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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.
   41  Be It Enacted by the Legislature of the State of Florida:
   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.
  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),
  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),
  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.

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