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May 23, 2018
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HB 1755

A bill to be entitled
2An act relating to trusts; amending s. 711.501, F.S.;
3expanding the definition of the term "security account";
4amending s. 737.402, F.S.; providing certain powers to
5trustees; amending s. 737.403, F.S.; specifying when court
6authorization is not required for payment from trust
7assets; amending s. 738.104, F.S.; providing that
8adjustments affecting the value of trust assets are not
9deemed to benefit a trustee under certain circumstances;
10providing for applicability of trustee adjustment power to
11trusts administered under Florida law outside Florida;
12amending s. 738.1041, F.S., relating to total return
13unitrust; defining the terms "fair market value" and
14"unitrust amount"; providing a remedy; providing that
15certain provisions shall apply to the administration of
16trusts outside Florida; amending s. 738.303, F.S.;
17defining the term "undistributed income"; providing an
18effective date.
20Be It Enacted by the Legislature of the State of Florida:
22     Section 1.  Subsection (10) of section 711.501, Florida
23Statutes, is amended to read:
24     711.501  Definitions.--In ss. 711.50-711.512, unless the
25context otherwise requires, the term:
26     (10)  "Security account" means:
27     (a)  A reinvestment account associated with a security, a
28securities account with a broker, a cash balance in a brokerage
29account, cash, interest, earnings, or dividends earned or
30declared on a security in an account, a reinvestment account, or
31a brokerage account, whether or not credited to the account
32before the owner's death; or
33     (b)  An investment management, investment advisory,
34investment agency, custody, or other account with a bank or
35trust company, including the securities in the account, the cash
36balance in the account, and cash equivalents, and interest,
37earnings, or dividends earned or declared on a security in the
38account, whether or not credited to the account before the
39owner's death; or
40     (c)(b)  A cash balance or other property held for or due to
41the owner of a security as a replacement for or product of an
42account security, whether or not credited to the account before
43the owner's death.
44     Section 2.  Paragraphs (y) and (z) of subsection (2) of
45section 737.402, Florida Statutes, are amended to read:
46     737.402  Powers of trustees conferred by this part.--
47     (2)  Unless otherwise provided in the trust instrument, a
48trustee has the power:
49     (y)  To employ persons, including attorneys, auditors,
50investment advisers, or agents, even if they are the trustee or
51associated with the trustee, to advise or assist the trustee in
52the performance of his or her administrative duties; to pay
53compensation and costs incurred in connection with such
54employment from the assets of the trust; to act without
55independent investigation upon their recommendations; and,
56instead of acting personally, to employ one or more agents to
57perform any act of administration, whether or not discretionary.
58     (z)  To prosecute or defend actions, claims, or
59proceedings, including appeals, for the protection of trust
60assets and of the trustee in the performance of his or her
61duties; to employ attorneys and other agents to advise and
62assist the trustee in the exercise of such powers; and to pay
63compensation and costs incurred in connection with such
64employment from the assets of the trust.
65     Section 3.  Subsection (2) of section 737.403, Florida
66Statutes, is amended to read:
67     737.403  Power of court to permit deviation or to approve
68transactions involving conflict of interest.--
69     (2)  If the duty of the trustee and the trustee's
70individual interest or his or her interest as trustee of another
71trust conflict in the exercise of a trust power, the power may
72be exercised only by court authorization, except as provided in
73s. 737.402(2)(a), (e), (g), (s) and (y). Under this section,
74personal profit or advantage to an affiliated or subsidiary
75company or association is personal profit to any corporate
76trustee. Court authorization is not required for any of the
78     (a)  The exercise of any power described in s.
79737.402(2)(a), (e), (g), (s), or (y);
80     (b)  The exercise of any power for which the trust
81instrument acknowledges the trustee's conflict of interest and
82expressly authorizes the exercise of that power notwithstanding
83the conflict;
84     (c)  The exercise of any power consented to in writing by a
85settlor of the trust while the settlor holds the right of
86revocation of the trust;
87     (d)  The exercise of any power consented to in writing by
88each of the beneficiaries to whom the trustee is required to
89provide any annual or periodic accounting. Consent under this
90paragraph may be given by a person who represents the interest
91of the beneficiary pursuant to s. 731.303 or by the legal
92guardian of the beneficiary or, if there is no legal guardian,
93the natural guardian of the beneficiary; or
94     (e)  Payment of costs or attorney's fees incurred in any
95trust proceeding from the assets of the trust unless an action
96has been filed or defense asserted against the trustee based
97upon a breach of trust. Court authorization is not required if
98the action or defense is later withdrawn or dismissed by the
99party alleging a breach of trust, or resolved without a
100determination by the court that the trustee has committed a
101breach of trust.
102     Section 4.  Paragraph (h) of subsection (3) of section
103738.104, Florida Statutes, is amended, and subsection (11) is
104added to said section, to read:
105     738.104  Trustee's power to adjust.--
106     (3)  A trustee may not make an adjustment:
107     (h)  If the trustee is not a beneficiary of the trust but
108the adjustment would benefit the trustee directly or indirectly,
109except that in the case of a trustee whose compensation for
110acting as trustee is based upon the value of trust assets, an
111adjustment that affects the value of trust assets is not deemed
112to benefit the trustee.
113     (11)  This section pertains to the administration of a
114trust and is applicable to any trust that is administered under
115Florida law.
116     Section 5.  Paragraphs (e) and (f) are added to subsection
117(1) of section 738.1041, Florida Statutes, and subsections (10)
118and (12) of said section are amended, to read:
119     738.1041  Total return unitrust.--
120     (1)  For purposes of this section, the term:
121     (e)  "Fair market value" means the fair market value of
122assets held by the trust as otherwise determined under this
123chapter, reduced by all known noncontingent liabilities except
124for those liabilities that, upon payment, will represent
125expenses under s. 738.701 or s. 738.702.
126     (f)  "Unitrust amount" means the amount determined by
127multiplying the fair market value of the assets as defined in
128paragraph (e) by the percentage calculated under paragraph
130     (10)  Any trustee or disinterested person who in good faith
131takes or fails to take any action under this section shall not
132be liable to any person affected by such action or inaction,
133regardless of whether such person received written notice as
134provided in this section and regardless of whether such person
135was under a legal disability at the time of the delivery of such
136notice. Such person's exclusive remedy shall be to obtain, under
137subsection (11), an order of the court directing the trustee to
138convert an income trust to a total return unitrust, to reconvert
139from a total return unitrust to an income trust, or to change
140the percentage used to calculate the unitrust amount. If a court
141determines that the trustee or disinterested person has not
142acted in good faith in taking or failing to take any action
143under this section, the provisions of s. 738.105(3) apply.
144     (12)  This section shall be construed as pertaining to the
145administration of a trust and shall be available to any trust
146that is administered in this state under Florida law unless:
147     (a)  The governing instrument reflects an intention that
148the current beneficiary or beneficiaries are to receive an
149amount other than a reasonable current return from the trust;
150     (b)  The trust is a trust described in the Internal Revenue
151Code, 26 U.S.C. s. 170(f)(2)(B), s. 642(c)(5), s. 664(d), s.
1521361(d), s. 2702(a)(3), or s. 2702(b);
153     (c)  One or more persons to whom the trustee could
154distribute income have a power of withdrawal over the trust:
155     1.  That is not subject to an ascertainable standard under
156the Internal Revenue Code, 26 U.S.C. s. 2041 or s. 2514, and
157exceeds in any calendar year the amount set forth in the
158Internal Revenue Code, 26 U.S.C. s. 2041(b)(2) or s. 2514(e); or
159     2.  A power of withdrawal over the trust that can be
160exercised to discharge a duty of support he or she possesses;
161     (d)  The governing instrument expressly prohibits use of
162this section by specific reference to the section. A provision
163in the governing instrument that, "The provisions of section
164738.1041, Florida Statutes, as amended, or any corresponding
165provision of future law, shall not be used in the administration
166of this trust," or similar words reflecting such intent shall be
167sufficient to preclude the use of this section; or
168     (e)  The trust is a trust with respect to which a trustee
169currently possesses the power to adjust under s. 738.104.
170     Section 6.  Subsection (1) of section 738.303, Florida
171Statutes, is amended to read:
172     738.303  Apportionment when income interest ends.--
173     (1)  For purposes of this section, "undistributed income"
174means net income received on or before the date on which an
175income interest ends. The term does not include an item of
176income or expense that is due or accrued or net income that has
177been added or is required to be added to principal under the
178terms of the trust. In the case of a trust being administered as
179a unitrust pursuant to s. 738.1041, the term "undistributed
180income" means the prorated unitrust amount computed on a daily
181basis through the date on which the income interest ends.
182     Section 7.  This act shall take effect upon becoming a law.

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