aBsoLuTE powEr no LongEr nECEssarY
Real Property Probate & Trust Section
Chairs: Kristin Morris – Shutts & Bowen & Elaine McGinnis – Law Office of Elaine McGinnis, P.A.
Effective march 2018, an absolute
power to invade principal is
no longer a requirement to
decant a trust that is administered
D
in the state of Florida.
ecanting a trust,
generally, involves a
trustee “pouring” trust
assets from one trust
to another under the trustee’s
discretionary authority to make
distributions to or for the benefit
of one or more beneficiaries.
A recent amendment to Section
736.04117, Florida Statutes, has
expanded the ability of trustees
to decant trust principal. Prior to
the amendment, a trust could only
be decanted by a trustee who had
an “absolute power” to invade the
principal of the trust. A power to
invade principal that is limited to
specific or ascertainable purposes
is not an absolute power to invade.
As a result, the standard power
to invade trust principal for the
“health, education, maintenance,
and support” of a beneficiary
had previously barred trustees
from decanting trusts.
Effective March 2018, an
absolute power to invade principal
is no longer a requirement to
decant a trust that is administered
in the state of Florida.
Unless the trust instrument
expressly provides otherwise, a
trustee who has a non-absolute
power to invade trust principal
may now decant all or part of the
principal of the first trust subject to
such power into one or more second
trusts. In exercising such power:
(1) The second trust, in the
aggregate, must grant each
beneficiary of the first trust
beneficial interests in the second
trust that are substantially similar
to the beneficial interests they had
under the first trust.
(2) If the first trust grants a
power of appointment to a
beneficiary of the first trust, the
second trust must grant such power
of appointment in the second trust
to such beneficiary, and the class
of permissible appointees must
be the same as in the first trust.
(3) If the first trust does not
grant a power of appointment
to a beneficiary of the first trust,
the second trust may not grant
a power of appointment in the
second trust to such beneficiary.
(4) The term of the second
trust may extend beyond the term
of the first trust, and, for any
period after the first trust would
have otherwise terminated, in
whole or in part, under the
provisions of the first trust, the
second trust may, with respect
to the property subject to such
extended term, include language
providing the trustee with the
absolute power to invade the
principal of the second trust during
such extended term. The second
trust may also create a power of
appointment (if the power holder
is a current beneficiary of the
first trust) or expand the class of
permissible appointees in favor
of which a power of appointment
may be exercised.
A trustee who intends to decant
a trust must give written notice at
least 60 days prior to the exercise of
the power to invade trust principal
to all qualified beneficiaries of the
first trust, all trustees of the first
trust, and any person who has the
power to remove or replace the
trustee of the first trust. The notice
requirement is satisfied when all
of these persons are provided
copies of the proposed instrument
exercising the power to decant, the
existing trust
agreement, and
the proposed
second trust
agreement.
Author:
Matthew
Schnitzlein -
Allen Dell
get InvoLved In A SeCtIon oR CommIttee!
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58
JAN - FEB 2019
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HCBA LAWYER