What Is the New Trust Law in Florida? A Plain Guide

What is the new trust law in Florida? The short answer

Many questions about trusts in Florida involve the Florida Trust Code, the trust law in Chapter 736 of the Florida Statutes. Those changes added rules for directed trusts, where some decisions go to someone other than the trustee. They also added rules for community property trusts used by married couples. The core Code rules apply to express trusts in general. Whether a specific rule reaches a specific trust depends on the facts: the trust’s date, its exact terms, and the people involved.

Leslie V. Marenco is the responsible lawyer for this page. Trust Counsel, PL is a Coral Gables, Florida firm. Its only office is in Coral Gables, and we serve clients in Florida from that office.

What does the Florida Trust Code cover?

The Florida Trust Code covers express trusts, which are trusts a person creates on purpose, whether charitable or noncharitable. Fla. Stat. § 736.0102 It also covers certain trusts created under a law or court order. It does not cover conservatorships or constructive and resulting trusts. Fla. Stat. § 736.0102 reads: “(2) This code does not apply to constructive or resulting trusts; conservatorships; custodial arrangements pursuant to the Florida Uniform Transfers to Minors Act; business trusts providing for certificates to be issued to beneficiaries; common trust funds; trusts created by the form of the account or by the deposit agreement at a financial institution; voting trusts; security arrangements; liquidation trusts; trusts for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind; and any arrangement under which a person is nominee or escrowee for another.”

Heirs often ask first whether a document called a trust is covered at all. The statute’s exclusions answer that question.

The Code also gives beneficiaries real rights. These rights often matter most after a death or incapacity, when family members first learn a trust exists.

How does the Florida directed trust rule work?

A directed trust moves some decisions away from the trustee. The trust’s terms can give a power of direction to a trust director. § 736.1406 That power includes only the powers the trust grants. Unless the trust says otherwise, trust directors with joint powers act by majority decision.

A common mistake is assuming the trustee alone decides everything. Under this structure, the director may hold the decision. The trustee’s job then becomes following it reasonably and checking that the direction is within the director’s power.

A directed trustee must take reasonable action to comply with a trust director’s exercise or nonexercise of a power of direction, and is not liable for that reasonable action (§ 736.1409(1)). § 736.1409 It may not comply if doing so would mean willful misconduct. If it has reasonable doubt about its duty, it may ask a court for instructions.

§ 736.1408 A trust director has the same fiduciary duty and liability as a trustee in a like position when using a power of direction (as a sole trustee if the director holds the power alone, or as a cotrustee if it is held jointly), and the trust’s terms may vary the director’s duty or liability. However, unless the trust says otherwise, a director who is licensed or authorized to provide health care has no duty or liability under this part when acting in that capacity, so the trust document matters.

What is the Florida community property trust rule?

A community property trust lets married settlor spouses classify their property as community property under Florida law. They do this by transferring property to the trust and stating in the trust that it is community property. § 736.1505 The rule works whether one or both spouses live in Florida, or neither does.

Spouses may classify property as community property by transferring it to a community property trust and providing in the trust that the property is community property pursuant to this part. It must have at least one qualified trustee and be signed by both settlor spouses. § 736.1503 It must also contain substantially the following warning language in capital letters at the beginning of the community property trust agreement. That language says the consequences may be very extensive. It mentions rights with creditors, rights during the marriage, and rights at divorce or death. A document without that language would not follow the statute’s required form.

The statute says separate legal counsel for each spouse is not required. It also says separate counsel is strongly advisable. Couples with property or homes in more than one state should review whether this structure fits their situation. The trust’s terms, not a default rule, control who manages the property. § 736.1505

What powers and duties does a trustee have?

Under Fla. Stat. § 736.0815, a trustee, without authorization by the court, may exercise powers conferred by the terms of the trust and, except as limited by those terms, all powers over trust property that an unmarried competent owner has over individually owned property, other powers appropriate to achieve the proper investment, management, and distribution of the trust property, and other powers conferred by the Florida Trust Code, but the exercise of a power is subject to the fiduciary duties prescribed by that code. § 736.0815 Those powers include what the trust grants. Unless the trust limits them, they also include the powers an unmarried competent owner has over individually owned property. Every power stays subject to the trustee’s fiduciary duties.

The core duties are clear. § 736.0802 A trustee must also act as a prudent person would, using reasonable care, skill and caution. § 736.0804 A trustee must administer the trust as a prudent person would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust, and must exercise reasonable care, skill, and caution.

Trustees can be individuals. Trust Counsel’s attorneys can serve individually as trustee or personal representative. The firm advises and represents trustees, personal representatives and beneficiaries. A personal representative (often called an executor) administers a deceased person’s estate.

Can a court change a trust under the new rules?

A court can change an irrevocable trust in limited situations. A trustee or qualified beneficiary may apply to the court. The court may modify the trust if its purposes have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill. Under Fla. Stat. § 736.04113, upon the application of a trustee or a qualified beneficiary, a court at any time may modify the terms of a trust that is not then revocable if the purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill, if circumstances not anticipated by the settlor would defeat or substantially impair the accomplishment of a material purpose of the trust, or if a material purpose of the trust no longer exists. § 736.04113

The court looks at the trust’s terms and purposes, the facts around its creation, and relevant evidence. It does not predict any outcome. Revocable trusts work differently. § 736.0602 If the trust gives an amendment method, the settlor must substantially follow it.

Modification options also depend on the trust’s governing law, as ACTEC’s session materials on modifying trusts explain. Some trusts are sold as tax or asset-protection tools. The IRS guidance on abusive trust schemes says asset protection trusts follow applicable state law. It also warns against trusts marketed to cut federal taxes.

A will and a trust can both play a role in one family’s estate. If a will has not been probated, the steps differ. See what happens when a will is not probated in Florida.

How do these rules fit into estate planning?

A living trust is a trust a person creates during life, often a revocable one. It only controls assets that have been placed into it, so how property is titled matters. Planning usually means listing assets, naming a trustee and a successor, and deciding whether a directed structure or community property treatment fits the family. Families also revisit the plan when facts change, such as a move to another state, a marriage, or a death in the family.

The step-by-step guide to preparing a trust in Florida covers those steps in more detail. Trust Counsel’s work covers trust litigation, trust administration and estate planning in Florida. The trust litigation services overview describes that work.

Talk with Trust Counsel about your situation

Being named in a parent’s trust, or asked to act as trustee after a death or illness, can raise hard questions quickly. The short answers below can help you start.

If you have questions about a trust you were named in, call (305) 707-7126 or schedule online through our contact page. Your first consultation is free, confidential, and carries no obligation to continue.