Bill Text: FL H0361 | 2010 | Regular Session | Comm Sub

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Bill Title: Trust Administration

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2010-04-27 - Placed on Special Order Calendar; Substituted CS/CS/SB 998; Laid on Table, companion bill(s) passed, see CS/CS/HB 1237 (Ch. 2010-132), CS/CS/SB 998 (Ch. 2010-122) -HJ 01166 [H0361 Detail]

Download: Florida-2010-H0361-Comm_Sub.html

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CS/HB 361

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 trust;
7	amending s. 733.707, F.S.; specifying application of
8	additional provisions to liability for certain estate
9	expense and obligation payments from a trust; amending s.
10	736.0206, F.S.; deleting certain notice requirements
11	relating to court review of a trustee's employment of
12	certain persons; authorizing the award of expert witness
13	fees from trust assets rather than requiring the award of
14	such fees; providing a limitation; creating s. 736.04114,
15	F.S.; providing authority for court interpretation of
16	certain trusts not subject to the federal estate tax;
17	specifying trust provision requirements; providing
18	conditions; providing definitions; providing criteria for
19	court interpretation of a trust; providing an exception;
20	authorizing a trustee to take certain actions pending a
21	determination of trust distribution; limiting trustee
22	liability; preserving certain rights to construe a trust;
23	providing for retroactive operation; amending s. 736.0505,
24	F.S.; revising a value criterion for determining the
25	extent of treating the holder of a power of withdrawal as
26	the 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 nonresiduary
31	devises; amending s. 736.1007, F.S.; deleting authority
32	for a court to determine an attorney's compensation;
33	deleting certain expert testimony and fee payment
34	provisions; deleting requirements for certain court
35	compensation determination proceedings to be part of a
36	trust administration process and for court determination
37	and payment of certain estate costs and fees from trust
38	assets; providing an effective date.
39
40	Be It Enacted by the Legislature of the State of Florida:
41
42	Section 1. Subsection (2) of section 733.607, Florida
43	Statutes, is amended to read:
44	733.607 Possession of estate.-
45	(2) If, after providing for statutory entitlements and all
46	devises other than residuary devises, the assets of the
47	decedent's estate are insufficient to pay the expenses of the
48	administration and obligations of the decedent's estate, the
49	personal representative is entitled to payment from the trustee
50	of a trust described in s. 733.707(3), in the amount the
51	personal representative certifies in writing to be required to
52	satisfy the insufficiency, subject to the exclusions and
53	preferences under s. 736.05053. The provisions of s. 733.805
54	shall apply in determining the amount of any payment required by
55	this section.
56	Section 2. Subsection (3) of section 733.707, Florida
57	Statutes, is amended to read:
58	733.707 Order of payment of expenses and obligations.-
59	(3) Any portion of a trust with respect to which a
60	decedent who is the grantor has at the decedent's death a right
61	of revocation, as defined in paragraph (e), either alone or in
62	conjunction with any other person, is liable for the expenses of
63	the administration and obligations of the decedent's estate to
64	the extent the decedent's estate is insufficient to pay them as
65	provided in ss. s. 733.607(2) and 736.05053.
66	(a) For purposes of this subsection, any trusts
67	established as part of, and all payments from, either an
68	employee annuity described in s. 403 of the Internal Revenue
69	Code of 1986, as amended, an Individual Retirement Account, as
70	described in s. 408 of the Internal Revenue Code of 1986, as
71	amended, a Keogh (HR-10) Plan, or a retirement or other plan
72	established by a corporation which is qualified under s. 401 of
73	the Internal Revenue Code of 1986, as amended, shall not be
74	considered a trust over which the decedent has a right of
75	revocation.
76	(b) For purposes of this subsection, any trust described
77	in s. 664 of the Internal Revenue Code of 1986, as amended,
78	shall not be considered a trust over which the decedent has a
79	right of 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
98	for 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
102	and 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 terms
135	"unified credit," "estate tax exemption," "applicable exemption
136	amount," "applicable credit amount," "applicable exclusion
137	amount," "generation-skipping transfer tax exemption" or "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	may pass free of federal estate tax or the amount that may pass
143	free of federal generation-skipping transfer tax;
144	(c) Otherwise makes a disposition referring to a
145	charitable deduction, marital deduction, or another provision of
146	federal estate tax law or federal generation-skipping transfer
147	tax law; or
148	(d) Appears to be intended to reduce or minimize the
149	federal estate tax or generation-skipping transfer tax.
150	(2) For purposes of this section:
151	(a) "Applicable period" means a period beginning January
152	1, 2010, and ending at the end of the day on the earlier of
153	December 31, 2010, or the day before the date that an act
154	becomes a law that repeals or otherwise modifies or has the
155	effect of repealing or modifying s. 901 of The Economic Growth
156	and Tax Relief 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 tax or federal
168	generation-skipping transfer tax being imposed.
169	(5)(a) 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	1. Delay or refrain from making any distribution.
174	2. Incur and pay fees and costs reasonably necessary to
175	determine the trustee's duties and obligations, including, but
176	not limited to, compliance with provisions of existing and
177	reasonably anticipated future federal tax laws.
178	3. Establish and maintain reserves for the payment of fees
179	and costs and federal taxes.
180	(b) The trustee shall not be liable for its actions as
181	provided in this subsection if such actions are made or taken in
182	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 nature and intended to
187	provide a new or modified legal remedy. This section shall
188	operate retroactively to 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
207	Revenue Code of 1986, as amended, or a trust for which the
208	election described in s. 2523(f) of the Internal Revenue Code of
209	1986, as 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
220	of 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.

CODING: Words stricken are deletions; words underlined are additions.