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CS/HB 743--Trusts.

The bill amends various sections of the Florida Trust Code to expand the power of a bank or trust company that is acting as a trustee to invest in investment instruments that the bank or trust company owns or controls. A trust company or bank that is acting as a trustee of a trust may invest in an investment instrument it owns or controls if the investment instrument is available for sale to accounts of other customers (rather than "primarily" sold to other customers); and not sold to the trust account upon less favorable terms than the terms upon which they are "normally" sold to other customers. The bill limits the power of a trustee to distribute the principal of a trust when the trustee has absolute power under the trust's terms to invade the principal of the trust. A trustee with absolute power to invade principal may take the principal of a trust (first trust) and place the property in a second trust if the beneficiaries of the second trust include only beneficiaries of the first trust; the second trust does not reduce any fixed income, annuity, or unitrust interest in the assets of the first trust; and if the first trust qualified for a marital or charitable federal income tax deduction, the second trust does as well and does not reduce the deduction. When principal is invaded under an absolute power, it must be done in writing, signed and acknowledged by the trustee, and filed with the records of the first trust. The exercise of this power may not be used to appoint in favor of the trustee or the trustee's creditors and cannot be used in a manner that would postpone the vesting of the trust estate beyond the rule against perpetuities. Sixty days advance notice must be given to all qualified beneficiaries of the first trust prior to the exercise of the power to invade principal. The bill states that exculpatory terms caused to be drafted by a trustee are invalid unless the trustee proves that the exculpatory term is fair under the circumstances, and (if the trust is created after July 1, 2007) the term's existence and contents were adequately communicated to the settlor or the independent attorney of the settlor. The bill revises the definition of "land trust" to apply only to trusts in which ownership of real property is vested in the trustee and to provide that the recorded land trust instrument does not create an entity. It also establishes under what circumstances a trustee of a land trust may be personally liable for torts committed while administering a trust and for contracts made by the trustee in a fiduciary capacity. By operation of [section]736.1013(1), a trustee may be personally liable on contracts if the trustee did not disclose that he or she was acting as a fiduciary. Moreover, [section]736.1013(2), provides that a trustee may have personal liability for certain torts for which the trustee is personally at fault. It makes certain provisions of the Florida Probate Code inapplicable to trusts and provides that a creditor of a beneficiary of a discretionary trust may not compel a distribution from a trust or reach a beneficiary's interest in the trust. The bill makes certain accounting provisions effective on the effective date of the new Florida.Trust Code. It provides that certain anti-lapse statutes in effect before the effective date of the new Florida Trust Code apply to preexisting trusts. Approved by the governor, these provisions take effect July 1, 2007. Chapter 2007-153 L.O.F.
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Title Annotation:Real Property, Probate & Trust Law
Publication:Florida Bar News
Geographic Code:1U5FL
Date:Jul 1, 2007
Previous Article:CS/HB 111--Title insurance.
Next Article:CS/HB 311--Probate.

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