Florida Banking October 2022

TRUST BANKING

ADVANCING FLORIDA’S TRUST INDUSTRY: A REVIEWOF TRUST LEGISLATION FROM THE 2022 LEGISLATIVE SESSION

BY KENNETH D. PRATT, FBA SENIOR VICE PRESIDENT, GOVERNMENT AFFAIRS

W ith the 2022 Legislative Session now fully in our rear view, it is a good time to review some of the significant changes to the Florida Probate Code that were adopted into Florida law this year. This year’s changes should positively and significantly impact how you serve your clientele. This article summarizes what you need to know about new additions to Florida’s Trust Code. Even More Perpetuities Currently, Florida’s maximum vesting period for any non-charitable trust is 360 years. In an effort to make Florida more aligned with longer trends in other states, House Bill 1001 provided that all trusts created on or after July 1, 2022 have a maximum vesting period of 1,000 years, unless that trust specifically provides for a lesser time period. Several other states (Alaska, Colorado, Utah and Wyoming) have also already made this change to 1,000 years, with several others totally extinguishing the vesting limitation and allowing the trust to potentially remain in perpetuity (Delaware, Idaho, Illinois, Kentucky, Missouri, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Dakota and Virginia). Passage of this new provision will now allow testators who situs their trusts in Florida, similar to other states, to control their wealth longer by establishing multi-generational trusts or dynasty trusts and to assist in limiting federal estate and generation-skipping transfer taxes. However, a word to the wise — federal law has been interpreted to immediately trigger the gift or estate tax where there is no limit to the trust’s existence and beneficiaries exercise their powers to extend the trust forever. HB 1001 also expanded the impact of a testator under the Florida Trust Code, by codifying the right of a parent to represent and bind their unborn and minor children. This right is subject to a court

appointed property guardian and where there is no conflict of interest between the representative and the persons being represented. The impact of this provision is that it would expand the number of beneficiaries of a multi-generational trust by allowing a trustee to seek consent through the trust’s living adult beneficiaries. More Streamlined Accountings House Bill 1001 also created a new alternative to the annual trust accounting requirements for family trust companies, licensed family trust companies and foreign licensed family trust companies. The new law provides that in the case where a family trust company is managing an irrevocable trust, the terms of the trust may allow a trustee to provide a summary financial statement in lieu of a full accounting to a qualified beneficiary upon trust termination, resignation or removal of a trustee or upon demand of a qualified beneficiary or representative of that beneficiary. The new statute also requires notice if the trustee decides to elect this manner of reporting and requires basic identifying and financial information to be included in the financial statement. Beginning with any accounting period that begins on or after January 1, 2022, trustees may provide a financial statement that meets all the requirements of the statute, deeming the statement to be a trust accounting. Lessening these requirements for family trust companies that will shortly be concluding their business with the family, will allow trustees the option to save the family significant administrative expenses by providing a comprehensive financial statement rather than providing a more expensive full accounting of the trust’s business. Also provided for in this section is the clarification that in addition to posting notices on a secure website or portal, a family company trust trustee may send an attached or hyperlinked document or notice

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