Bill Text: FL S0998 | 2010 | Regular Session | Enrolled

---

Bill Title: Trust Administration [SPSC]

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2010-05-27 - Approved by Governor; Chapter No. 2010-122; companion bill(s) passed, see CS/CS/HB 1237 (Ch. 2010-132) [S0998 Detail]

Download: Florida-2010-S0998-Enrolled.html

---

 
ENROLLED 
2010 Legislature                            CS for CS for SB 998 
2010998er 
1 
2         An act relating to trust administration; amending s. 
3         733.607, F.S.; limiting a personal representative’s 
4         entitlement to payment from a trust of certain estate 
5         expenses and obligations; specifying application of 
6         certain criteria in making certain payments from a 
7         trust; amending s. 733.707, F.S.; specifying 
8         application of additional provisions to liability for 
9         certain estate expense and obligation payments from a 
10         trust; amending s. 736.0206, F.S.; deleting certain 
11         notice requirements relating to court review of a 
12         trustee’s employment of certain persons; authorizing 
13         the award of expert witness fees from trust assets 
14         rather than requiring the award of such fees; 
15         providing a limitation; creating s. 736.04114, F.S.; 
16         providing for interpretation of trusts not subject to 
17         the federal estate tax; providing conditions; 
18         providing definitions; providing criteria for a court 
19         interpreting a trust; providing an exception; allowing 
20         a trustee to take certain actions pending a 
21         determination of trust distribution; limiting trustee 
22         liability; providing for interpretation; providing for 
23         retroactive effect; amending s. 736.0505, F.S.; 
24         revising a value criterion for determining the extent 
25         of treating the holder of a power of withdrawal as the 
26         settlor of a trust; providing criteria for determining 
27         who contributed certain trust assets under certain 
28         circumstances; amending s. 736.05053, F.S.; requiring 
29         application of priorities for pro rata abatement of 
30         nonresiduary trust dispositions together with 
31         nonresiduary devises; amending s. 736.1007, F.S.; 
32         deleting authority for a court to determine an 
33         attorney’s compensation; deleting certain expert 
34         testimony and fee payment provisions; deleting 
35         requirements for certain court compensation 
36         determination proceedings to be part of a trust 
37         administration process and for court determination and 
38         payment of certain estate costs and fees from trust 
39         assets; creating s. 736.1211, F.S.; prohibiting state 
40         agencies and local governments from requiring the 
41         disclosure of certain characteristics of persons 
42         associated with certain charitable organizations, 
43         trusts, and foundations; prohibiting state agencies 
44         and local governments from requiring certain private 
45         foundations or trusts to disclose certain 
46         characteristics of persons associated with an entity 
47         receiving monetary or in-kind contributions from the 
48         foundation or trust; prohibiting state agencies and 
49         local governments from requiring that individuals 
50         having certain characteristics be included on the 
51         governing board or as officers of certain charitable 
52         organizations, trusts, or foundations; prohibiting 
53         state agencies and local governments from prohibiting 
54         a person from serving on the board or as an officer 
55         based on the person’s familial relationship to other 
56         board members, officers, or a donor; prohibiting state 
57         agencies and local governments from requiring that 
58         certain charitable organizations, trusts, or 
59         foundations distribute funds to or contract with 
60         persons or entities having certain characteristics; 
61         specifying the effect of the act on contracts in 
62         existence before the effective date of the act; 
63         providing effective dates. 
64 
65  Be It Enacted by the Legislature of the State of Florida: 
66 
67         Section 1. Subsection (2) of section 733.607, Florida 
68  Statutes, is amended to read: 
69         733.607 Possession of estate.— 
70         (2) If, after providing for statutory entitlements and all 
71  devises other than residuary devises, the assets of the 
72  decedent’s estate are insufficient to pay the expenses of the 
73  administration and obligations of the decedent’s estate, the 
74  personal representative is entitled to payment from the trustee 
75  of a trust described in s. 733.707(3), in the amount the 
76  personal representative certifies in writing to be required to 
77  satisfy the insufficiency, subject to the exclusions and 
78  preferences under s. 736.05053. The provisions of s. 733.805 
79  shall apply in determining the amount of any payment required by 
80  this section. 
81         Section 2. Subsection (3) of section 733.707, Florida 
82  Statutes, is amended to read: 
83         733.707 Order of payment of expenses and obligations.— 
84         (3) Any portion of a trust with respect to which a decedent 
85  who is the grantor has at the decedent’s death a right of 
86  revocation, as defined in paragraph (e), either alone or in 
87  conjunction with any other person, is liable for the expenses of 
88  the administration and obligations of the decedent’s estate to 
89  the extent the decedent’s estate is insufficient to pay them as 
90  provided in ss. s. 733.607(2) and 736.05053. 
91         (a) For purposes of this subsection, any trusts established 
92  as part of, and all payments from, either an employee annuity 
93  described in s. 403 of the Internal Revenue Code of 1986, as 
94  amended, an Individual Retirement Account, as described in s. 
95  408 of the Internal Revenue Code of 1986, as amended, a Keogh 
96  (HR-10) Plan, or a retirement or other plan established by a 
97  corporation which is qualified under s. 401 of the Internal 
98  Revenue Code of 1986, as amended, shall not be considered a 
99  trust over which the decedent has a right of revocation. 
100         (b) For purposes of this subsection, any trust described in 
101  s. 664 of the Internal Revenue Code of 1986, as amended, shall 
102  not be considered a trust over which the decedent has a right of 
103  revocation. 
104         (c) This subsection shall not impair any rights an 
105  individual has under a qualified domestic relations order as 
106  that term is defined in s. 414(p) of the Internal Revenue Code 
107  of 1986, as amended. 
108         (d) For purposes of this subsection, property held or 
109  received by a trust to the extent that the property would not 
110  have been subject to claims against the decedent’s estate if it 
111  had been paid directly to a trust created under the decedent’s 
112  will or other than to the decedent’s estate, or assets received 
113  from any trust other than a trust described in this subsection, 
114  shall not be deemed assets of the trust available to the 
115  decedent’s estate. 
116         (e) For purposes of this subsection, a “right of 
117  revocation” is a power retained by the decedent, held in any 
118  capacity, to: 
119         1. Amend or revoke the trust and revest the principal of 
120  the trust in the decedent; or 
121         2. Withdraw or appoint the principal of the trust to or for 
122  the decedent’s benefit. 
123         Section 3. Subsections (1), (5), (6), and (7) of section 
124  736.0206, Florida Statutes, are amended to read: 
125         736.0206 Proceedings for review of employment of agents and 
126  review of compensation of trustee and employees of trust.— 
127         (1) After notice to all interested persons, The court may 
128  review the propriety of the employment by a trustee of any 
129  person, including any attorney, auditor, investment adviser, or 
130  other specialized agent or assistant, and the reasonableness of 
131  any compensation paid to that person or to the trustee. 
132         (5) The court may determine reasonable compensation for a 
133  trustee or any person employed by a trustee without receiving 
134  expert testimony. Any party may offer expert testimony after 
135  notice to interested persons. If expert testimony is offered, a 
136  reasonable expert witness fee may shall be awarded by the court 
137  and paid from the assets of the trust unless the court finds 
138  that the expert testimony did not assist the court. The court 
139  shall direct from which part of the trust assets the fee shall 
140  be paid. 
141         (6) Persons given notice as provided in this section shall 
142  be bound by all orders entered on the complaint. 
143         (6)(7) In a proceeding pursuant to subsection (2), the 
144  petitioner may serve formal notice as provided in the Florida 
145  Probate Rules, and such notice shall be sufficient for the court 
146  to acquire jurisdiction over the person receiving the notice to 
147  the extent of the person’s interest in the trust. 
148         Section 4. Effective upon this act becoming a law, section 
149  736.04114, Florida Statutes, is created to read: 
150         736.04114 Limited judicial construction of irrevocable 
151  trust with federal tax provisions.— 
152         (1) Upon the application of a trustee or any qualified 
153  beneficiary of a trust, a court at any time may construe the 
154  terms of a trust that is not then revocable to define the 
155  respective shares or determine beneficiaries, in accordance with 
156  the intention of the settlor, if a disposition occurs during the 
157  applicable period and the trust contains a provision that: 
158         (a) Includes a formula disposition referring to the 
159  “unified credit,” “estate tax exemption,” ”applicable exemption 
160  amount,” “applicable credit amount,” “applicable exclusion 
161  amount,” “generation-skipping transfer tax exemption,” “GST 
162  exemption,” “marital deduction,” “maximum marital deduction,” 
163  “unlimited marital deduction,” or “maximum charitable 
164  deduction”; 
165         (b) Measures a share of a trust based on the amount that 
166  can pass free of federal estate tax or the amount that can pass 
167  free of federal generation-skipping transfer tax; 
168         (c) Otherwise makes a disposition referring to a charitable 
169  deduction, marital deduction, or another provision of federal 
170  estate tax or generation-skipping transfer tax law; or 
171         (d) Appears to be intended to reduce or minimize federal 
172  estate tax or generation-skipping transfer tax. 
173         (2) For the purpose of this section: 
174         (a) “Applicable period” means a period beginning January 1, 
175  2010, and ending on the end of the day on the earlier of: 
176         1. December 31, 2010; or 
177         2. The day before the date that an act becomes law which 
178  repeals or otherwise modifies or has the effect of repealing or 
179  modifying s. 901 of The Economic Growth and Tax Relief 
180  Reconciliation Act of 2001. 
181         (b) A “disposition occurs” when an interest takes effect in 
182  possession or enjoyment. 
183         (3) In construing the trust, the court shall consider the 
184  terms and purposes of the trust, the facts and circumstances 
185  surrounding the creation of the trust, and the settlor’s 
186  probable intent. In determining the settlor’s probable intent, 
187  the court may consider evidence relevant to the settlor’s intent 
188  even though the evidence contradicts an apparent plain meaning 
189  of the trust instrument. 
190         (4) This section does not apply to a disposition that is 
191  specifically conditioned upon no federal estate or generation 
192  skipping transfer tax being imposed. 
193         (5) Unless otherwise ordered by the court, during the 
194  applicable period and without court order, the trustee 
195  administering a trust containing one or more provisions 
196  described in subsection (1) may: 
197         (a) Delay or refrain from making any distribution; 
198         (b) Incur and pay fees and costs reasonably necessary to 
199  determine its duties and obligations, including compliance with 
200  provisions of existing and reasonably anticipated future federal 
201  tax laws; and 
202         (c) Establish and maintain reserves for the payment of 
203  these fees and costs and federal taxes. 
204 
205  The trustee is not liable for its actions as provided in this 
206  subsection which are made or taken in good faith. 
207         (6) The provisions of this section are in addition to, and 
208  not in derogation of, rights under this code or the common law 
209  to construe a trust. 
210         (7) This section is remedial in order to provide a new or 
211  modified legal remedy. This section applies retroactively and is 
212  effective as of January 1, 2010. 
213         Section 5. Paragraph (b) of subsection (2) of section 
214  736.0505, Florida Statutes, is amended, and subsection (3) is 
215  added to that section, to read: 
216         736.0505 Creditors’ claims against settlor.— 
217         (2) For purposes of this section: 
218         (b) Upon the lapse, release, or waiver of the power, the 
219  holder is treated as the settlor of the trust only to the extent 
220  the value of the property affected by the lapse, release, or 
221  waiver exceeds the greater of the amount specified in: 
222         1. Section 2041(b)(2) or s. 2514(e); or 
223         2. Section 2503(b) and, if the donor was married at the 
224  time of the transfer to which the power of withdrawal applies, 
225  twice the amount specified in s. 2503(b), 
226 
227  of the Internal Revenue Code of 1986, as amended. 
228         (3) Subject to the provisions of s. 726.105, for purposes 
229  of this section, the assets in: 
230         (a) A trust described in s. 2523(e) of the Internal Revenue 
231  Code of 1986, as amended, or a trust for which the election 
232  described in s. 2523(f) of the Internal Revenue Code of 1986, as 
233  amended, has been made; and 
234         (b) Another trust, to the extent that the assets in the 
235  other trust are attributable to a trust described in paragraph 
236  (a), 
237 
238  shall, after the death of the settlor’s spouse, be deemed to 
239  have been contributed by the settlor’s spouse and not by the 
240  settlor. 
241         Section 6. Subsection (5) is added to section 736.05053, 
242  Florida Statutes, to read: 
243         736.05053 Trustee’s duty to pay expenses and obligations of 
244  settlor’s estate.— 
245         (5) Nonresiduary trust dispositions shall abate pro rata 
246  with nonresiduary devises pursuant to the priorities specified 
247  in this section and s. 733.805, determined as if the 
248  beneficiaries of the will and trust, other than the estate or 
249  trust itself, were taking under a common instrument. 
250         Section 7. Subsections (7) through (10) of section 
251  736.1007, Florida Statutes, are amended to read: 
252         736.1007 Trustee’s attorney’s fees.— 
253         (7) The court may determine reasonable attorney’s 
254  compensation without receiving expert testimony. Any party may 
255  offer expert testimony after notice to interested persons. If 
256  expert testimony is offered, an expert witness fee may be 
257  awarded by the court and paid from the assets of the trust. The 
258  court shall direct from what part of the trust the fee is to be 
259  paid. 
260         (7)(8) If a separate written agreement regarding 
261  compensation exists between the attorney and the settlor, the 
262  attorney shall furnish a copy to the trustee prior to 
263  commencement of employment and, if employed, shall promptly file 
264  and serve a copy on all interested persons. A separate agreement 
265  or a provision in the trust suggesting or directing the trustee 
266  to retain a specific attorney does not obligate the trustee to 
267  employ the attorney or obligate the attorney to accept the 
268  representation but, if the attorney who is a party to the 
269  agreement or who drafted the trust is employed, the compensation 
270  paid shall not exceed the compensation provided in the 
271  agreement. 
272         (9) Court proceedings to determine compensation, if 
273  required, are a part of the trust administration process, and 
274  the costs, including fees for the trustee’s attorney, shall be 
275  determined by the court and paid from the assets of the trust 
276  unless the court finds the attorney’s fees request to be 
277  substantially unreasonable. The court shall direct from what 
278  part of the trust the fees are to be paid. 
279         (8)(10) As used in this section, the term “initial trust 
280  administration” means administration of a revocable trust during 
281  the period that begins with the death of the settlor and ends on 
282  the final distribution of trust assets outright or to continuing 
283  trusts created under the trust agreement but, if an estate tax 
284  return is required, not until after issuance of an estate tax 
285  closing letter or other evidence of termination of the estate 
286  tax proceeding. This initial period is not intended to include 
287  continued regular administration of the trust. 
288         Section 8. Section 736.1211, Florida Statutes, is created 
289  to read: 
290         736.1211 Protections afforded to certain charitable trusts 
291  and organizations.— 
292         (1) A charitable organization, private foundation trust, 
293  split interest trust, or a private foundation as defined in s. 
294  509(a) of the Internal Revenue Code may not be required by a 
295  state agency or a local government to disclose the race, 
296  religion, gender, national origin, socioeconomic status, age, 
297  ethnicity, disability, marital status, sexual orientation, or 
298  political party registration of its employees, officers, 
299  directors, trustees, members, or owners, without the prior 
300  written consent of the individual or individuals in question. 
301         (2) A private foundation as defined in s. 509(a) of the 
302  Internal Revenue Code, a private foundation trust, a split 
303  interest trust, or a grant-making organization may not be 
304  required by the state or any local government to disclose the 
305  race, religion, gender, national origin, socioeconomic status, 
306  age, ethnicity, disability, marital status, sexual orientation, 
307  or political party registration of any person, or of the 
308  employees, officers, directors, trustees, members, or owners of 
309  any entity that has received monetary or in-kind contributions 
310  from or contracted with the organization, trust, or foundation, 
311  without the prior written consent of the individual or 
312  individuals in question. For purposes of this subsection, a 
313  “grant-making organization” is an organization that makes grants 
314  to charitable organizations but is not a private foundation, 
315  private foundation trust, or split interest trust. 
316         (3) A state agency or a local government may not require 
317  that the governing board or officers of a charitable 
318  organization, private foundation trust, split interest trust, or 
319  a private foundation as defined in s. 509(a) of the Internal 
320  Revenue Code include an individual or individuals of any 
321  particular race, religion, gender, national origin, 
322  socioeconomic status, age, ethnicity, disability, marital 
323  status, sexual orientation, or political party registration. 
324  Further, a state agency or a local government may not prohibit 
325  service as a board member or officer by an individual or 
326  individuals based upon their familial relationship to each other 
327  or to a donor or require that the governing board or officers 
328  include one or more individuals who do not share a familial 
329  relationship with each other or with a donor. 
330         (4) A charitable organization, private foundation trust, 
331  split interest trust, or any private foundation as defined in s. 
332  509(a) of the Internal Revenue Code may not be required by a 
333  state agency or a local government to distribute its funds to or 
334  contract with any person or entity based upon the race, 
335  religion, gender, national origin, socioeconomic status, age, 
336  ethnicity, disability, marital status, sexual orientation, or 
337  political party registration of the person or of the employees, 
338  officers, directors, trustees, members, or owners of the entity, 
339  or based upon the populations, locales, or communities served by 
340  the person or entity, except as a lawful condition on the 
341  expenditure of particular funds imposed by the donor of such 
342  funds. 
343         Section 9. Section 8 of this act does not invalidate 
344  contracts in effect before the effective date of this act. 
345         Section 10. Except as otherwise expressly provided in this 
346  act and except for this section, which shall take effect upon 
347  this act becoming a law, this act shall take effect July 1, 
348  2010.