Justia Badge
The Florida Bar - Board Certified
Miami Lakes - Bar Association
Avvo Rating 10.0
Weston Bar Association
Avvo Clients Choice 2016
DC Bar
Indiana State Bar Association
Ullinois State Bar Association
The Virginia Bar Association
Published on:

Florida’s New Directed Trust Act: Executive Summary

Curve Balls to Watch for In New Florida Trust Director Law

By Phillip B. Rarick, Miami Trust Attorney, and Hannah S. Rarick, J.D. Candidate

Effective as of last year July 1, 2021, Florida is now 1 of 15 states to enact the Uniform Directed Trust Act (FUDTA), Fla. Stat. §§736.1401 to .1416, that allows a third party other than the Trustee to take over some part of the trust administration – such as supervision of a small family business. This third party is called a Trust Director (or directing Trustee) in the new statute; but is also commonly referred to as a Trust Advisor under prior law or Trust Protector in other jurisdictions.

Here are Five key points in the new Directed Trust Act:

1. Expanded Trustee Protections. The focus of the new act is to expand the guidelines and protections for Trustees that are “directed” to take or not take certain actions during the trust administration. F.S. 736.1409. The person who can give such directions is now referred to as either (a) Trust Director (Fla Stat. §736.1406) or (b) a “directing Trustee” (Fla Stat §736.1412).

Note: I am going to use “Trust Director” as I find “directing Trustee” confusing. The act anticipates that the Trustee will not als

MIAMI-BAY-VIEW-225x300

o serve as Trust Director otherwise why then do you need a Trust Director? However, the new law does not prohibit a Trustee from also serving as a Trust Director.

2. Powers of the Trust Director. These powers are very broad and include power over investment, management, distribution of trust property, amend trust, and terminate Trust. Powers that are excluded include powers of appointment and the powers to remove a Trustee or Trust director.

3. Clarification of Trust Director Standard of Care. Before FUDTA, it was not clearly defined what fiduciary duty was imposed on the Director. Now, the new law states the Trust Director’s minimum duty is to act in good faith and in accordance with the beneficiaries’ interest, which is parallel to a Trustee. This duty is applicable to any person who holds the role of directing a trustee, despite the title of the position.

4. Trust Director Can Now Issue a 6-month limitation notice. A 6-month limitation notice can now be issued by both the Trustee and Trust Director. A Trust Director can issue 6-month limitations notice per F.S. 736.1008 that can effectively cut off claims by a beneficiary of the acts of the Trust Director unless an action for breach of trust based on matters disclosed in a trust accounting or other written report is commenced within 6 months after receipt from the trustee or a trust director of the limitation notice.

5. Effective date: July 1, 2021. But here is the curve ball.  The new law is currently effective, although F.S. §736.1403 provides “(a) If the trust was created before July 1, 2021, this part applies only to a decision or action occurring on or after July 1, 2021.”

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on the information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami Trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

 

Contact Information