Bill Text: FL S0998 | 2010 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Comm_Sub.html

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Florida Senate - 2010                              CS for SB 998 
 
By the Committee on Judiciary; and Senator Thrasher 
590-02044-10                                           2010998c1 
1                        A bill to be entitled 
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; providing an effective date. 
40 
41  Be It Enacted by the Legislature of the State of Florida: 
42 
43         Section 1. Subsection (2) of section 733.607, Florida 
44  Statutes, is amended to read: 
45         733.607 Possession of estate.— 
46         (2) If, after providing for statutory entitlements and all 
47  devises other than residuary devises, the assets of the 
48  decedent’s estate are insufficient to pay the expenses of the 
49  administration and obligations of the decedent’s estate, the 
50  personal representative is entitled to payment from the trustee 
51  of a trust described in s. 733.707(3), in the amount the 
52  personal representative certifies in writing to be required to 
53  satisfy the insufficiency, subject to the exclusions and 
54  preferences under s. 736.05053. The provisions of s. 733.805 
55  shall apply in determining the amount of any payment required by 
56  this section. 
57         Section 2. Subsection (3) of section 733.707, Florida 
58  Statutes, is amended to read: 
59         733.707 Order of payment of expenses and obligations.— 
60         (3) Any portion of a trust with respect to which a decedent 
61  who is the grantor has at the decedent’s death a right of 
62  revocation, as defined in paragraph (e), either alone or in 
63  conjunction with any other person, is liable for the expenses of 
64  the administration and obligations of the decedent’s estate to 
65  the extent the decedent’s estate is insufficient to pay them as 
66  provided in ss. s. 733.607(2) and 736.05053. 
67         (a) For purposes of this subsection, any trusts established 
68  as part of, and all payments from, either an employee annuity 
69  described in s. 403 of the Internal Revenue Code of 1986, as 
70  amended, an Individual Retirement Account, as described in s. 
71  408 of the Internal Revenue Code of 1986, as amended, a Keogh 
72  (HR-10) Plan, or a retirement or other plan established by a 
73  corporation which is qualified under s. 401 of the Internal 
74  Revenue Code of 1986, as amended, shall not be considered a 
75  trust over which the decedent has a right of revocation. 
76         (b) For purposes of this subsection, any trust described in 
77  s. 664 of the Internal Revenue Code of 1986, as amended, shall 
78  not be considered a trust over which the decedent has a right of 
79  revocation. 
80         (c) This subsection shall not impair any rights an 
81  individual has under a qualified domestic relations order as 
82  that term is defined in s. 414(p) of the Internal Revenue Code 
83  of 1986, as amended. 
84         (d) For purposes of this subsection, property held or 
85  received by a trust to the extent that the property would not 
86  have been subject to claims against the decedent’s estate if it 
87  had been paid directly to a trust created under the decedent’s 
88  will or other than to the decedent’s estate, or assets received 
89  from any trust other than a trust described in this subsection, 
90  shall not be deemed assets of the trust available to the 
91  decedent’s estate. 
92         (e) For purposes of this subsection, a “right of 
93  revocation” is a power retained by the decedent, held in any 
94  capacity, to: 
95         1. Amend or revoke the trust and revest the principal of 
96  the trust in the decedent; or 
97         2. Withdraw or appoint the principal of the trust to or for 
98  the decedent’s benefit. 
99         Section 3. Subsections (1), (5), (6), and (7) of section 
100  736.0206, Florida Statutes, are amended to read: 
101         736.0206 Proceedings for review of employment of agents and 
102  review of compensation of trustee and employees of trust.— 
103         (1) After notice to all interested persons, The court may 
104  review the propriety of the employment by a trustee of any 
105  person, including any attorney, auditor, investment adviser, or 
106  other specialized agent or assistant, and the reasonableness of 
107  any compensation paid to that person or to the trustee. 
108         (5) The court may determine reasonable compensation for a 
109  trustee or any person employed by a trustee without receiving 
110  expert testimony. Any party may offer expert testimony after 
111  notice to interested persons. If expert testimony is offered, a 
112  reasonable expert witness fee may shall be awarded by the court 
113  and paid from the assets of the trust unless the court finds 
114  that the expert testimony did not assist the court. The court 
115  shall direct from which part of the trust assets the fee shall 
116  be paid. 
117         (6) Persons given notice as provided in this section shall 
118  be bound by all orders entered on the complaint. 
119         (6)(7) In a proceeding pursuant to subsection (2), the 
120  petitioner may serve formal notice as provided in the Florida 
121  Probate Rules, and such notice shall be sufficient for the court 
122  to acquire jurisdiction over the person receiving the notice to 
123  the extent of the person’s interest in the trust. 
124         Section 4. Section 736.04114, Florida Statutes, is created 
125  to read: 
126         736.04114 Limited judicial construction of irrevocable 
127  trust with federal tax provisions.— 
128         (1) Upon the application of a trustee or any qualified 
129  beneficiary of a trust, a court at any time may construe the 
130  terms of a trust that is not then revocable to define the 
131  respective shares or determine beneficiaries, in accordance with 
132  the intention of the settlor, if a disposition occurs during the 
133  applicable period and the trust contains a provision that: 
134         (a) Includes a formula disposition referring to the 
135  “unified credit,” “estate tax exemption,” ”applicable exemption 
136  amount,” “applicable credit amount,” “applicable exclusion 
137  amount,” “generation-skipping transfer tax exemption,” “GST 
138  exemption,” “marital deduction,” “maximum marital deduction,” 
139  “unlimited marital deduction,” or “maximum charitable 
140  deduction”; 
141         (b) Measures a share of a trust based on the amount that 
142  can pass free of federal estate tax or the amount that can pass 
143  free of federal generation-skipping transfer tax; 
144         (c) Otherwise makes a disposition referring to a charitable 
145  deduction, marital deduction, or another provision of federal 
146  estate tax or generation-skipping transfer tax law; or 
147         (d) Appears to be intended to reduce or minimize federal 
148  estate tax or generation-skipping transfer tax. 
149         (2) For the purpose of this section: 
150         (a) “Applicable period” means a period beginning January 1, 
151  2010, and ending on the end of the day on the earlier of: 
152         1. December 31, 2010; or 
153         2. The day before the date that an act becomes law which 
154  repeals or otherwise modifies or has the effect of repealing or 
155  modifying s. 901 of The Economic Growth and Tax Relief 
156  Reconciliation Act of 2001. 
157         (b) A “disposition occurs” when an interest takes effect in 
158  possession or enjoyment. 
159         (3) In construing the trust, the court shall consider the 
160  terms and purposes of the trust, the facts and circumstances 
161  surrounding the creation of the trust, and the settlor’s 
162  probable intent. In determining the settlor’s probable intent, 
163  the court may consider evidence relevant to the settlor’s intent 
164  even though the evidence contradicts an apparent plain meaning 
165  of the trust instrument. 
166         (4) This section does not apply to a disposition that is 
167  specifically conditioned upon no federal estate or generation 
168  skipping transfer tax being imposed. 
169         (5) Unless otherwise ordered by the court, during the 
170  applicable period and without court order, the trustee 
171  administering a trust containing one or more provisions 
172  described in subsection (1) may: 
173         (a) Delay or refrain from making any distribution; 
174         (b) Incur and pay fees and costs reasonably necessary to 
175  determine its duties and obligations, including compliance with 
176  provisions of existing and reasonably anticipated future federal 
177  tax laws; and 
178         (c) Establish and maintain reserves for the payment of 
179  these fees and costs and federal taxes. 
180 
181  The trustee is not liable for its actions as provided in this 
182  subsection which are made or taken in good faith. 
183         (6) The provisions of this section are in addition to, and 
184  not in derogation of, rights under this code or the common law 
185  to construe a trust. 
186         (7) This section is remedial in order to provide a new or 
187  modified legal remedy. This section applies retroactively and is 
188  effective as of January 1, 2010. 
189         Section 5. Paragraph (b) of subsection (2) of section 
190  736.0505, Florida Statutes, is amended, and subsection (3) is 
191  added to that section, to read: 
192         736.0505 Creditors’ claims against settlor.— 
193         (2) For purposes of this section: 
194         (b) Upon the lapse, release, or waiver of the power, the 
195  holder is treated as the settlor of the trust only to the extent 
196  the value of the property affected by the lapse, release, or 
197  waiver exceeds the greater of the amount specified in: 
198         1. Section 2041(b)(2) or s. 2514(e); or 
199         2. Section 2503(b) and, if the donor was married at the 
200  time of the transfer to which the power of withdrawal applies, 
201  twice the amount specified in s. 2503(b), 
202 
203  of the Internal Revenue Code of 1986, as amended. 
204         (3) Subject to the provisions of s. 726.105, for purposes 
205  of this section, the assets in: 
206         (a) A trust described in s. 2523(e) of the Internal Revenue 
207  Code of 1986, as amended, or a trust for which the election 
208  described in s. 2523(f) of the Internal Revenue Code of 1986, as 
209  amended, has been made; and 
210         (b) Another trust, to the extent that the assets in the 
211  other trust are attributable to a trust described in paragraph 
212  (a), 
213 
214  shall, after the death of the settlor’s spouse, be deemed to 
215  have been contributed by the settlor’s spouse and not by the 
216  settlor. 
217         Section 6. Subsection (5) is added to section 736.05053, 
218  Florida Statutes, to read: 
219         736.05053 Trustee’s duty to pay expenses and obligations of 
220  settlor’s estate.— 
221         (5) Nonresiduary trust dispositions shall abate pro rata 
222  with nonresiduary devises pursuant to the priorities specified 
223  in this section and s. 733.805, determined as if the 
224  beneficiaries of the will and trust, other than the estate or 
225  trust itself, were taking under a common instrument. 
226         Section 7. Subsections (7) through (10) of section 
227  736.1007, Florida Statutes, are amended to read: 
228         736.1007 Trustee’s attorney’s fees.— 
229         (7) The court may determine reasonable attorney’s 
230  compensation without receiving expert testimony. Any party may 
231  offer expert testimony after notice to interested persons. If 
232  expert testimony is offered, an expert witness fee may be 
233  awarded by the court and paid from the assets of the trust. The 
234  court shall direct from what part of the trust the fee is to be 
235  paid. 
236         (7)(8) If a separate written agreement regarding 
237  compensation exists between the attorney and the settlor, the 
238  attorney shall furnish a copy to the trustee prior to 
239  commencement of employment and, if employed, shall promptly file 
240  and serve a copy on all interested persons. A separate agreement 
241  or a provision in the trust suggesting or directing the trustee 
242  to retain a specific attorney does not obligate the trustee to 
243  employ the attorney or obligate the attorney to accept the 
244  representation but, if the attorney who is a party to the 
245  agreement or who drafted the trust is employed, the compensation 
246  paid shall not exceed the compensation provided in the 
247  agreement. 
248         (9) Court proceedings to determine compensation, if 
249  required, are a part of the trust administration process, and 
250  the costs, including fees for the trustee’s attorney, shall be 
251  determined by the court and paid from the assets of the trust 
252  unless the court finds the attorney’s fees request to be 
253  substantially unreasonable. The court shall direct from what 
254  part of the trust the fees are to be paid. 
255         (8)(10) As used in this section, the term “initial trust 
256  administration” means administration of a revocable trust during 
257  the period that begins with the death of the settlor and ends on 
258  the final distribution of trust assets outright or to continuing 
259  trusts created under the trust agreement but, if an estate tax 
260  return is required, not until after issuance of an estate tax 
261  closing letter or other evidence of termination of the estate 
262  tax proceeding. This initial period is not intended to include 
263  continued regular administration of the trust. 
264         Section 8. This act shall take effect July 1, 2010.