A trust is an excellent solution to avoid probate and ensure a smooth inheritance process for your loved ones. Many Florida residents rely on trusts for estate planning purposes, as these legal tools offer flexible solutions for different use cases.
In this article, you will discover whether Florida has a trust decanting statute.
Revocable Trusts vs. Irrevocable Trusts – Understanding the Concept
In a trust, the trustor or settlor (the person creating the document) transfers the ownership of assets to a trustee (fiduciary) to benefit one or multiple individuals (beneficiaries).
The trust instrument is the document that creates the trust, appoints the parties involved in its structure, and details how trust property should be organized, controlled, and eventually distributed to the beneficiaries.
Florida law allows you to set up two types of trusts – revocable trusts and irrevocable trusts. Revocable trusts are arrangements that allow the trustor to remain in control of the assets while he or she is still alive.
During the trustor’s lifetime, the terms of a revocable trust instrument can be modified, amended, or even revoked. After the trust’s passing, the trust becomes irrevocable.
As its name suggests, an irrevocable trust cannot be modified, amended, or revoked once it is signed into existence. However, every rule has its exception, as irrevocable trusts can be modified in very few situations.
Does Florida Have a Trust Decanting Statute? – The Verdict
If an irrevocable trust does not fulfill the trustor’s purpose behind its existence, the trustee and beneficiaries can file to terminate the arrangement.
Florida law offers two alternatives to revoke an existing irrevocable trust – judicial termination or non-judicial termination. Non-judicial termination is available for trusts created after January 1, 2001.
Florida Statutes 736.0414 (1) specifies that “after notice to the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than $50,000 may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration.”
Florida Statutes 736.0414 (2) adds that “upon application of a trustee or any qualified beneficiary, the court may modify or terminate a trust or remove the trustee and appoint a different trustee if the court determines that the value of the trust property is insufficient to justify the cost of administration.”
The term “decanting” a trust refers to the transfer of assets held in an old trust to a new trust. In essence, the old trust can be rewritten, and the beneficiaries will receive their fair share without court intervention.
Please note that the new trust must meet strict requirements and focus exclusively on the beneficiaries from the old trust. Florida law has a specific decanting statute. Under Florida Statutes §736.04117, the trustee has “absolute power” to invade the principal of the old trust and create a new trust.
Florida Statutes §736.04117 (1)(a) provides that “a power to invade principal for purposes such as best interests, welfare, comfort, or happiness constitutes an absolute power not limited to specific or ascertainable purposes.”
As long as the trustee follows the instructions established by Florida’s decanting statute, court approval is not required.
Decanting a Florida Trust – Immediately Contact Jurado & Associates, P.A.
Avoid mistakes by working with an expert trust attorney from Jurado & Associates, P.A. Contact us today by calling (305) 921-0976 or emailing Romy@juradolawfirm.com to schedule a consultation.