall order attorney’s fees or costs previously
  193  paid from assets of the trust to be refunded. An order entered
  194  under this paragraph shall not limit a trustee’s right to seek
  195  an order permitting the payment of some or all of the attorney’s
  196  fees or costs incurred in the proceeding from trust assets,
  197  including any fees required to be refunded, after the claim or
  198  defense is finally determined by the court. If a claim or
  199  defense based upon a breach of trust is withdrawn, dismissed, or
  200  resolved without a determination by the court that the trustee
  201  committed a breach of trust after the entry of an order
  202  prohibiting payment of attorney’s fees and costs pursuant to
  203  this paragraph, the trustee may pay costs or attorney’s fees
  204  incurred in the proceeding from the assets of the trust without
  205  further court authorization.
  206         (c) If the court orders a refund under paragraph (b), the
  207  court may enter such sanctions as are appropriate if a refund is
  208  not made as directed by the court, including, but not limited
  209  to, striking defenses or pleadings filed by the trustee. Nothing
  210  in this subsection limits other remedies and sanctions the court
  211  may employ for the failure to refund timely.
  212         (d) Nothing in this subsection limits the power of the
  213  court to review fees and costs or the right of any interested
  214  persons to challenge fees and costs after payment, after an
  215  accounting, or after conclusion of the litigation.
  216         (e) Notice under paragraph (a) is not required if the
  217  action or defense is later withdrawn or dismissed by the party
  218  that is alleging a breach of trust or resolved without a
  219  determination by the court that the trustee has committed a
  220  breach of trust.
  221         Section 4. Subsection (20) of section 736.0816, Florida
  222  Statutes, is amended to read:
  223         736.0816 Specific powers of trustee.—Except as limited or
  224  restricted by this code, a trustee may:
  225         (20) Employ persons, including, but not limited to,
  226  attorneys, accountants, investment advisers, or agents, even if
  227  they are the trustee, an affiliate of the trustee, or otherwise
  228  associated with the trustee, to advise or assist the trustee in
  229  the exercise of any of the trustee’s powers and pay reasonable
  230  compensation and costs incurred in connection with such
  231  employment from the assets of the trust, subject to s.
  232  736.0802(10) with respect to attorney fees and costs, and act
  233  without independent investigation on the recommendations of such
  234  persons.
  235         Section 5. Subsection (1) of section 736.1007, Florida
  236  Statutes, is amended to read:
  237         736.1007 Trustee’s attorney’s fees.—
  238         (1) If the trustee of a revocable trust retains an attorney
  239  to render legal services in connection with the initial
  240  administration of the trust, the attorney is entitled to
  241  reasonable compensation for those legal services, payable from
  242  the assets of the trust, subject to s. 736.0802(10), without
  243  court order. The trustee and the attorney may agree to
  244  compensation that is determined in a manner or amount other than
  245  the manner or amount provided in this section. The agreement is
  246  not binding on a person who bears the impact of the compensation
  247  unless that person is a party to or otherwise consents to be
  248  bound by the agreement. The agreement may provide that the
  249  trustee is not individually liable for the attorney attorney’s
  250  fees and costs.
  251         Section 6. This act shall take effect July 1, 2016.