30 Mar General Provisions and Definitions Under the Florida Trust Code
General Provisions and Definitions Under the Florida Trust Code
GENERAL PROVISIONS AND DEFINITIONS
736.0101 Short title.
736.0105 Default and mandatory rules.
736.0106 Common law of trusts; principles of equity.
736.0107 Governing law.
736.0108 Principal place of administration.
736.0109 Methods and waiver of notice.
736.0110 Others treated as qualified beneficiaries.
736.0111 Nonjudicial settlement agreements.
736.0112 Qualification of foreign trustee.
736.0101 Short title.—This chapter may be cited as the “Florida Trust Code” and for purposes of this chapter is referred to as the “code.”
736.0102 Scope.—This code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a law, judgment, or decree that requires the trust to be administered in the manner of an express trust. This code does not apply to constructive or resulting trusts; conservatorships; custodial arrangements pursuant to the Florida Uniform Transfers to Minors Act; business trusts providing for certificates to be issued to beneficiaries; common trust funds; land trusts under s. 689.071, except to the extent provided in s. 689.071(7); trusts created by the form of the account or by the deposit agreement at a financial institution; voting trusts; security arrangements; liquidation trusts; trusts for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind; and any arrangement under which a person is nominee or escrowee for another.
736.0103 Definitions.—Unless the context otherwise requires, in this code:
(1) “Action,” with respect to an act of a trustee, includes a failure to act.
(2) “Affiliate” means any person or entity that directly or indirectly through one or more intermediaries owns or controls, is owned or controlled by, or is under common control or ownership with, the fiduciary. An affiliate may include, but is not limited to, an investment adviser, administrator, broker, transfer agent, placement agent, servicing agent, registrar, custodian, underwriter, sponsor, distributor, or manager.
(3) “Ascertainable standard” means a standard relating to an individual’s health, education, support, or maintenance within the meaning of s. 2041(b)(1)(A) or s. 2514(c)(1) of the Internal Revenue Code of 1986, as amended.
(4) “Beneficiary” means a person who has a present or future beneficial interest in a trust, vested or contingent, or who holds a power of appointment over trust property in a capacity other than that of trustee. An interest as a permissible appointee of a power of appointment, held by a person in a capacity other than that of trustee, is not a beneficial interest for purposes of this subsection. Upon an irrevocable exercise of a power of appointment, the interest of a person in whose favor the appointment is made shall be considered a present or future beneficial interest in a trust in the same manner as if the interest had been included in the trust instrument.
(5) “Charitable trust” means a trust, or portion of a trust, created for a charitable purpose as described in s. 736.0405(1).
(6) “Environmental law” means a federal, state, or local law, rule, regulation, or ordinance that relates to protection of the environment or human health.
(7) “General power of appointment” means a power of appointment exercisable in favor of the holder of the power, the power holder’s creditors, the power holder’s estate, or the creditors of the power holder’s estate.
(8) “Guardian of the person” means a person appointed by the court to make decisions regarding the support, care, education, health, and welfare of a minor or an incapacitated adult. The term does not include a guardian ad litem.
(9) “Guardian of the property” means a person appointed by the court to administer the estate of a minor or incapacitated adult.
(10) “Interests of the beneficiaries” means the beneficial interests provided in the terms of the trust.
(11) “Jurisdiction” with respect to a geographic area, includes a state or country.
(12) “Power of withdrawal” means a presently exercisable general power of appointment other than a power:
(a) Exercisable by a trustee and limited by an ascertainable standard; or
(b) Exercisable by another person only upon consent of the trustee or a person holding an adverse interest.
(13) “Property” means anything that may be the subject of ownership, real or personal, legal or equitable, or any interest therein.
(14) “Qualified beneficiary” means a living beneficiary who, on the date the beneficiary’s qualification is determined:
(a) Is a distributee or permissible distributee of trust income or principal;
(b) Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph (a) terminated on that date without causing the trust to terminate; or
(c) Would be a distributee or permissible distributee of trust income or principal if the trust terminated in accordance with its terms on that date.
(15) “Revocable,” as applied to a trust, means revocable by the settlor without the consent of the trustee or a person holding an adverse interest.
(16) “Settlor” means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person’s contribution except to the extent another person has the power to revoke or withdraw that portion.
(17) “Spendthrift provision” means a term of a trust that restrains both voluntary and involuntary transfer of a beneficiary’s interest.
(18) “State” means any state of the United States and includes the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession subject to the legislative authority of the United States.
(19) “Terms of a trust” means the manifestation of the settlor’s intent regarding a trust’s provisions as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding.
(20) “Trust instrument” means an instrument executed by a settlor that contains terms of the trust, including any amendments to the trust.
(21) “Trustee” means the original trustee and includes any additional trustee, any successor trustee, and any cotrustee.
(1) Subject to subsection (2), a person has knowledge of a fact if the person:
(a) Has actual knowledge of the fact;
(b) Has received a notice or notification of the fact; or
(c) Has reason to know the fact from all the other facts and circumstances known to the person at the time in question.
(2) An organization that conducts activities through employees has notice or knowledge of a fact involving a trust only from the time the information was received by an employee having responsibility to act on matters involving the trust, or would have been brought to the employee’s attention if the organization had exercised reasonable diligence. An organization exercises reasonable diligence if the organization maintains reasonable routines for communicating significant information to the employee having responsibility to act on matters involving the trust and there is reasonable compliance with the routines. Reasonable diligence does not require an employee of the organization to communicate information unless the communication is part of the individual’s regular duties or the individual knows a matter involving the trust would be materially affected by the information.
736.0105 Default and mandatory rules.—
(1) Except as otherwise provided in the terms of the trust, this code governs the duties and powers of a trustee, relations among trustees, and the rights and interests of a beneficiary.
(2) The terms of a trust prevail over any provision of this code except:
(a) The requirements for creating a trust.
(b) The duty of the trustee to act in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.
(c) The requirement that a trust and its terms be for the benefit of the trust’s beneficiaries, and that the trust have a purpose that is lawful, not contrary to public policy, and possible to achieve.
(d) The periods of limitation for commencing a judicial proceeding.
(e) The power of the court to take such action and exercise such jurisdiction as may be necessary in the interests of justice.
(f) The requirements under s. 736.0108(1) for the designation of a principal place of administration of the trust and the requirements under s. 736.0107 for the designation of a jurisdiction the law of which determines the meaning and effect of the terms of a trust.
(g) The jurisdiction and venue provisions in ss. 736.0202, 736.0203, and 736.0204.
(h) The restrictions on the designation of representative under s. 736.0306.
(i) The formalities required under s. 736.0403(2) for the execution of a trust.
(j) The power of the court to modify or terminate a trust under ss. 736.0410-736.04115, except as provided in s. 736.04115(3)(b), and under ss. 736.0413, 736.0415, and 736.0416.
(k) The ability to modify a trust under s. 736.0412, except as provided in s. 736.0412(4)(b).
(l) The effect of a spendthrift provision and the rights of certain creditors and assignees to reach a trust as provided in part V.
(m) The trustee’s duty under s. 736.05053 to pay expenses and obligations of the settlor’s estate.
(n) The trustee’s duty under s. 736.05055 to file a notice of trust at the settlor’s death.
(o) The right of a trustee under s. 736.0701 to decline a trusteeship and the right of a trustee under s. 736.0705 to resign a trusteeship.
(p) The power of the court under s. 736.0702 to require, dispense with, modify, or terminate a bond.
(q) The power of the court under s. 736.0708(2) to adjust a trustee’s compensation specified in the terms of the trust that is unreasonably low or high.
(r) The duty under s. 736.0813(1)(a) and (b) to notify qualified beneficiaries of an irrevocable trust of the existence of the trust, of the identity of the trustee, and of their rights to trust accountings.
(s) The duty under s. 736.0813(1)(c) and (d) to provide a complete copy of the trust instrument and to account to qualified beneficiaries.
(t) The duty under s. 736.0813(1)(e) to respond to the request of a qualified beneficiary of an irrevocable trust for relevant information about the assets and liabilities of the trust and the particulars relating to trust administration.
(u) The effect of an exculpatory term under s. 736.1011.
(v) The rights under ss. 736.1013-736.1017 of a person other than a trustee or beneficiary.
(w) The effect of a penalty clause for contesting a trust under s. 736.1108.
736.0106 Common law of trusts; principles of equity.—The common law of trusts and principles of equity supplement this code, except to the extent modified by this code or another law of this state.
736.0107 Governing law.—The meaning and effect of the terms of a trust are determined by:
(1) The law of the jurisdiction designated in the terms of the trust, provided there is a sufficient nexus to the designated jurisdiction at the time of the creation of the trust or during the trust administration, including, but not limited to, the location of real property held by the trust or the residence or location of an office of the settlor, trustee, or any beneficiary; or
(2) In the absence of a controlling designation in the terms of the trust, the law of the jurisdiction where the settlor resides at the time the trust is first created.
Notwithstanding subsection (1) or subsection (2), a designation in the terms of a trust is not controlling as to any matter for which the designation would be contrary to a strong public policy of this state.
736.0108 Principal place of administration.—
(1) Terms of a trust designating the principal place of administration of the trust are valid only if there is a sufficient connection with the designated jurisdiction. Without precluding other means for establishing a sufficient connection, terms of a trust designating the principal place of administration are valid and controlling if:
(a) A trustee’s principal place of business is located in or a trustee is a resident of the designated jurisdiction; or
(b) All or part of the administration occurs in the designated jurisdiction.
(2) Unless otherwise validly designated in the trust instrument, the principal place of administration of a trust is the trustee’s usual place of business where the records pertaining to the trust are kept or, if the trustee has no place of business, the trustee’s residence. In the case of cotrustees, the principal place of administration is:
(a) The usual place of business of the corporate trustee, if there is only one corporate cotrustee;
(b) The usual place of business or residence of the individual trustee who is a professional fiduciary, if there is only one such person and no corporate cotrustee; or otherwise
(c) The usual place of business or residence of any of the cotrustees as agreed on by the cotrustees.
(3) Notwithstanding any other provision of this section, the principal place of administration of a trust, for which a bank, association, or trust company organized under the laws of this state or bank or savings association organized under the laws of the United States with its main office in this state has been appointed trustee, shall not be moved or otherwise affected solely because the trustee engaged in an interstate merger transaction with an out-of-state bank pursuant to s. 658.2953 in which the out-of-state bank is the resulting bank.
(4) A trustee is under a continuing duty to administer the trust at a place appropriate to its purposes and its administration.
(5) Without precluding the right of the court to order, approve, or disapprove a transfer, the trustee, in furtherance of the duty prescribed by subsection (4), may transfer the trust’s principal place of administration to another state or to a jurisdiction outside of the United States.
(6) The trustee shall notify the qualified beneficiaries of a proposed transfer of a trust’s principal place of administration not less than 60 days before initiating the transfer. The notice of proposed transfer must include:
(a) The name of the jurisdiction to which the principal place of administration is to be transferred.
(b) The address and telephone number at the new location at which the trustee can be contacted.
(c) An explanation of the reasons for the proposed transfer.
(d) The date on which the proposed transfer is anticipated to occur.
(e) The date, not less than 60 days after the notice is provided, by which the qualified beneficiary must notify the trustee of an objection to the proposed transfer.
(7) The authority of a trustee to act under this section without court approval to transfer a trust’s principal place of administration is suspended if a qualified beneficiary files a lawsuit objecting to the proposed transfer on or before the date specified in the notice. The suspension is effective until the lawsuit is dismissed or withdrawn.
(8) In connection with a transfer of the trust’s principal place of administration, the trustee may transfer any of the trust property to a successor trustee designated in the terms of the trust or appointed pursuant to s. 736.0704.
736.0109 Methods and waiver of notice.—
(1) Notice to a person under this code or the sending of a document to a person under this code must be accomplished in a manner reasonably suitable under the circumstances and likely to result in receipt of the notice or document. Permissible methods of notice or for sending a document include first-class mail, personal delivery, delivery to the person’s last known place of residence or place of business, or a properly directed facsimile or other electronic message.
(2) Notice otherwise required under this code or a document otherwise required to be sent under this code need not be provided to a person whose identity or location is unknown to and not reasonably ascertainable by the trustee.
(3) Notice under this code or the sending of a document under this code may be waived by the person to be notified or to whom the document is to be sent.
(4) Notice of a judicial proceeding must be given as provided in the Florida Rules of Civil Procedure.
736.0110 Others treated as qualified beneficiaries.—
(1) A charitable organization expressly designated to receive distributions under the terms of a charitable trust has the rights of a qualified beneficiary under this code if the charitable organization, on the date the charitable organization’s qualification is being determined:
(a) Is a distributee or permissible distributee of trust income or principal;
(b) Would be a distributee or permissible distributee of trust income or principal on termination of the interests of other distributees or permissible distributees then receiving or eligible to receive distributions; or
(c) Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.
(2) A person appointed to enforce a trust created for the care of an animal or another noncharitable purpose as provided in s. 736.0408 or s. 736.0409 has the rights of a qualified beneficiary under this code.
(3) The Attorney General may assert the rights of a qualified beneficiary with respect to a charitable trust having its principal place of administration in this state.
736.0111 Nonjudicial settlement agreements.—
(1) For purposes of this section, the term “interested persons” means persons whose interest would be affected by a settlement agreement.
(2) Except as otherwise provided in subsection (3), interested persons may enter into a binding nonjudicial settlement agreement with respect to any matter involving a trust.
(3) A nonjudicial settlement agreement among the trustee and trust beneficiaries is valid only to the extent the terms and conditions could be properly approved by the court. A nonjudicial settlement may not be used to produce a result not authorized by other provisions of this code, including, but not limited to, terminating or modifying a trust in an impermissible manner.
(4) Matters that may be resolved by a nonjudicial settlement agreement include:
(a) The interpretation or construction of the terms of the trust.
(b) The approval of a trustee’s report or accounting.
(c) The direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power.
(d) The resignation or appointment of a trustee and the determination of a trustee’s compensation.
(e) The transfer of a trust’s principal place of administration.
(f) The liability of a trustee for an action relating to the trust.
(5) Any interested person may request the court to approve or disapprove a nonjudicial settlement agreement.
736.0112 Qualification of foreign trustee.—Unless otherwise doing business in this state, local qualification by a foreign trustee is not required for the trustee to receive distribution from a local estate. Nothing in this chapter shall affect the provisions of s. 660.41.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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