In 2021, Florida passed a new law called the Florida Uniform Directed Trust Act, which deals with trusts where someone other than the trustee has power over parts of the trust. This is becoming more common, so it was necessary to create new laws to govern how these types of trusts work. In the past, the trustee was responsible for everything in the trust, but now there are people called trust directors who have specific powers over the trust. These new laws help to clarify the roles and responsibilities of these different people involved in the trust. In simple terms, there were some legal issues between trust directors and trustees that Florida law didn’t fully address. There were questions about how the responsibility for the trust is divided between the trust director and the trustee, how much they need to tell each other, and whether the trust director can get paid. To answer these questions, a new law called the Uniform Directed Trust Act was created. It has been adopted by 16 states, including Florida, and gives clear answers to these questions. The Real Property, Probate and Trust Law Section of The Florida Bar wanted to bring the benefits of a uniform act to Florida, so they created a specific version for the state called FUDTA. It’s now part of the Florida Trust Code and has its own section because it’s different enough to warrant it. There were also some changes made to existing trust laws to make everything work together better. Changes to existing trust law in Florida include adding definitions for directed trusts, trust directors, and powers of direction. These changes also include exceptions to the duty of a trustee to act in good faith and in accordance with the trust’s terms and the beneficiaries’ interests for certain aspects of directed trusts. The Florida Trust Code has been updated with new provisions for co-trustees, limitations on proceedings against trustees, and trust certifications. The new Part XIV of the code focuses on directed trusts and applies to trusts with their main administration in Florida. It also includes rules for determining the principal place of administration. These changes aim to make trust management more efficient and protect the interests of beneficiaries. If you have a power to control a trust but you’re not the trustee, you are usually subject to certain rules. However, there are some powers that are excluded from these rules, like the power to decide who gets what from the trust. If the trust gives you the power to make, change, or end this kind of power, you still have to follow the rules. But if the trust only gives you the power to make, change, or end a different power like this, then you don’t have to follow the rules. So, basically, it depends on what kind of power the trust gives you. A power of appointment is the ability to choose or remove someone to be in charge of a trust. The person who created the trust can make changes to it while they are still alive. The person who benefits from the trust can also have some control over it, and there are certain powers that can be given to someone without them having to act in the best interest of the trust’s beneficiaries. This is mainly for tax purposes and to help the person who made the trust pay any taxes related to it. There is also a power that allows someone to change whether the trust is considered a grantor trust for tax purposes. “F.S. §736.1406 gives the trust director certain powers, but they have to follow the rules in the trust document and only have powers that are appropriate. If there are multiple trust directors, they have to make decisions together. The draftspersons decided that the trust director can hire people like lawyers to help them, and they can also hire lawyers to defend themselves if they are accused of not doing their job. The law also says that a trust director with certain powers has to follow the same rules as a trustee. They can be held responsible for their actions, but the trust document can also change some of their responsibilities. So, the trust director has to act in the best interest of the trust and the people it’s for, just like a trustee does.” A trust director who is a healthcare provider will not be held responsible under the FUDTA for their actions in providing healthcare.
Under the FUDTA, a directed trustee must follow the directions they receive, unless it would involve willful misconduct. This means they can’t act in a way that is deliberately harmful or against the terms of the trust. This standard also applies to a trustee being directed by a trust director, to ensure fairness and consistency. The law doesn’t give a specific definition of “willful misconduct” but some states do. Florida decided not to provide a definition to avoid unintended consequences in other areas of the law. The comments to the uniform act say that a trustee has to act reasonably when carrying out the directions of a trust director. For example, if a trust director tells the trustee to buy a particular investment, the trustee has to do it in a reasonable way and avoid any conflicts of interest. The directed trustee is responsible for following directions from the trust director, as long as the directions are within the limits of the trust. The trustee is not responsible for the content of the directions, but can seek court instruction if they have doubts. The trustee and trust director must share information with each other and can rely on that information unless they act with deliberate wrongdoing. They also have no duty to monitor or advise each other. If one trustee has the power to direct another trustee, the trustee being directed has the same duties and liabilities as a directed trustee. F.S. §736.1413: If someone wants to sue a trust director for not doing their job, they have to do it within a certain timeframe, just like with trustees. The trust director can also use a qualified trust accounting or written report to help protect themselves.
F.S. §736.1414: A trust director has the same defenses in a breach of trust case as a trustee.
F.S. §736.1415: A trust director agrees to follow Florida’s laws by accepting their role. The courts in Florida can also have authority over them in certain situations.
F.S. §736.1416: Some parts of the Florida Trust Code that apply to trustees also apply to trust directors, but not all of them. The specific details can be found in F.S. §736.1416 of the FUDTA. This section deals with how a person becomes a trust director for a trust. It explains that accepting the role of trust director isn’t always as clear-cut as accepting the role of trustee because some trust director powers may not be used right away. The FUDTA allows a trustee, settlor, or qualified beneficiary to ask a trust director to confirm that they have accepted the role, and the trust director has to respond within 60 days. If they don’t respond, interested people can go to court to figure out if the trust director has accepted their role or not. The Florida Uniform Directed Trust Act is a law that regulates how trusts are managed in Florida. It covers things like who can give instructions for the trust, how those instructions are carried out, and how the trust is administered. The law was written by a lawyer named Charles D. Rubin, who works at a law firm in Boca Raton. He specializes in tax law, estate planning, and managing trusts. Jenna G. Rubin is a lawyer who specializes in helping people with their wills and trusts. She is really good at it and even helped write a new law in Florida. She works at a law firm and is part of a group of lawyers who focus on real estate, wills, and trusts. This article is from that group.
Source: https://www.floridabar.org/the-florida-bar-journal/protectors-and-directors-and-advisers-oh-mythe-new-florida-uniform-directed-trust-act/
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