Duties and Powers of Trustee Under Florida’s Trust Code
DUTIES AND POWERS OF TRUSTEE
736.0801 Duty to administer trust.
736.0802 Duty of loyalty.
736.0804 Prudent administration.
736.0805 Expenses of administration.
736.0806 Trustee’s skills.
736.0807 Delegation by trustee.
736.0808 Powers to direct.
736.0809 Control and protection of trust property.
736.0810 Recordkeeping and identification of trust property.
736.08105 Duty to ascertain marketable title of trust real property.
736.0811 Enforcement and defense of claims.
736.0812 Collecting trust property.
736.08125 Protection of successor trustees.
736.0813 Duty to inform and account.
736.08135 Trust accountings.
736.0814 Discretionary powers; tax savings.
736.08147 Duty to distribute trust income.
736.0815 General powers of trustee.
736.0816 Specific powers of trustee.
736.08163 Powers of trustees relating to environmental or human health laws or to trust property contaminated with hazardous or toxic substances; liability.
736.08165 Administration pending outcome of contest or other proceeding.
736.0817 Distribution on termination.
736.0801 Duty to administer trust.—Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with this code.
736.0802 Duty of loyalty.—
(1) As between a trustee and the beneficiaries, a trustee shall administer the trust solely in the interests of the beneficiaries.
(2) Subject to the rights of persons dealing with or assisting the trustee as provided in s. 736.1016, a sale, encumbrance, or other transaction involving the investment or management of trust property entered into by the trustee for the trustee’s own personal account or which is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction unless:
(a) The transaction was authorized by the terms of the trust;
(b) The transaction was approved by the court;
(c) The beneficiary did not commence a judicial proceeding within the time allowed by s. 736.1008;
(d) The beneficiary consented to the trustee’s conduct, ratified the transaction, or released the trustee in compliance with s. 736.1012;
(e) The transaction involves a contract entered into or claim acquired by the trustee when that person had not become or contemplated becoming trustee;
(f) The transaction was consented to in writing by a settlor of the trust while the trust was revocable; or
(g) The transaction is one by a corporate trustee that involves a money market mutual fund, mutual fund, or a common trust fund described in s. 736.0816(3).
(3) A sale, encumbrance, or other transaction involving the investment or management of trust property is presumed to be affected by a conflict between personal and fiduciary interests if the sale, encumbrance, or other transaction is entered into by the trustee with:
(a) The trustee’s spouse;
(b) The trustee’s descendants, siblings, parents, or their spouses;
(c) An officer, director, employee, agent, or attorney of the trustee; or
(d) A corporation or other person or enterprise in which the trustee, or a person that owns a significant interest in the trustee, has an interest that might affect the trustee’s best judgment.
(4) A transaction not concerning trust property in which the trustee engages in the trustee’s individual capacity involves a conflict between personal and fiduciary interests if the transaction concerns an opportunity properly belonging to the trust.
(5)(a) An investment by a trustee authorized by lawful authority to engage in trust business, as defined in s. 658.12(20), in investment instruments, as defined in s. 660.25(6), that are owned or controlled by the trustee or its affiliate, or from which the trustee or its affiliate receives compensation for providing services in a capacity other than as trustee, is not presumed to be affected by a conflict between personal and fiduciary interests provided the investment otherwise complies with chapters 518 and 660 and the trustee complies with the requirements of this subsection.
(b) A trustee who, pursuant to this subsection, invests trust funds in investment instruments that are owned or controlled by the trustee or its affiliate shall disclose the following to all qualified beneficiaries:
1. Notice that the trustee has invested trust funds in investment instruments owned or controlled by the trustee or its affiliate.
2. The identity of the investment instruments.
3. The identity and relationship to the trustee of any affiliate that owns or controls the investment instruments.
(c) A trustee who, pursuant to this subsection, invests trust funds in investment instruments with respect to which the trustee or its affiliate receives compensation for providing services in a capacity other than as trustee shall disclose to all qualified beneficiaries, the nature of the services provided by the trustee or its affiliate, and all compensation, including, but not limited to, fees or commissions paid or to be paid by the account and received or to be received by an affiliate arising from such affiliated investment.
(d) Disclosure required by this subsection shall be made at least annually unless there has been no change in the method or increase in the rate at which such compensation is calculated since the most recent disclosure. The disclosure may be given in a trust disclosure document as defined in s. 736.1008, in a copy of the prospectus for the investment instrument, in any other written disclosure prepared for the investment instrument under applicable federal or state law, or in a written summary that includes all compensation received or to be received by the trustee and any affiliate of the trustee and an explanation of the manner in which such compensation is calculated, either as a percentage of the assets invested or by some other method.
(e) This subsection shall apply as follows:
1. This subsection does not apply to qualified investment instruments or to a trust for which a right of revocation exists.
2. For investment instruments other than qualified investment instruments, paragraphs (a), (b), (c), and (d) shall apply to irrevocable trusts created on or after July 1, 2007, which expressly authorize the trustee, by specific reference to this subsection, to invest in investment instruments owned or controlled by the trustee or its affiliate.
3. For investment instruments other than qualified investment instruments, paragraphs (a), (b), (c), and (d) shall apply to irrevocable trusts created on or after July 1, 2007, that are not described in subparagraph 2. and to irrevocable trusts created prior to July 1, 2007, only as follows:
a. Such paragraphs shall not apply until the statement required in paragraph (f) is provided and a majority of the qualified beneficiaries have provided written consent. All consents must be obtained within 90 days after the date of delivery of the written request. Once given, consent shall be valid as to all investment instruments acquired pursuant to the consent prior to the date of any withdrawal of the consent.
(I) Any qualified beneficiary may petition the court for an order to prohibit, limit, or restrict a trustee’s authority to make investments under this subsection. The burden shall be upon the petitioning beneficiary to show good cause for the relief sought.
(II) The court may award costs and attorney’s fees relating to any petition under this subparagraph in the same manner as in chancery actions. When costs and attorney’s fees are to be paid out of the trust, the court, in its discretion, may direct from which part of the trust such costs and fees shall be paid.
b. The consent of a majority of the qualified beneficiaries under this subparagraph may be withdrawn prospectively by written notice of a majority of any one of the class or classes of the qualified beneficiaries.
(f)1. The trustee of a trust as defined in s. 731.201 may request authority to invest in investment instruments described in this subsection other than a qualified investment instrument, by providing to all qualified beneficiaries a written request containing the following:
a. The name, telephone number, street address, and mailing address of the trustee and of any individuals who may be contacted for further information.
b. A statement that the investment or investments cannot be made without the consent of a majority of each class of the qualified beneficiaries.
c. A statement that, if a majority of each class of qualified beneficiaries consent, the trustee will have the right to make investments in investment instruments, as defined in s. 660.25(6), which are owned or controlled by the trustee or its affiliate, or from which the trustee or its affiliate receives compensation for providing services in a capacity other than as trustee, that such investment instruments may include investment instruments sold primarily to trust accounts, and that the trustee or its affiliate may receive fees in addition to the trustee’s compensation for administering the trust.
d. A statement that the consent may be withdrawn prospectively at any time by written notice given by a majority of any class of the qualified beneficiaries.
A statement by the trustee is not delivered if the statement is accompanied by another written communication other than a written communication by the trustee that refers only to the statement.
2. For purposes of paragraph (e) and this paragraph:
a. “Majority of the qualified beneficiaries” means:
(I) If at the time the determination is made there are one or more beneficiaries as described in s. 736.0103(14)(c), at least a majority in interest of the beneficiaries described in s. 736.0103(14)(a), at least a majority in interest of the beneficiaries described in s. 736.0103(14)(b), and at least a majority in interest of the beneficiaries described in s. 736.0103(14)(c), if the interests of the beneficiaries are reasonably ascertainable; otherwise, a majority in number of each such class; or
(II) If there is no beneficiary as described in s. 736.0103(14)(c), at least a majority in interest of the beneficiaries described in s. 736.0103(14)(a) and at least a majority in interest of the beneficiaries described in s. 736.0103(14)(b), if the interests of the beneficiaries are reasonably ascertainable; otherwise, a majority in number of each such class.
b. “Qualified investment instrument” means a mutual fund, common trust fund, or money market fund described in and governed by s. 736.0816(3).
c. An irrevocable trust is created upon execution of the trust instrument. If a trust that was revocable when created thereafter becomes irrevocable, the irrevocable trust is created when the right of revocation terminates.
(g) Nothing in this chapter is intended to create or imply a duty for the trustee to seek the application of this subsection to invest in investment instruments described in paragraph (a), and no inference of impropriety may be made as a result of a trustee electing not to invest trust assets in investment instruments described in paragraph (a).
(h) This subsection is not the exclusive authority under this code for investing in investment instruments described in paragraph (a). A trustee who invests trust funds in investment instruments described in paragraph (a) is not required to comply with paragraph (b), paragraph (c), or paragraph (f) if the trustee is permitted to invest in such investment instruments pursuant to subsection (2).
(6) In voting shares of stock or in exercising powers of control over similar interests in other forms of enterprise, the trustee shall act in the best interests of the beneficiaries. If the trust is the sole owner of a corporation or other form of enterprise, the trustee shall elect or appoint directors or other managers who will manage the corporation or enterprise in the best interests of the beneficiaries.
(7) This section does not preclude the following transactions, if fair to the beneficiaries:
(a) An agreement between a trustee and a beneficiary relating to the appointment or compensation of the trustee;
(b) A payment of reasonable compensation to the trustee;
(c) A transaction between a trust and another trust, the decedent’s estate, or a guardian of the property of which the trustee is a fiduciary or in which a beneficiary has an interest;
(d) A deposit of trust money in a regulated financial service institution operated by the trustee; or
(e) An advance by the trustee of money for the protection of the trust.
(8) This section does not preclude the employment of persons, including, but not limited to, attorneys, accountants, investment advisers, or agents, even if they are the trustee, an affiliate of the trustee, or otherwise associated with the trustee, to advise or assist the trustee in the exercise of any of the trustee’s powers and to pay reasonable compensation and costs incurred in connection with such employment from the assets of the trust; to act without independent investigation on their recommendations; and, instead of acting personally, to employ one or more agents to perform any act of administration, whether or not discretionary.
(9) The court may appoint a special fiduciary to act with respect to any proposed transaction that might violate this section if entered into by the trustee.
(10) Payment of costs or attorney’s fees incurred in any proceeding from the assets of the trust may be made by the trustee without the approval of any person and without court authorization, unless the court orders otherwise as provided in paragraph (b).
(a) If a claim or defense based upon a breach of trust is made against a trustee in a proceeding, the trustee shall provide written notice to each qualified beneficiary of the trust whose share of the trust may be affected by the payment of attorney’s fees and costs of the intention to pay costs or attorney’s fees incurred in the proceeding from the trust prior to making payment. The written notice shall be delivered by sending a copy by any commercial delivery service requiring a signed receipt, by any form of mail requiring a signed receipt, or as provided in the Florida Rules of Civil Procedure for service of process. The written notice shall inform each qualified beneficiary of the trust whose share of the trust may be affected by the payment of attorney’s fees and costs of the right to apply to the court for an order prohibiting the trustee from paying attorney’s fees or costs from trust assets. If a trustee is served with a motion for an order prohibiting the trustee from paying attorney’s fees or costs in the proceeding and the trustee pays attorney’s fees or costs before an order is entered on the motion, the trustee and the trustee’s attorneys who have been paid attorney’s fees or costs from trust assets to defend against the claim or defense are subject to the remedies in paragraphs (b) and (c).
(b) If a claim or defense based upon breach of trust is made against a trustee in a proceeding, a party must obtain a court order to prohibit the trustee from paying costs or attorney’s fees from trust assets. To obtain an order prohibiting payment of costs or attorney’s fees from trust assets, a party must make a reasonable showing by evidence in the record or by proffering evidence that provides a reasonable basis for a court to conclude that there has been a breach of trust. The trustee may proffer evidence to rebut the evidence submitted by a party. The court in its discretion may defer ruling on the motion, pending discovery to be taken by the parties. If the court finds that there is a reasonable basis to conclude that there has been a breach of trust, unless the court finds good cause, the court shall enter an order prohibiting the payment of further attorney’s fees and costs from the assets of the trust and shall order attorney’s fees or costs previously paid from assets of the trust to be refunded. An order entered under this paragraph shall not limit a trustee’s right to seek an order permitting the payment of some or all of the attorney’s fees or costs incurred in the proceeding from trust assets, including any fees required to be refunded, after the claim or defense is finally determined by the court. If a claim or defense based upon a breach of trust is withdrawn, dismissed, or resolved without a determination by the court that the trustee committed a breach of trust after the entry of an order prohibiting payment of attorney’s fees and costs pursuant to this paragraph, the trustee may pay costs or attorney’s fees incurred in the proceeding from the assets of the trust without further court authorization.
(c) If the court orders a refund under paragraph (b), the court may enter such sanctions as are appropriate if a refund is not made as directed by the court, including, but not limited to, striking defenses or pleadings filed by the trustee. Nothing in this subsection limits other remedies and sanctions the court may employ for the failure to refund timely.
(d) Nothing in this subsection limits the power of the court to review fees and costs or the right of any interested persons to challenge fees and costs after payment, after an accounting, or after conclusion of the litigation.
(e) Notice under paragraph (a) is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.
736.0803 Impartiality.—If a trust has two or more beneficiaries, the trustee shall act impartially in administering the trust property, giving due regard to the beneficiaries’ respective interests.
736.0804 Prudent administration.—A trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
736.0805 Expenses of administration.—In administering a trust, the trustee shall only incur expenses that are reasonable in relation to the trust property, the purposes of the trust, and the skills of the trustee.
736.0806 Trustee’s skills.—A trustee who has special skills or expertise, or is named trustee in reliance on the trustee’s representation that the trustee has special skills or expertise, shall use those special skills or expertise.
736.0807 Delegation by trustee.—
(1) A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances, including investment functions pursuant to s. 518.112. The trustee shall exercise reasonable care, skill, and caution in:
(a) Selecting an agent.
(b) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust.
(c) Reviewing the agent’s actions periodically, in order to monitor the agent’s performance and compliance with the terms of the delegation.
(2) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.
(3) A trustee who complies with subsection (1) and, when investment functions are delegated, s. 518.112 is not liable to the beneficiaries or to the trust for an action of the agent to whom the function was delegated.
(4) By accepting a delegation of powers or duties from the trustee of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state.
736.0808 Powers to direct.—
(1) Subject to ss. 736.0403(2) and 736.0602(3)(a), the trustee may follow a direction of the settlor that is contrary to the terms of the trust while a trust is revocable.
(2) If the terms of a trust confer on a person other than the settlor of a revocable trust the power to direct certain actions of the trustee, the trustee shall act in accordance with an exercise of the power unless the attempted exercise is manifestly contrary to the terms of the trust or the trustee knows the attempted exercise would constitute a serious breach of a fiduciary duty that the person holding the power owes to the beneficiaries of the trust.
(3) The terms of a trust may confer on a trustee or other person a power to direct the modification or termination of the trust.
(4) A person, other than a beneficiary, who holds a power to direct is presumptively a fiduciary who, as such, is required to act in good faith with regard to the purposes of the trust and the interests of the beneficiaries. The holder of a power to direct is liable for any loss that results from breach of a fiduciary duty.
736.0809 Control and protection of trust property.—A trustee shall take reasonable steps to take control of and protect the trust property.
736.0810 Recordkeeping and identification of trust property.—
(1) A trustee shall keep clear, distinct, and accurate records of the administration of the trust.
(2) A trustee shall keep trust property separate from the trustee’s own property.
(3) Except as otherwise provided in subsection (4), a trustee shall cause the trust property to be designated so that the interest of the trust, to the extent feasible, appears in records maintained by a party other than a trustee or beneficiary.
(4) If the trustee maintains records clearly indicating the respective interests, a trustee may invest as a whole the property of two or more separate trusts.
736.08105 Duty to ascertain marketable title of trust real property.—A trustee holding title to real property received from a settlor or estate shall not be required to obtain title insurance or proof of marketable title until a marketable title is required for a sale or conveyance of the real property.
736.0811 Enforcement and defense of claims.—A trustee shall take reasonable steps to enforce claims of the trust and to defend claims against the trust.
736.0812 Collecting trust property.—A trustee shall take reasonable steps to compel a former trustee or other person to deliver trust property to the trustee and, except as provided in s. 736.08125, to redress a breach of trust known to the trustee to have been committed by a former trustee.
736.08125 Protection of successor trustees.—
(1) A successor trustee is not personally liable for actions taken by any prior trustee, nor does any successor trustee have a duty to institute any proceeding against any prior trustee, or file any claim against any prior trustee’s estate, for any of the prior trustee’s actions as trustee under any of the following circumstances:
(a) As to a successor trustee who succeeds a trustee who was also the settlor of a trust that was revocable during the time that the settlor served as trustee;
(b) As to any beneficiary who has waived any accounting required by s. 736.0813, but only as to the periods included in the waiver;
(c) As to any beneficiary who has released the successor trustee from the duty to institute any proceeding or file any claim;
(d) As to any person who is not an eligible beneficiary; or
(e) As to any eligible beneficiary:
1. If a super majority of the eligible beneficiaries have released the successor trustee;
2. If the eligible beneficiary has not delivered a written request to the successor trustee to institute an action or file a claim against the prior trustee within 6 months after the date of the successor trustee’s acceptance of the trust, if the successor trustee has notified the eligible beneficiary in writing of acceptance by the successor trustee in accordance with s. 736.0813(1)(a) and that writing advises the beneficiary that, unless the beneficiary delivers the written request within 6 months after the date of acceptance, the right to proceed against the successor trustee will be barred pursuant to this section; or
3. For any action or claim that the eligible beneficiary is barred from bringing against the prior trustee.
(2) For the purposes of this section, the term:
(a) “Eligible beneficiaries” means:
1. At the time the determination is made, if there are one or more beneficiaries as described in s. 736.0103(14)(c), the beneficiaries described in s. 736.0103(14)(a) and (c); or
2. If there is no beneficiary as described in s. 736.0103(14)(c), the beneficiaries described in s. 736.0103(14)(a) and (b).
(b) “Super majority of eligible beneficiaries” means at least two-thirds in interest of the eligible beneficiaries if the interests of the eligible beneficiaries are reasonably ascertainable, otherwise, at least two-thirds in number of the eligible beneficiaries.
(3) Nothing in this section affects any liability of the prior trustee or the right of the successor trustee or any beneficiary to pursue an action or claim against the prior trustee.
736.0813 Duty to inform and account.—The trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.
(1) The trustee’s duty to inform and account includes, but is not limited to, the following:
(a) Within 60 days after acceptance of the trust, the trustee shall give notice to the qualified beneficiaries of the acceptance of the trust, the full name and address of the trustee, and that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.
(b) Within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, the trustee shall give notice to the qualified beneficiaries of the trust’s existence, the identity of the settlor or settlors, the right to request a copy of the trust instrument, the right to accountings under this section, and that the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.
(c) Upon reasonable request, the trustee shall provide a qualified beneficiary with a complete copy of the trust instrument.
(d) A trustee of an irrevocable trust shall provide a trust accounting, as set forth in s. 736.08135, to each qualified beneficiary annually and on termination of the trust or on change of the trustee.
(e) Upon reasonable request, the trustee shall provide a qualified beneficiary with relevant information about the assets and liabilities of the trust and the particulars relating to administration.
Paragraphs (a) and (b) do not apply to an irrevocable trust created before the effective date of this code, or to a revocable trust that becomes irrevocable before the effective date of this code. Paragraph (a) does not apply to a trustee who accepts a trusteeship before the effective date of this code.
(2) A qualified beneficiary may waive the trustee’s duty to account under paragraph (1)(d). A qualified beneficiary may withdraw a waiver previously given. Waivers and withdrawals of prior waivers under this subsection must be in writing. Withdrawals of prior waivers are effective only with respect to accountings for future periods.
(3) The representation provisions of part III apply with respect to all rights of a qualified beneficiary under this section.
(4) As provided in s. 736.0603(1), the trustee’s duties under this section extend only to the settlor while a trust is revocable.
(5) This section applies to trust accountings rendered for accounting periods beginning on or after July 1, 2007.
736.08135 Trust accountings.—
(1) A trust accounting must be a reasonably understandable report from the date of the last accounting or, if none, from the date on which the trustee became accountable, that adequately discloses the information required in subsection (2).
(2)(a) The accounting must begin with a statement identifying the trust, the trustee furnishing the accounting, and the time period covered by the accounting.
(b) The accounting must show all cash and property transactions and all significant transactions affecting administration during the accounting period, including compensation paid to the trustee and the trustee’s agents. Gains and losses realized during the accounting period and all receipts and disbursements must be shown.
(c) To the extent feasible, the accounting must identify and value trust assets on hand at the close of the accounting period. For each asset or class of assets reasonably capable of valuation, the accounting shall contain two values, the asset acquisition value or carrying value and the estimated current value. The accounting must identify each known noncontingent liability with an estimated current amount of the liability if known.
(d) To the extent feasible, the accounting must show significant transactions that do not affect the amount for which the trustee is accountable, including name changes in investment holdings, adjustments to carrying value, a change of custodial institutions, and stock splits.
(e) The accounting must reflect the allocation of receipts, disbursements, accruals, or allowances between income and principal when the allocation affects the interest of any beneficiary of the trust.
(f) The trustee shall include in the final accounting a plan of distribution for any undistributed assets shown on the final accounting.
(3) This section applies to all trust accountings rendered for any accounting periods beginning on or after January 1, 2003.
736.0814 Discretionary powers; tax savings.—
(1) Notwithstanding the breadth of discretion granted to a trustee in the terms of the trust, including the use of such terms as “absolute,” “sole,” or “uncontrolled,” the trustee shall exercise a discretionary power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. A court shall not determine that a trustee abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.
(2) Subject to subsection (3) and unless the terms of the trust expressly indicate that a rule in this subsection does not apply, a person who is a beneficiary and a trustee may not:
(a) Make discretionary distributions of either principal or income to or for the benefit of that trustee, except to provide for that trustee’s health, education, maintenance, or support as described under ss. 2041 and 2514 of the Internal Revenue Code;
(b) Make discretionary allocations of receipts or expenses as between principal and income, unless the trustee acts in a fiduciary capacity whereby the trustee has no power to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of the trustee’s fiduciary duties;
(c) Make discretionary distributions of either principal or income to satisfy any of the trustee’s legal support obligations; or
(d) Exercise any other power, including, but not limited to, the right to remove or to replace any trustee, so as to cause the powers enumerated in paragraph (a), paragraph (b), or paragraph (c) to be exercised on behalf of, or for the benefit of, a beneficiary who is also a trustee.
(3) Subsection (2) does not apply to:
(a) A power held by the settlor of the trust;
(b) A power held by the settlor’s spouse who is the trustee of a trust for which a marital deduction, as defined in s. 2056(a) or s. 2523(a) of the Internal Revenue Code of 1986, as amended, was previously allowed;
(c) Any trust during any period that the trust may be revoked or amended by its settlor; or
(d) A trust if contributions to the trust qualify for the annual exclusion under s. 2503(c) of the Internal Revenue Code of 1986, as amended.
(4) A power whose exercise is limited or prohibited by subsection (2) may be exercised by the remaining trustees whose exercise of the power is not so limited or prohibited. If there is no trustee qualified to exercise the power, on petition by any qualified beneficiary, the court may appoint an independent trustee with authority to exercise the power.
(5) 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.
736.08147 Duty to distribute trust income.—If a will or trust instrument granting income to the settlor’s or testator’s spouse for life is silent as to the time of distribution of income and the frequency of distributions, the trustee shall distribute all net income, as defined in chapter 738, to the spouse no less frequently than annually. This provision shall apply to any trust established before, on, or after July 1, 2007, unless the trust instrument expressly directs or permits net income to be distributed less frequently than annually.
736.0815 General powers of trustee.—
(1) A trustee, without authorization by the court, may, except as limited or restricted by this code, exercise:
(a) Powers conferred by the terms of the trust.
(b) Except as limited by the terms of the trust:
1. All powers over the trust property that an unmarried competent owner has over individually owned property.
2. Any other powers appropriate to achieve the proper investment, management, and distribution of the trust property.
3. Any other powers conferred by this code.
(2) The exercise of a power is subject to the fiduciary duties prescribed by this code.
736.0816 Specific powers of trustee.—Except as limited or restricted by this code, a trustee may:
(1) Collect trust property and accept or reject additions to the trust property from a settlor, including an asset in which the trustee is personally interested, and 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.
(2) Acquire or sell property, for cash or on credit, at public or private sale.
(3) 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 or any affiliate or associate of the trustee is entitled to receive reasonable compensation for providing necessary services as an investment adviser, portfolio manager, or servicing agent. A trustee or affiliate or associate of the trustee 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 qualified beneficiaries. As used in this subsection, the term “mutual fund” includes an open-end or closed-end management investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended.
(4) Exchange, partition, or otherwise change the character of trust property.
(5) Deposit trust money in an account in a regulated financial service institution.
(6) Borrow money, with or without security, and mortgage or pledge trust property for a period within or extending beyond the duration of the trust and advance money for the protection of the trust.
(7) With respect to an interest in a proprietorship, partnership, limited liability company, business trust, corporation, or other form of business or enterprise, continue the business or other enterprise and take any action that may be taken by shareholders, members, or property owners, including, but not limited to, merging, dissolving, or otherwise changing the form of business organization or contributing additional capital.
(8) With respect to stocks or other securities, exercise the rights of an absolute owner, including, but not limited to, the right to:
(a) Vote, or give proxies to vote, with or without power of substitution, or enter into or continue a voting trust agreement.
(b) Hold a security in the name of a nominee or in other form without disclosure of the trust so that title may pass by delivery.
(c) Pay calls, assessments, and other sums chargeable or accruing against the securities, and sell or exercise stock subscription or conversion rights.
(d) Deposit the securities with a depositary or other regulated financial service institution.
(9) With respect to an interest in real property, construct, or make ordinary or extraordinary repairs to, alterations to, or improvements in, buildings or other structures, demolish improvements, raze existing or erect new party walls or buildings, subdivide or develop land, dedicate land to public use or grant public or private easements, and make or vacate plats and adjust boundaries.
(10) Enter into a lease for any purpose as lessor or lessee, including a lease or other arrangement for exploration and removal of natural resources, with or without the option to purchase or renew, for a period within or extending beyond the duration of the trust.
(11) Grant an option involving a sale, lease, or other disposition of trust property or acquire an option for the acquisition of property, including an option exercisable beyond the duration of the trust, and exercise an option so acquired.
(12) Insure the property of the trust against damage or loss and insure the trustee, trustee’s agents, and beneficiaries against liability arising from the administration of the trust.
(13) Abandon or decline to administer property of no value or of insufficient value to justify the collection or continued administration of such property.
(14) Pay or contest any claim, settle a claim by or against the trust, and release, in whole or in part, a claim belonging to the trust.
(15) Pay taxes, assessments, compensation of the trustee and of employees and agents of the trust, and other expenses incurred in the administration of the trust.
(16) Allocate items of income or expense to trust income or principal, as provided by law.
(17) Exercise elections with respect to federal, state, and local taxes.
(18) Select a mode of payment under any employee benefit or retirement plan, annuity, or life insurance payable to the trustee, exercise rights under such plan, annuity, or insurance, including exercise of the right to indemnification for expenses and against liabilities, and take appropriate action to collect the proceeds.
(19) Make loans out of trust property, including, but not limited to, loans to a beneficiary on terms and conditions that are fair and reasonable under the circumstances, and the trustee has a lien on future distributions for repayment of those loans.
(20) Employ persons, including, but not limited to, attorneys, accountants, investment advisers, or agents, even if they are the trustee, an affiliate of the trustee, or otherwise associated with the trustee, to advise or assist the trustee in the exercise of any of the trustee’s powers and pay reasonable compensation and costs incurred in connection with such employment from the assets of the trust and act without independent investigation on the recommendations of such persons.
(21) Pay an amount distributable to a beneficiary who is under a legal disability or who the trustee reasonably believes is incapacitated, by paying the amount directly to the beneficiary or applying the amount for the beneficiary’s benefit, or by:
(a) Paying the amount to the beneficiary’s guardian of the property or, if the beneficiary does not have a guardian of the property, the beneficiary’s guardian of the person;
(b) Paying the amount to the beneficiary’s custodian under a Uniform Transfers to Minors Act or custodial trustee under a Uniform Custodial Trust Act, and, for that purpose, creating a custodianship or custodial trust;
(c) Paying the amount to an adult relative or other person having legal or physical care or custody of the beneficiary, to be expended on the beneficiary’s behalf, if the trustee does not know of a guardian of the property, guardian of the person, custodian, or custodial trustee; or
(d) Managing the amount as a separate fund on the beneficiary’s behalf, subject to the beneficiary’s continuing right to withdraw the distribution.
(22) On distribution of trust property or the division or termination of a trust, make distributions in divided or undivided interests, allocate particular assets in proportionate or disproportionate shares, value the trust property for those purposes, and adjust for resulting differences in valuation.
(23) Prosecute or defend, including appeals, an action, claim, or judicial proceeding in any jurisdiction to protect trust property or the trustee in the performance of the trustee’s duties.
(24) Sign and deliver contracts and other instruments that are useful to achieve or facilitate the exercise of the trustee’s powers.
(25) On termination of the trust, exercise the powers appropriate to wind up the administration of the trust and distribute the trust property to the persons entitled to the property, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes.
736.08163 Powers of trustees relating to environmental or human health laws or to trust property contaminated with hazardous or toxic substances; liability.—
(1) From the creation of a trust until final distribution of the assets from the trust, the trustee has, without court authorization, the powers specified in subsection (2).
(2) Unless otherwise provided in the trust instrument, a trustee has the power, acting reasonably, to:
(a) Inspect or investigate, or cause to be inspected or investigated, property held by the trustee, including interests in sole proprietorships, partnerships, or corporations and any assets owned by any such business entity for the purpose of determining compliance with an environmental law affecting that property or to respond to an actual or threatened violation of an environmental law affecting that property;
(b) Take, on behalf of the trust, any action necessary to prevent, abate, or otherwise remedy an actual or potential violation of an environmental law affecting property held by the trustee, before or after initiation of an enforcement action by a governmental body;
(c) Refuse to accept property in trust if the trustee determines that any property to be donated or conveyed to the trustee is contaminated with a hazardous substance or is being used or has been used for an activity directly or indirectly involving a hazardous substance, which circumstance could result in liability to the trust or trustee or otherwise impair the value of the assets to be held;
(d) Settle or compromise at any time any claim against the trust or trustee that may be asserted by a governmental body or private party that involves the alleged violation of an environmental law affecting property of any trust over which the trustee has responsibility;
(e) Disclaim any power granted by any document, law, or rule of law that, in the sole judgment of the trustee, may cause the trustee to incur personal liability, or the trust to incur liability, under any environmental law;
(f) Decline to serve as a trustee, or having undertaken to serve as a trustee, resign at any time, if the trustee believes there is or may be a conflict of interest in its fiduciary capacity and in its individual capacity because of potential claims or liabilities that may be asserted against the trustee on behalf of the trust by reason of the type or condition of the assets held; or
(g) Charge against the income and principal of the trust the cost of any inspection, investigation, review, abatement, response, cleanup, or remedial action that this section authorizes the trustee to take and, if the trust terminates or closes or the trust property is transferred to another trustee, hold assets sufficient to cover the cost of cleaning up any known environmental problem.
(3) A trustee is not personally liable to any beneficiary or any other person for a decrease in value of assets in a trust by reason of the trustee’s compliance or efforts to comply with an environmental law, specifically including any reporting requirement under that law.
(4) A trustee that acquires ownership or control of a vessel or other property, without having owned, operated, or materially participated in the management of that vessel or property before assuming ownership or control as trustee, is not considered an owner or operator for purposes of liability under chapter 376, chapter 403, or any other environmental law. A trustee that willfully, knowingly, or recklessly causes or exacerbates a release or threatened release of a hazardous substance is personally liable for the cost of the response, to the extent that the release or threatened release is attributable to the trustee’s activities. This subsection does not preclude the filing of claims against the assets that constitute the trust held by the trustee or the filing of actions against the trustee in its representative capacity and in any such action, an award or judgment against the trustee must be satisfied only from the assets of the trust.
(5) The acceptance by the trustee of the property or a failure by the trustee to inspect or investigate the property does not create any inference as to whether there is liability under an environmental law with respect to that property.
(6) For the purposes of this section, the term “hazardous substance” means a substance defined as hazardous or toxic, or any contaminant, pollutant, or constituent thereof, or otherwise regulated, by an environmental law.
(7) This section does not apply to any trust created under a document executed before July 1, 1995, unless the trust is amendable and the settlor amends the trust at any time to incorporate the provisions of this section.
736.08165 Administration pending outcome of contest or other proceeding.—
(1) Pending the outcome of a proceeding filed to determine the validity of all or part of a trust or the beneficiaries of all or part of a trust, the trustee shall proceed with the administration of the trust as if no proceeding had been commenced, except no action may be taken and no distribution may be made to a beneficiary in contravention of the rights of those persons who may be affected by the outcome of the proceeding.
(2) Upon motion of a party and after notice to interested persons, a court, on good cause shown, may make an exception to the prohibition under subsection (1) and authorize the trustee to act or to distribute trust assets to a beneficiary subject to any conditions the court, in the court’s discretion, may impose, including the posting of bond by the beneficiary.
736.0817 Distribution on termination.—Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed expeditiously to distribute the trust property to the persons entitled to the property, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses, and taxes. The provisions of this section are in addition to and are not in derogation of the rights of a trustee under the common law with respect to final distribution of a trust.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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