2005 Florida Statutes
Powers of trustees conferred by this part.
737.402 Powers of trustees conferred by this part.--
(1) From the creation of the trust until final distribution of the assets from the trust, a trustee has the power to perform every act that a prudent trustee would perform for the purposes of the trust, without court authorization, including, but not limited to, the powers specified in subsections (2) and (3) but subject to the limitations of subsection (4).
(2) Unless otherwise provided in the trust instrument, a trustee has the power:
(a) To collect, hold, and retain trust assets received from a settlor until disposition of the assets should be made. The assets may be retained even though they include an asset in which the trustee is personally interested.
(b) To hold without liability, other than that involved in holding property legal for investment of trust funds, any and all property received from or through the settlor of the trust, whether or not permissible for investment of funds of that particular trust, and any property lawfully coming into the hands of the trustees instead of or in substitution therefor, including the power to exchange capital stock of any bank or trust company, including capital stock of the corporate trustee, for capital stock in any registered bank holding company if the bank holding company is subject to the provisions of 12 U.S.C. ss. 1841 et seq., as amended, commonly known as the Bank Holding Company Act of 1956. This provision does not cover reinvestments of cash made by the trustee except for the purchase of fractional shares and the exercise of rights acquired in the exchange.
(c) To receive additions to the assets of the trust and, unless expressly provided to the contrary in the trust instrument, to incorporate those additions as part of the trust or hold the additions as a separate trust having terms identical to the terms of the existing trust.
(d) To continue or participate in the operation of any business or other enterprise and to effect incorporation, dissolution, or other change in the form of the organization of the business or enterprise.
(e) To acquire an undivided interest in a trust asset, including, but not limited to, a money market mutual fund, mutual fund, or common trust fund, in which asset the trustee holds an undivided interest in any trust capacity, including any money market or other mutual fund from which the trustee, any cotrustee, or any affiliate or associate of the trustee or cotrustee is entitled to receive reasonable compensation for providing necessary services as an investment adviser, portfolio manager, or servicing agent. A trustee, cotrustee, or affiliate or associate of the trustee or cotrustee may receive compensation for such services in addition to fees received for administering the trust, provided such compensation is fully disclosed in writing to all current income beneficiaries of the trust.
(f) To invest and reinvest trust assets in accordance with the provisions of the trust or as provided by law.
(g) If a bank, to deposit trust funds in another department of the same entity or in a bank that is affiliated with the trustee bank.
(h) To acquire or dispose of an asset for cash or on credit at a public or private sale; to manage, develop, improve, exchange, partition, change the character of, or abandon a trust asset or any interest in it; and to encumber, mortgage, or pledge a trust asset for a term within or extending beyond the term of the trust in connection with the exercise of any power vested in the trustee.
(i) To make ordinary or extraordinary repairs or alterations in buildings or other structures; to demolish any improvements; or to raze existing, or erect new, party walls or buildings.
(j) To subdivide, develop, or dedicate land to public use; to make, or obtain the vacation of, plats and adjust boundaries; to adjust differences in valuation on exchange or partition by giving or receiving consideration; or to dedicate easements to public use without consideration.
(k) To enter for any purpose into a lease as lessor or lessee with or without option to purchase or renew for a term within or extending beyond the term of the trust.
(l) To enter into a lease or arrangement for exploration and removal of minerals or other natural resources or enter into a pooling or unitization agreement.
(m) To grant an option involving disposition of a trust asset or to take an option for the acquisition of any asset.
(n) To vote a security, in person or by general or limited proxy, or not to vote a security.
(o) To pay calls, assessments, and any other sums chargeable or accruing against, or on account of, securities.
(p) To sell or exercise stock subscription or conversion rights and consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise.
(q) To hold property in the name of a nominee or in other form without disclosure of the trust so that title to the property may pass by delivery, but the trustee is liable for any act of the nominee in connection with the property so held.
(r) To insure the assets of the trust against damage or loss and insure the trustee against liability with respect to third persons.
(s) To borrow money to be repaid from trust assets or otherwise, and to advance money for the protection of the trust and for all expenses, losses, and liabilities sustained in the administration of the trust or because of the holding or ownership of any trust assets, for which advances, with any interest, the trustee has a lien on the trust assets as against the beneficiary.
(t) To pay or contest any claim; to settle a claim by or against the trust by compromise, arbitration, or otherwise; and to release any claim belonging to the trust in whole or in part to the extent that the claim is uncollectible.
(u) To pay taxes, assessments, compensation of the trustee, and other expenses incurred in the collection, care, administration, and protection of the trust.
(v) To allocate items of income or expense to either trust income or principal, as provided by law.
(w) To pay any sum distributable to a beneficiary under legal disability to the beneficiary or by paying the sum for the use of the beneficiary either to a legal representative appointed by the court or, if none, to a relative; and, when income is directed to be paid to minors, apply and expend it for their benefit either with or without the intervention of a guardian.
(x) To effect distribution of property and money in divided or undivided interests and to adjust resulting differences in valuation.
(y) To employ persons, including attorneys, auditors, investment advisers, or agents, even if they are the trustee or associated with the trustee, to advise or assist the trustee in the performance of his or her administrative duties and to pay compensation and costs incurred in connection with such employment from the assets of the trust; to act without independent investigation upon their recommendations; and, instead of acting personally, to employ one or more agents to perform any act of administration, whether or not discretionary.
(z)1. To prosecute or defend actions, claims, or proceedings, including appeals, for the protection of trust assets and of the trustee in the performance of his or her duties.
2. To employ attorneys and other agents to advise and assist the trustee in the exercise of any of the trustee's powers and to pay compensation and costs incurred in connection with such employment from the assets of the trust.
(aa) To execute and deliver all instruments that will accomplish or facilitate the exercise of the powers vested in the trustee.
(bb) To sever any trust on a fractional basis into two or more separate and identical trusts for any reason or to segregate by allocation to a separate account or trust a specific amount from, a portion of, or specific assets included in, the trust property of any trust, unless expressly provided to the contrary in the trust instrument. Income earned on a segregated amount, portion, or specific asset after the segregation is effective passes with the amount, portion, or asset segregated. Each separate trust must be held and administered upon the identical terms and conditions of the trust from which it was severed. Subject to the terms of the trust, the trustee may take into consideration differences in federal tax attributes and other pertinent factors in administering the trust property of any separate account or trust, in making applicable tax elections, and in making distributions. A separate trust created by severance must be treated as a separate trust for all purposes from the date on which the severance is effective. The effective date of the severance may be retroactive to a date before the date on which the trustee exercises such power.
(3) If a trustee has determined that the market value of a trust is less than $50,000 and that, relative to the costs of administering the trust, continuance pursuant to its existing terms will defeat or substantially impair the accomplishment of its purposes, the trustee may, in the trustee's sole discretion, terminate the trust and distribute the trust property, including principal and undistributed income, to the beneficiaries in a manner which conforms as nearly as possible to the intention of the settlor. The trustee may enter into agreements or make such other provisions that it deems necessary or appropriate to protect the interests of the beneficiaries and the trustee and to carry out the intent and purpose of the trust. The existence of a spendthrift or similar protective provision in the trust does not make this subsection inapplicable unless the trust instrument expressly provides that the trustee may not terminate the trust pursuant to this subsection.
(4)(a) Due to the inherent conflict of interest that exists between a trustee who is a beneficiary and other beneficiaries of the trust, unless the terms of a trust refer specifically to this subsection and provide expressly to the contrary, any power conferred upon a trustee (other than the settlor of a revocable or amendable trust or a decedent's or settlor's spouse who is the trustee of a testamentary or an inter vivos trust for which a marital deduction has been allowed):
1. To make discretionary distributions of either principal or income to or for the benefit of such trustee, except to provide for that trustee's health, education, maintenance, or support as described under Internal Revenue Code ss. 2041 and 2514;
2. To make discretionary allocations of receipts or expenses as between principal and income, unless such trustee acts in a fiduciary capacity whereby such trustee has no power to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of such trustee's fiduciary duties;
3. To make discretionary distributions of either principal or income to satisfy any legal support obligations of such trustee; or
4. To exercise any other power, including the right to remove or to replace any trustee, so as to cause the powers enumerated in subparagraph 1., subparagraph 2., or subparagraph 3. to be exercised on behalf of, or for the benefit of, a beneficiary who is also a trustee,
cannot be exercised by such trustee. Any of the foregoing proscribed powers that are conferred upon two or more trustees may be exercised by the trustees who are not so disqualified. If there is no trustee qualified to exercise such power, any party in interest, as defined in paragraph (c), may apply to a court of competent jurisdiction to appoint an independent trustee and such power may be exercised by the independent trustee appointed by the court.
(b) This subsection applies to:
1. Any trust executed after June 30, 1991, unless the terms of the trust refer specifically to this subsection and provide expressly to the contrary;
2. Any testamentary trust created under a will executed after June 30, 1991, unless the terms of the trust refer specifically to this subsection and provide expressly to the contrary; and
3. Any trust created under a document executed before July 1, 1991, unless:
a. If the trust is revocable or amendable, the settlor revokes or amends the trust at any time to provide otherwise; or
b. If the trust is irrevocable, all parties in interest, as defined in paragraph (c), elect affirmatively, in the manner prescribed in paragraph (d), not to be subject to the application of this subsection. Such election must be made on or before the later of July 1, 1994, or 3 years after the date on which the trust becomes irrevocable.
However, the provisions of this subsection neither create a new cause of action nor impair any existing cause of action which, in either case, relates to any power proscribed by paragraph (a) that was exercised before July 1, 1991.
(c) For the purpose of paragraph (a) or paragraph (b):
1. If the trust is revocable or amendable and the settlor is not incapacitated, the party in interest is the settlor.
2. If the trust is revocable or amendable and the settlor is incapacitated, the party in interest is the settlor's legal representative under applicable law or the settlor's donee under a durable power of attorney that is sufficient to grant such authority.
3. If the trust is not revocable or amendable, the parties in interest are:
a. Each trustee then serving;
b. Each income beneficiary then in existence or, if any such beneficiary has not attained majority or is otherwise incapacitated, the beneficiary's legal representative under applicable law or the beneficiary's donee under a durable power of attorney that is sufficient to grant such authority; and
c. Each remainder beneficiary then in existence or, if any such remainder beneficiary has not attained majority or is otherwise incapacitated, the beneficiary's legal representative under applicable law or the beneficiary's donee under a durable power of attorney that is sufficient to grant such authority.
(d) The affirmative election required under paragraph (b) must be made:
1. If the settlor is not incapacitated and the trust is revocable or amendable, through a revocation of or an amendment to the trust;
2. If the settlor is incapacitated and the trust is revocable or amendable, through a written declaration executed in the manner prescribed for the recordation of deeds in this state and delivered to the trustee; or
3. If the trust is not revocable or amendable, through a written declaration executed in the manner prescribed for the recordation of deeds in this state and delivered to the trustee.
(e) A person who has the right to remove or to replace a trustee does not possess nor may that person be deemed to possess, by virtue of having that right, the powers of the trustee that is subject to removal or to replacement.
History.--s. 1, ch. 74-106; s. 8, ch. 75-221; s. 3, ch. 84-31; s. 1, ch. 84-179; s. 2, ch. 89-39; s. 3, ch. 91-61; s. 27, ch. 92-200; s. 15, ch. 95-401; s. 1043, ch. 97-102; s. 3, ch. 2005-85.
Note.--Created from former s. 691.03.