CS/HB 361

1
A bill to be entitled
2An act relating to trust administration; amending s.
3733.607, F.S.; limiting a personal representative's
4entitlement to payment from a trust of certain estate
5expenses and obligations; specifying application of
6certain criteria in making certain payments from a trust;
7amending s. 733.707, F.S.; specifying application of
8additional provisions to liability for certain estate
9expense and obligation payments from a trust; amending s.
10736.0206, F.S.; deleting certain notice requirements
11relating to court review of a trustee's employment of
12certain persons; authorizing the award of expert witness
13fees from trust assets rather than requiring the award of
14such fees; providing a limitation; creating s. 736.04114,
15F.S.; providing authority for court interpretation of
16certain trusts not subject to the federal estate tax;
17specifying trust provision requirements; providing
18conditions; providing definitions; providing criteria for
19court interpretation of a trust; providing an exception;
20authorizing a trustee to take certain actions pending a
21determination of trust distribution; limiting trustee
22liability; preserving certain rights to construe a trust;
23providing for retroactive operation; amending s. 736.0505,
24F.S.; revising a value criterion for determining the
25extent of treating the holder of a power of withdrawal as
26the settlor of a trust; providing criteria for determining
27who contributed certain trust assets under certain
28circumstances; amending s. 736.05053, F.S.; requiring
29application of priorities for pro rata abatement of
30nonresiduary trust dispositions together with nonresiduary
31devises; amending s. 736.1007, F.S.; deleting authority
32for a court to determine an attorney's compensation;
33deleting certain expert testimony and fee payment
34provisions; deleting requirements for certain court
35compensation determination proceedings to be part of a
36trust administration process and for court determination
37and payment of certain estate costs and fees from trust
38assets; providing an effective date.
39
40Be It Enacted by the Legislature of the State of Florida:
41
42     Section 1.  Subsection (2) of section 733.607, Florida
43Statutes, is amended to read:
44     733.607  Possession of estate.-
45     (2)  If, after providing for statutory entitlements and all
46devises other than residuary devises, the assets of the
47decedent's estate are insufficient to pay the expenses of the
48administration and obligations of the decedent's estate, the
49personal representative is entitled to payment from the trustee
50of a trust described in s. 733.707(3), in the amount the
51personal representative certifies in writing to be required to
52satisfy the insufficiency, subject to the exclusions and
53preferences under s. 736.05053. The provisions of s. 733.805
54shall apply in determining the amount of any payment required by
55this section.
56     Section 2.  Subsection (3) of section 733.707, Florida
57Statutes, 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
60decedent who is the grantor has at the decedent's death a right
61of revocation, as defined in paragraph (e), either alone or in
62conjunction with any other person, is liable for the expenses of
63the administration and obligations of the decedent's estate to
64the extent the decedent's estate is insufficient to pay them as
65provided in ss. s. 733.607(2) and 736.05053.
66     (a)  For purposes of this subsection, any trusts
67established as part of, and all payments from, either an
68employee annuity described in s. 403 of the Internal Revenue
69Code of 1986, as amended, an Individual Retirement Account, as
70described in s. 408 of the Internal Revenue Code of 1986, as
71amended, a Keogh (HR-10) Plan, or a retirement or other plan
72established by a corporation which is qualified under s. 401 of
73the Internal Revenue Code of 1986, as amended, shall not be
74considered a trust over which the decedent has a right of
75revocation.
76     (b)  For purposes of this subsection, any trust described
77in s. 664 of the Internal Revenue Code of 1986, as amended,
78shall not be considered a trust over which the decedent has a
79right of revocation.
80     (c)  This subsection shall not impair any rights an
81individual has under a qualified domestic relations order as
82that term is defined in s. 414(p) of the Internal Revenue Code
83of 1986, as amended.
84     (d)  For purposes of this subsection, property held or
85received by a trust to the extent that the property would not
86have been subject to claims against the decedent's estate if it
87had been paid directly to a trust created under the decedent's
88will or other than to the decedent's estate, or assets received
89from any trust other than a trust described in this subsection,
90shall not be deemed assets of the trust available to the
91decedent's estate.
92     (e)  For purposes of this subsection, a "right of
93revocation" is a power retained by the decedent, held in any
94capacity, to:
95     1.  Amend or revoke the trust and revest the principal of
96the trust in the decedent; or
97     2.  Withdraw or appoint the principal of the trust to or
98for the decedent's benefit.
99     Section 3.  Subsections (1), (5), (6), and (7) of section
100736.0206, Florida Statutes, are amended to read:
101     736.0206  Proceedings for review of employment of agents
102and review of compensation of trustee and employees of trust.-
103     (1)  After notice to all interested persons, The court may
104review the propriety of the employment by a trustee of any
105person, including any attorney, auditor, investment adviser, or
106other specialized agent or assistant, and the reasonableness of
107any compensation paid to that person or to the trustee.
108     (5)  The court may determine reasonable compensation for a
109trustee or any person employed by a trustee without receiving
110expert testimony. Any party may offer expert testimony after
111notice to interested persons. If expert testimony is offered, a
112reasonable expert witness fee may shall be awarded by the court
113and paid from the assets of the trust unless the court finds
114that the expert testimony did not assist the court. The court
115shall direct from which part of the trust assets the fee shall
116be paid.
117     (6)  Persons given notice as provided in this section shall
118be bound by all orders entered on the complaint.
119     (6)(7)  In a proceeding pursuant to subsection (2), the
120petitioner may serve formal notice as provided in the Florida
121Probate Rules, and such notice shall be sufficient for the court
122to acquire jurisdiction over the person receiving the notice to
123the extent of the person's interest in the trust.
124     Section 4.  Section 736.04114, Florida Statutes, is created
125to read:
126     736.04114  Limited judicial construction of irrevocable
127trust with federal tax provisions.-
128     (1)  Upon the application of a trustee or any qualified
129beneficiary of a trust, a court at any time may construe the
130terms of a trust that is not then revocable to define the
131respective shares or determine beneficiaries, in accordance with
132the intention of the settlor, if a disposition occurs during the
133applicable 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
136amount," "applicable credit amount," "applicable exclusion
137amount," "generation-skipping transfer tax exemption" or "GST
138exemption," "marital deduction," "maximum marital deduction,"
139"unlimited marital deduction," or "maximum charitable
140deduction";
141     (b)  Measures a share of a trust based on the amount that
142may pass free of federal estate tax or the amount that may pass
143free of federal generation-skipping transfer tax;
144     (c)  Otherwise makes a disposition referring to a
145charitable deduction, marital deduction, or another provision of
146federal estate tax law or federal generation-skipping transfer
147tax law; or
148     (d)  Appears to be intended to reduce or minimize the
149federal estate tax or generation-skipping transfer tax.
150     (2)  For purposes of this section:
151     (a)  "Applicable period" means a period beginning January
1521, 2010, and ending at the end of the day on the earlier of
153December 31, 2010, or the day before the date that an act
154becomes a law that repeals or otherwise modifies or has the
155effect of repealing or modifying s. 901 of The Economic Growth
156and Tax Relief Reconciliation Act of 2001.
157     (b)  A disposition occurs when an interest takes effect in
158possession or enjoyment.
159     (3)  In construing the trust, the court shall consider the
160terms and purposes of the trust, the facts and circumstances
161surrounding the creation of the trust, and the settlor's
162probable intent. In determining the settlor's probable intent,
163the court may consider evidence relevant to the settlor's intent
164even though the evidence contradicts an apparent plain meaning
165of the trust instrument.
166     (4)  This section does not apply to a disposition that is
167specifically conditioned upon no federal estate tax or federal
168generation-skipping transfer tax being imposed.
169     (5)(a)  Unless otherwise ordered by the court, during the
170applicable period and without court order, the trustee
171administering a trust containing one or more provisions
172described in subsection (1) may:
173     1.  Delay or refrain from making any distribution.
174     2.  Incur and pay fees and costs reasonably necessary to
175determine the trustee's duties and obligations, including, but
176not limited to, compliance with provisions of existing and
177reasonably anticipated future federal tax laws.
178     3.  Establish and maintain reserves for the payment of fees
179and costs and federal taxes.
180     (b)  The trustee shall not be liable for its actions as
181provided in this subsection if such actions are made or taken in
182good faith.
183     (6)  The provisions of this section are in addition to, and
184not in derogation of, rights under this code or the common law
185to construe a trust.
186     (7)  This section is remedial in nature and intended to
187provide a new or modified legal remedy. This section shall
188operate retroactively to January 1, 2010.
189     Section 5.  Paragraph (b) of subsection (2) of section
190736.0505, Florida Statutes, is amended, and subsection (3) is
191added 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
195holder is treated as the settlor of the trust only to the extent
196the value of the property affected by the lapse, release, or
197waiver 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
200time of the transfer to which the power of withdrawal applies,
201twice the amount specified in s. 2503(b),
202
203of the Internal Revenue Code of 1986, as amended.
204     (3)  Subject to the provisions of s. 726.105, for purposes
205of this section, the assets in:
206     (a)  A trust described in s. 2523(e) of the Internal
207Revenue Code of 1986, as amended, or a trust for which the
208election described in s. 2523(f) of the Internal Revenue Code of
2091986, as amended, has been made; and
210     (b)  Another trust, to the extent that the assets in the
211other trust are attributable to a trust described in paragraph
212(a),
213
214shall, after the death of the settlor's spouse, be deemed to
215have been contributed by the settlor's spouse and not by the
216settlor.
217     Section 6.  Subsection (5) is added to section 736.05053,
218Florida Statutes, to read:
219     736.05053  Trustee's duty to pay expenses and obligations
220of settlor's estate.-
221     (5)  Nonresiduary trust dispositions shall abate pro rata
222with nonresiduary devises pursuant to the priorities specified
223in this section and s. 733.805, determined as if the
224beneficiaries of the will and trust, other than the estate or
225trust itself, were taking under a common instrument.
226     Section 7.  Subsections (7) through (10) of section
227736.1007, Florida Statutes, are amended to read:
228     736.1007  Trustee's attorney's fees.-
229     (7)  The court may determine reasonable attorney's
230compensation without receiving expert testimony. Any party may
231offer expert testimony after notice to interested persons. If
232expert testimony is offered, an expert witness fee may be
233awarded by the court and paid from the assets of the trust. The
234court shall direct from what part of the trust the fee is to be
235paid.
236     (7)(8)  If a separate written agreement regarding
237compensation exists between the attorney and the settlor, the
238attorney shall furnish a copy to the trustee prior to
239commencement of employment and, if employed, shall promptly file
240and serve a copy on all interested persons. A separate agreement
241or a provision in the trust suggesting or directing the trustee
242to retain a specific attorney does not obligate the trustee to
243employ the attorney or obligate the attorney to accept the
244representation but, if the attorney who is a party to the
245agreement or who drafted the trust is employed, the compensation
246paid shall not exceed the compensation provided in the
247agreement.
248     (9)  Court proceedings to determine compensation, if
249required, are a part of the trust administration process, and
250the costs, including fees for the trustee's attorney, shall be
251determined by the court and paid from the assets of the trust
252unless the court finds the attorney's fees request to be
253substantially unreasonable. The court shall direct from what
254part of the trust the fees are to be paid.
255     (8)(10)  As used in this section, the term "initial trust
256administration" means administration of a revocable trust during
257the period that begins with the death of the settlor and ends on
258the final distribution of trust assets outright or to continuing
259trusts created under the trust agreement but, if an estate tax
260return is required, not until after issuance of an estate tax
261closing letter or other evidence of termination of the estate
262tax proceeding. This initial period is not intended to include
263continued 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.