Florida Senate - 2010                       CS for CS for SB 998
       By the Committees on Banking and Insurance; and Judiciary; and
       Senator Thrasher
       597-02814-10                                           2010998c2
    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; 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.
   65  Be It Enacted by the Legislature of the State of Florida:
   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.
  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),
  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),
  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.

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