Fla. Stat. § 736.0102 - Commentary to Florida Trust Code

Legal Commentary on Fla. Stat. § 736.0102

Fla. Stat. § 736.0102 limits the application of the Florida Trust Code and creates a prohibition against creating a land trust by means of trust amendment.

First, the Florida Trust Code applies to express trusts. An “express trust” is a trust which is “existent in the mind of the grantor. . ." at the time the trust is created. Smehyl v. Hammond, 44 So.2d 678 (Fla. 1950). “An express trust cannot exist unless there is an execution of an intention to create such a trust by the one having legal and equitable dominion over the property made subject to it." Columbia Bank for Cooperatives v. Okeelanta Sugar Co-op., 52 So.2d 670 (Fla. 1951). Put differently, an express trust is one that exists because the trust grantor intentionally created the trust.

The code also applies to “trusts created pursuant to a law, judgment, or decree that requires the trust to be administered in the manner of an express trust.” In other words, if judgment or decree may also create an express trust governed by the Florida Trust Code. The commentary to the Uniform Trust Code, the text which partially inspired Fla. Stat. § 736.0102, provides two examples of this: trusts created by a court to hold the proceeds of personal injury recoveries and trusts created by a court to hold the assets of a protected person in a guardianship proceeding.

Second, the Florida Trust Code does not apply to:

• Constructive or resulting trusts;

• Conservatorships;

• Custodial arrangements pursuant to the Florida Uniform Transfers to Minors Act;

• Business trusts providing for certificates to be issued to beneficiaries;

• Common trust funds;

• Trusts created by the form of the account or by the deposit agreement at a financial institution;

• Voting trusts;

• Security arrangements;

• Liquidation trusts;

• Trusts for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind;

• Any arrangement under which a person is nominee or escrowee for another; and

• Land trusts.

Finally, Fla. Stat. § 736.0102(3) also limits what qualifies as a land trust. As of the 2013 amendment to the section, § 736.0102 disallows any trust created under the Florida Trust Code (or the trust code’s predecessor, former Chapter 737) from being turned into a land trust. Once the trust is governed by the Florida Trust Code, it remains under the governance of the Florida Trust Code, regardless of how the trust is amended.

This prohibition against amending a trust created under the Florida Trust Code into a land trust is an additional mandatory rule that ought to be mentioned in Fla. Stat. § 736.0105(2). To understand why, consider a trust created under the Florida Trust Code which is amended to include the following statement: “This Trust is a Land Trust governed by section 689.071 of the Florida Statutes. The Florida Trust Code shall not apply to this Trust or its terms.” According to the current version of Fla. Stat. § 736.0102, this amendment would be ineffective and would not prevail over Fla. Stat. § 736.0102(3). Thus, because of the prohibition in Fla. Stat. § 736.0102(3), the list of mandatory rules in Fla. Stat. § 736.0105(2) is incomplete.

Text of Fla. Stat. § 736.0102

Scope.—

(1) Except as otherwise provided in this section, this code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a law, judgment, or decree that requires the trust to be administered in the manner of an express trust.

(2) This code does not apply to constructive or resulting trusts; conservatorships; custodial arrangements pursuant to the Florida Uniform Transfers to Minors Act; business trusts providing for certificates to be issued to beneficiaries; common trust funds; trusts created by the form of the account or by the deposit agreement at a financial institution; voting trusts; security arrangements; liquidation trusts; trusts for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind; and any arrangement under which a person is nominee or escrowee for another.

(3) This code does not apply to any land trust under s. 689.071, except to the extent provided in s. 689.071(7), s. 721.08(2)(c)4., or s. 721.53(1)(e). A trust governed at its creation by this chapter, former chapter 737, or any prior trust statute superseded or replaced by any provision of former chapter 737, is not a land trust regardless of any amendment or modification of the trust, any change in the assets held in the trust, or any continuing trust resulting from the distribution or retention in further trust of assets from the trust.

History of Fla. Stat. § 736.0102

Fla. Stat. § 736.0102 became law on July 1, 2007, as part of the broader Florida Trust Code. Initially, this section of the statute was one long paragraph, unlike the modern version that contains three separate paragraphs. The original text of this section read:

Scope.--This code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a law, judgment, or decree that requires the trust to be administered in the manner of an express trust. This code does not apply to constructive or resulting trusts; conservatorships; custodial arrangements pursuant to the Florida Uniform Transfers to Minors Act; business trusts providing for certificates to be issued to beneficiaries; common trust funds; land trusts under s. 689.05; trusts created by the form of the account or by the deposit agreement at a financial institution; voting trusts; security arrangements; liquidation trusts; trusts for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind; and any arrangement under which a person is nominee or escrowee for another.

However, the portion bolded and italicized below (emphasis not in original) was immediately amended before the enactment of the statute section to make the reference to the Florida Land Trust Act clearer.

Scope.--This code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a law, judgment, or decree that requires the trust to be administered in the manner of an express trust. This code does not apply to constructive or resulting trusts; conservatorships; custodial arrangements pursuant to the Florida Uniform Transfers to Minors Act; business trusts providing for certificates to be issued to beneficiaries; common trust funds; land trusts under s. 689.071, except to the extent provided in s. 689.071(7); trusts created by the form of the account or by the deposit agreement at a financial institution; voting trusts; security arrangements; liquidation trusts; trusts for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind; and any arrangement under which a person is nominee or escrowee for another.

The text of the statute section was amended again in 2013, in which the legislature enacted the modern text of Fla. Stat. § 736.0102.

The statute section appears to be based in part on Section 102 of the Uniform Trust Code, which read:

This [Code] applies to express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust.

This article is part of the PTM Legal Commentary to the Florida Trust Code. Click here to navigate through the entire commentary.