Legal Commentary on Fla. Stat. § 736.1303 Fla. Stat. § 736.1303 establishes that trusts are included under the Florida Trust Code even when those trusts were executed prior to the effective date of the Code of July 1, 2007. Thus, there is a retroactive application of the Florida Trust Code. The same is true of judicial proceedings concerning trusts commenced on or after July 1, 2007; the Florida Trust Code applies whenever the law is relevant. However, courts are given dome discretion whenever the judicial proceeding was initiated prior to July 1, 2007. For those proceedings, the court may dec ..read more

Legal Commentary on Fla. Stat. § 736.1301 Fla. Stat. § 736.1301 preempts the federal Electronic Signatures in Global and National Commerce Act for all matters regarding the Florida Trust Code. Thus, to comply with the notice methods found in Fla. Stat. § 736.0109, one need not also comply with all of the requirements found in the Electronic Signatures in Global and National Commerce Act. Complying with state law is sufficient. Text of Fla. Stat. § 736.1301 Electronic records and signatures.—Any provisions of this code governing the legal effect, validity, or enforceability of electronic record ..read more

Legal Commentary on Fla. Stat. § 736.1302 Fla. Stat. § 736.1302 is a severability clause for the Florida Trust Code. The statute section establishes that if any individual part or section of the Florida Trust Code is held by a court to be unenforceable or unconstitutional, the rest of the Code will still be valid whenever possible. The purpose of this section is to avoid having the entire Code abandoned as a result of one vital section of the Code being stricken down by a court. “"A severability clause allows the invalidation of unconstitutional provisions of a statute, while allowing the inde ..read more

Legal Commentary on Fla. Stat. § 736.0811 Fla. Stat. § 736.0811 establishes that a trustee has a duty to “take reasonable steps” to (1) enforce the claims of a trust and (2) defend claims against the trust. The words “take reasonable steps” indicate that there are situations in which a trustee may potentially find the enforcement or defense of claims to be unreasonable. For example, if a trust has a potential claim against a debtor who refuses to pay a disputed debt of $18.43 to the trust, the trustee may reasonably determine that the expense of a lawsuit against the debtor does not justify th ..read more

Legal Commentary on Fla. Stat. § 736.1003 Fla. Stat. § 736.1003 makes clear that a trustee is liable for any loss of trust assets or a lack of profit resulting from trust assets if no breach of trust has occurred. This statute section creates some tension with Fla. Stat. § 736.0804, which requires a trustee to prudently administer a trust, and the prudent investor rule found in Fla. Stat. § 518.11 (and explicitly referenced by the Florida Trust Code in Fla. Stat. § 736.1007(4)(f)). A trustee generally has a duty to produce income from trust assets. In In re Estate of Feldstein, a trustee was h ..read more

Legal Commentary on Fla. Stat. § 736.0507 Fla. Stat. § 736.0507 establishes that a personal creditor of a trustee cannot go after trust assets to satisfy the debt of the trustee. For example, if Jim serves as trustee but owes $10,000.00 on a personal credit card, the bank who issued the credit card loan would need to pursue Jim’s personal assets to satisfy the loan; trust assets would not be available to the bank. However, if Jim paid himself compensation as trustee, the bank could potentially go after that compensation because it is no longer a trust asset. Simply put, trust assets can be use ..read more

Legal Commentary on Fla. Stat. § 736.151 Fla. Stat. § 736.151 makes clear that a real property in a community property trust may qualify as the homestead of the settlor spouses for all purposes, including for purposes of creditor protection, devise restriction, and for the homestead tax exemption. Community Property Trusts and Homestead Creditor Protection Homestead property is given a large amount of creditor protection in Article X, Section 4(a)(1) of the Florida Constitution. Only a few types of creditors have any hope of ever attaching an interest to property protected as homestead. For mo ..read more

Legal Commentary on the Definition of “Beneficiary” Fla. Stat. § 736.0103(3) defines the term “beneficiary.” The text of the subsection reads: “Beneficiary” means a person who has a present or future beneficial interest in a trust, vested or contingent, or who holds a power of appointment over trust property in a capacity other than that of trustee. An interest as a permissible appointee of a power of appointment, held by a person in a capacity other than that of trustee, is not a beneficial interest for purposes of this subsection. Upon an irrevocable exercise of a power of appointment, the ..read more

Legal Commentary on Fla. Stat. § 736.1506 Fla. Stat. § 736.1509 makes clear that a community property trust does not shield assets from child support. This is similar to the highly criticized Second District Court of Appeal holding in Berlinger v. Casselberry, in which a discretionary trust did not shield a trust settlor from spousal support obligations. 133 So. 3d 961 (Fla. 2d DCA 2014). However, unlike in Berlinger, in which the Second District Court of Appeal arguably contradicted the plain meaning of Fla. Stat. § 736.0504, Fla. Stat. § 736.1509 provides explicit statutory authority for a c ..read more

Legal Commentary on Fla. Stat. § 736.1506 Fla. Stat. § 736.1506 explains the rights and limitations of a creditor who might want to access the assets in a community property trust. Unless a community property trust provides otherwise in its terms, a creditor seeking to satisfy a debt owed by one spouse alone will be able to access up to half the assets in the trust. However, a creditor may potentially satisfy the spouses’ joint debts using any part of a community property trust owned by the spouses. If you assume that a joint trust between spouses could hold property as tenants by the entirety ..read more