The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Rules
BILL: CS/CS/SB 1070
INTRODUCER: Community Affairs Committee; Judiciary Committee; and Senator Berman
SUBJECT: Estates and Trusts
DATE: April 15, 2021 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Bond Cibula JU Fav/CS
2. Hackett Ryon CA Fav/CS
3. Bond Phelps RC Favorable
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 1070 amends laws on the transfer of property through wills, probate, and trusts.
The bill creates a comprehensive statutory framework for the creation and operation of a directed
trust. Directed trusts are authorized by current law. In a directed trust, someone other than a
trustee is allowed to direct some actions of a trustee of the trust.
The bill creates a comprehensive statutory framework for the creation and operation of a
community property trust. Community property trusts are not addressed in current law. A
community property trust holds property owned by a married couple as if the property was in a
community property state, which has certain tax and estate planning advantages.
The bill amends probate law to provide that, absent specific intent in the divorce judgment, an
ex-spouse is not a beneficiary of the former spouse’s will, regardless of when the will was
signed. Currently, an ex-spouse remains as a beneficiary after divorce if the will was signed prior
to the wedding and the deceased failed to change the will after divorce.
The bill also requires a probate court to allow a surety bond in lieu of a depository account
requirement; provides that the limitations periods for an action against a trust’s trustee apply to
directors, officers, and employees of the trustee; and applies homestead property law applicable
to wills to homestead property held in a decedent’s revocable trust.
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Portions of the bill relating to the effect of divorce and depository accounts are effective upon
becoming law. The remainder of the bill is effective July 1, 2021.
II. Present Situation:
Trusts, In General
Chapter 736, F.S., contains the Florida Trust Code (Code). The Code applies to express trusts,
charitable or noncharitable, and to trusts created pursuant to a law, judgment, or decree that
requires the trust to be administered in the manner of an express trust.
Under the Code, a settlor is the person who creates or contributes property to a trust.1 A
beneficiary of a trust is a person who has a present or future beneficial interest in the trust.2 A
trustee is the person who holds the legal title to the property of the trust. The trustee is granted
certain powers and is subject to certain duties imposed by the terms of the trust, equity
jurisprudence, or by statute. A trustee may have the power or duty to perform various acts of
management.
A trustee derives his or her rules of conduct, extent and limit of authority, and measure of
obligation from the trust instrument. Under the Code, a violation by a trustee of a duty owed to a
beneficiary is a breach of trust. A breach of trust makes the trustee liable for any loss of the trust
estate.
Except as otherwise provided in the terms of the trust, the Code governs the duties and powers of
a trustee, relations among trustees, and the rights and interests of beneficiaries. The terms of a
trust prevail over any provision of the Code, except as provided in s. 736.0105(2), F.S., which
provides 23 terms that are solely governed by the Code and cannot be changed, waived, or
otherwise altered by the terms of the trust.3
One area of trust law that cannot be changed by the terms of a trust is the duty of a trustee to act
in good faith and in accordance with the terms and purposes of the trust and the interests of the
beneficiaries. This becomes troublesome where the settlor wants to appoint someone other than a
trustee to direct some part of the operation of the trust.
Directed Trusts
In a directed trust, the terms of the trust grant a person other than a trustee a power over some
aspect of the trust’s administration. There is no consistent vocabulary to describe the person
other than a trustee that holds a power in a directed trust. Several terms are common in practice,
including “trust protector,” “trust adviser,” and “trust director.” There is much uncertainty in
existing law about the fiduciary status of a nontrustee that has a power over a trust and about the
fiduciary duty of a trustee, sometimes called an “administrative trustee” or “directed trustee,”
with regard to actions taken or directed by the nontrustee.
1 Section 736.0103(18), F.S.
2 Section 736.0103(4), F.S.
3 Section 736.0105(2), F.S.
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The concept of a directed trust is briefly addressed in current law at ss. 736.0703(9), and
736.0808, F.S. Those sections allow creation of a directed trust, provide for rights and duties
between cotrustees, and provide that a trustee of a revocable trust may follow the direction of
someone designated by the settlor unless that action would constitute a serious breach of trust. A
person who holds a power to direct is considered a fiduciary.
Community Property Trust
The term “community property” refers to the legal theory, applicable in some states, that most
property owned by a married person is jointly owned with the spouse. Nine states are considered
“community property states.”4 Florida is not a community property state, but some residents
come from community property states. Holding property as if community property law applies
has certain advantages in divorce, tax avoidance, and estate planning. The Probate Code
recognizes community property rights.5
Impact of Divorce on Wills and Trusts
One consequence of divorce is that is supposed to be the end of the benefits of marriage. One of
the financial benefits of marriage is inheritance. Many persons who divorce neglect to change the
terms of their wills, trusts, or other financial instruments, to omit their now former spouse as a
beneficiary. This common omission, if not corrected by statue, can lead to unexpected windfalls
for an ex-spouse years after divorce, to the detriment of the expected heirs of an estate (such as
the current spouse, children, parents, and other family). Current law protects expected heirs from
this oversight by creating the legal fiction that, for purposes of inheritance, revocable trusts, and
certain beneficiary designations, a past divorce is treated in the distribution as if the surviving
former spouse had died on the date of divorce.6 This legal fiction does not apply where the
divorce judgment specifically requires that the former spouse remain as a beneficiary of the will,
trust, or other financial instrument, or where the beneficiary designation is reaffirmed after
divorce.
A 2018 appellate case exposed an exception in this area. In that case, the decedent had signed his
will prior to the wedding date. The statute on wills requires that the will be signed during the
term of the marriage for the ex-spouse to be disinherited by the statute. A strict reading of the
statute led to the ex-wife receiving an inheritance, to the detriment of the decedent’s disabled
father.7
Depository Accounts in Probate
Courts are commonly called on to assume control over a person’s property. The most common
form of this is probate, but other common areas include guardianship and receivership. The trial
4
The nine states that have community-property systems: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,
Washington, and Wisconsin. Also, a community-property regime is elective in Alaska. Black’s Law Dictionary (11th ed.
2019).
5
Sections 732.216-.228, F.S., known as the Florida Uniform Disposition of Community Property Rights at Death Act.
6
Sections 732.507 (wills), 732.703 (certain life insurance, IRAs, retirement plans, and pay on death accounts), and 736.1105
(trusts), F.S.
7
Gordon v. Fishman, 253 So. 3d 1218 (Fla. 3d DCA 2018)
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judge does not have the time or expertise to inventory, manage, and distribute such property, and
so a fiduciary is appointed. These court-appointed fiduciaries are known by many names,
including personal representative, guardian, curator, executor, administrator, trustee, or receiver.
Current law provides numerous safeguards to guard against theft or mismanagement of property
by a court-appointed fiduciary. A common safeguard is a requirement that a court-appointed
fiduciary post a surety bond.
Surety bonds are expensive, and may not be available at any cost in large or complicated estates.
Current law at s. 69.031, F.S., gives the court an alternative safeguard applicable to all court-
appointed fiduciaries -- the use of a depository account. A depository account may be used where
“the size of the bond . . . is burdensome or for other cause.” Where a depository account is used,
the property of the estate is deposited with a bank, trust company, or savings and loan. Court
approval is required for every distribution from a depository account, a burdensome and costly
process.
Probate practitioners report that some jurisdictions require use of a depository account pursuant
to a blanket policy. A blanket policy requiring use of a depository account is improper.8
Liability of Directors, Officers and Employees
Section 736.1008, F.S., creates limitation periods for a beneficiary’s claim against a trustee for a
breach of trust. The trustee has the authority to adequately disclose matters in a trust disclosure
document and include a limitations notice to use a 6-month statute of limitations. Where the
appointed trustee is a business entity, employees of the trustee may be personally liable for a
breach of trust.9 It is unclear whether the limitations period for filing a lawsuit against a trustee
similarly applies to directors, officers, or employees of the trustee.
Homestead Property in a Trust
The state constitution protects a homestead in three distinct ways. First, it provides homesteads
with an exemption from property taxes. Second, the homestead provision protects the homestead
from forced sale by creditors. Third, the homestead provision delineates the restrictions a
homestead owner faces when attempting to alienate or devise the homestead property.10 This bill
involves the second and third protections.
When held by an individual, a homestead is protected from forced sale by creditors. Of course,
this protection does not affect a tax or mortgage lien foreclosure. This protection extends to the
heirs of such individual, so that the heirs inherit the homestead property without being subject to
creditors of the deceased. It is unclear whether the same protection would apply to a specific
devise of homestead property held in a trust. One court has ruled that it did not protect heirs
receiving homestead property through a trust because the transfer from the individual to the trust
8
Goodstein v. Goodstein, 263 So. 3d 78 (Fla. 4th DCA 2019).
9
Beaubien v. Cambridge Consol., Ltd., 652 So. 2d 936 (Fla. 5th DCA 1995).
10
Snyder v. Davis, 699 So. 2d 999, 1001–02 (Fla. 1997).
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caused the property to lose its homestead status.11 Two appellate courts have held to contrary,
finding that homestead property retained its status after transfer to a trust.12
The third part of the homestead benefits and limitations trio is related to devise of the property.
The term “devise” refers to transfer of property by will. The Probate Code specifically provides
that transfer by a trust is the same as a transfer will for purposes of limiting the devise of
homestead property. This does not, however, appear in the Trust Code.
Also not appearing in the Trust Code are laws regarding the mechanics of the transfer of title and
possession. In probate, title vests in the beneficiary at the moment of death.
It is common in probate proceedings to obtain a court order determining that property owned by
the deceased was homestead property on the date of death. Once homestead is determined, the
parties can go about the business of paying creditors and distributing property to heirs. A court
order determining homestead status is required by title insurance in some circumstances.
However, where the property was held in a revocable trust, there is no apparent authority for a
court to determine that the trust property was homestead.
III. Effect of Proposed Changes:
Directed Trusts
The bill creates a comprehensive statutory framework for the governance of directed trusts. The
bill repeals the brief references to directed trusts in current law. Current law is not changed, just
greatly expanded and clarified.
The bill creates Part XIV of the Trust Code, ch. 736, F.S, entitled “Directed Trusts.”
The bill creates s. 736.1403, F.S., to provide that Part XIV applies to a Florida-based trust,
including one created before July 1, 2021, but only applies to a decision or action occurring on or
after July 1, 2021. If a trust is moved to Florida on or after July 1, 2021, this part only applies to
a decision or action taken after the move.
The bill creates s. 736.1405, F.S., to exclude certain persons or transactions from the part.
Anyone who holds any power over a trust is subject to this part, so exceptions are required to
limit its scope. A person who only holds any of the following powers is not subject to this part,
unless specifically subject to this part under the terms of the trust:
 A power of appointment.
 A power to appoint or remove a trustee or trust director.
 Any power of the settlor over the trust while the trust is revocable.
 Any power of a beneficiary, but only to the extent such power only affects the beneficiary or
benefits another beneficiary represented by the beneficiary.
 Any non-fiduciary power related to federal income tax planning.
 Any power to add or release a power benefitting the settlor for federal income tax purposes.
11
Elmowitz v. Estate of Zimmerman, 647 So. 2d 1064 (Fla. 3rd DCA 1994).
12
HCA Gulf Coast Hosp. v. Estate of Downing, 594 So. 2d 774 (Fla. 1st DCA 1991) (spendthrift trust); Engelke v. Estate of
Engelke, 921 So. 2d 693 (Fla. 1st DCA 2006)(revocable trust).
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For purposes of this section and as to a person other than a trustee of the trust:
 The power to designate a recipient of an ownership in the trust is a power of appointment.
 The power to terminate is a power of appointment.
 The power to create, modify, or terminate a power of appointment is a power of direction;
unless it is a power to create a power of appointment that is an element of a broader power to
affect an ownership interest in trust property beyond the mere creation of a power of
appointment.
The bill creates s. 736.1406, F.S., to specify that the general power of a trust director is the
power to do what the trust directs. In carrying out that responsibility, the trust director has the
power to do anything appropriate to the exercise or non-exercise of such power of direction,
subject to the limits of s. 736.1407, F.S. However, where there are two or more persons with the
same power of direction, they must act by majority vote.
The bill creates s. 736.1407, F.S., to limit the powers of a trust director. A trust director must act
as a trustee and comply with the requirements of a special needs trust under the federal Medicaid
program,13 and with the requirements of a charitable interest in the trust.
The bill creates s. 736.1408, F.S., to provide that the duty of a trust director is the same as the
duty of a trustee as to that specific power. The terms of the trust may vary the duty or liability of
a trust director, with the same limits that the duty and liability of a trustee may be modified.14 A
trust director who is licensed to practice health care and who furnishes health care services to a