Florida Senate - 2020                                    SB 1366
       By Senator Gruters
       23-01273A-20                                          20201366__
    1                        A bill to be entitled                      
    2         An act relating to trusts; creating s. 736.08145,
    3         F.S.; authorizing trustees of certain trusts to
    4         reimburse persons being treated as the owner of the
    5         trust for specified amounts and in a specified manner;
    6         prohibiting certain policies, values, and proceeds
    7         from being used for such reimbursement; providing
    8         applicability; prohibiting certain trustees from
    9         taking specified actions relating to trusts; requiring
   10         that specified powers be granted to certain persons if
   11         the terms of the trust require a trustee to act at the
   12         direction or with the consent of such persons;
   13         providing construction; providing an effective date.
   15  Be It Enacted by the Legislature of the State of Florida:
   17         Section 1. Section 736.08145, Florida Statutes, is created
   18  to read:
   19         736.08145 Grantor trust reimbursement.
   20         (1)(a)Except as otherwise provided under the terms of a
   21  trust, if all or any portion of the trust is treated as being
   22  owned by a person under s. 671 of the Internal Revenue Code or
   23  any similar federal, state, or other tax law, the trustee may,
   24  in the trustee’s sole discretion, reimburse the person being
   25  treated as the owner for any amount of the person’s personal
   26  federal, state, or other income tax liability which is
   27  attributable to the inclusion of the trust’s income, capital
   28  gains, deductions, or credits in the calculation of the person’s
   29  taxable income. In the trustee’s sole discretion, the trustee
   30  may pay such tax reimbursement amount, determined without regard
   31  to any other distribution or payment made from trust assets, to
   32  the person directly or to the appropriate taxing authority.
   33         (b)A life insurance policy held in the trust, the cash
   34  value of any such policy, or the proceeds of any loan secured by
   35  an interest in the policy may not be used for such reimbursement
   36  or such payment if the person is an insured.
   37         (2)This section applies to all trusts, whether created on,
   38  before, or after July 1, 2020, unless:
   39         (a)The trustee provides written notification that the
   40  trustee intends to irrevocably elect out of the application of
   41  this section, at least 60 days before the effective date of such
   42  election, to the person treated as the owner of all or a portion
   43  of the trust under s. 671 of the Internal Revenue Code or any
   44  similar federal, state, or other tax law and to all persons who
   45  have the ability to remove and replace the trustee.
   46         (b)Applying this section would prevent a contribution to
   47  the trust from qualifying for, or would reduce, a federal tax
   48  benefit, including a federal tax exclusion or deduction, which
   49  was originally claimed or could have been claimed for the
   50  contribution, including:
   51         1.An exclusion under s. 2503(b) or s. 2503(c) of the
   52  Internal Revenue Code;
   53         2.A marital deduction under s. 2056, s. 2056A, or s. 2523
   54  of the Internal Revenue Code;
   55         3.A charitable deduction under s. 170(a), s. 642(c), s.
   56  2055(a), or s. 2522(a) of the Internal Revenue Code; or
   57         4.Direct skip treatment under s. 2642(c) of the Internal
   58  Revenue Code.
   59         (3)A trustee may not exercise, or participate in the
   60  exercise of, the powers granted by this section with respect to
   61  any trust if any of the following applies:
   62         (a)The trustee is treated as the owner of all or part of
   63  such trust under s. 671 of the Internal Revenue Code or any
   64  similar federal, state, or other tax law.
   65         (b)The trustee is a qualified beneficiary of such trust.
   66         (c)The trustee is a related or subordinate party, as
   67  defined in s. 672(c) of the Internal Revenue Code, with respect
   68  to a person treated as the owner of all or part of such trust
   69  under s. 671 of the Internal Revenue Code or any similar
   70  federal, state, or other tax law or with respect to a qualified
   71  beneficiary of such trust.
   72         (4)If the terms of a trust require the trustee to act at
   73  the direction or with the consent of a trust advisor, a
   74  protector, or any other person, the powers granted by this
   75  section to the trustee must instead or also be granted, as
   76  applicable under the terms of the trust, to the advisor,
   77  protector, or other person subject to the limitations set forth
   78  in subsection (3), which must be applied as if the advisor,
   79  protector, or other person were a trustee.
   80         (5)A person may not be considered a qualified beneficiary
   81  of a trust solely by reason of the application of this section.
   82         Section 2. This act shall take effect July 1, 2020.