Fla. Stat. § 736.0412 - Commentary to Florida Trust Code

Legal Commentary on Fla. Stat. § 736.0412

Fla. Stat. § 736.0412 establishes a means for irrevocable trust modification without court involvement and without the need for any court order. However, under Fla. Stat. § 736.0410, after such a modification, the court may be called upon by any trust beneficiary to review (and potentially disapprove of ) the modification.

To modify an irrevocable trust under Fla. Stat. § 736.0412, the trust can have no living settlor. The definition of “settlor” includes anyone who has contributed to the trust, not just the settlor(s) explicitly named in the trust instrument. Thus, anyone who contributed to an irrevocable trust must pass away before modification is allowed under Fla. Stat. § 736.0412.

Modification under Fla. Stat. § 736.0412 may be completed “as provided in s. 736.04113(2).” Thus, the modification may:

(a) Amend or change the terms of the trust, including terms governing distribution of the trust income or principal or terms governing administration of the trust;

(b) Terminate the trust in whole or in part;

(c) Direct or permit the trustee to do acts that are not authorized or that are prohibited by the terms of the trust; or

(d) Prohibit the trustee from performing acts that are permitted or required by the terms of the trust.

However, modifications made under Fla. Stat. § 736.0412 need to comply with settlor intent and need not be triggered by the elimination of a material purpose, an unanticipated change in circumstances, or a conflict between trust terms with the best interests of the beneficiaries. Modifications under Fla. Stat. § 736.0412 can be made at any time and for any reason, so long as all the relevant parties are in agreement.

To modify a trust under Fla. Stat. § 736.0412, there must be “unanimous agreement of the trustee and all qualified beneficiaries” on the modification. Even a single dissenting party is sufficient to block modification. Thus, the authority of the parties to modify under this state section is virtually unlimited, but it requires complete agreement from basically everyone involved in the trust.

A spendthrift clause will not block modification under Fla. Stat. § 736.0412, and neither will a clause which expressly attempts to block trust modification. The only way for a trust to block a non-judicial modification under Fla. Stat. § 736.0412 is for the trust to comply with the rule against perpetuities. However, compliance with the 360 or 1000 year substitutes in Fla. Stat. § 689.225(2)(f) and (g) will not be sufficient to meet the rule against perpetuities requirement; the stricter common law rule (lives in being plus 21 years) or Florida's shorter 90 year statutory substitute must be followed.

Fla. Stat. § 736.0412 does not apply to charitable trusts and does not apply to trusts created prior to January 1, 2001. “Creation” of a trust occurs on the date the trust became irrevocable.

Finally, Fla. Stat. § 736.0412 does not replace any options for modification under the common law; rather, it supplements the common law with an additional means of trust modification. One such method of trust modification under the common law is to gain the consent of the settlor and all beneficiaries. See Peck v. Peck, 133 So.3d 587, 591 (Fla. 2d DCA 2014).

Text of Fla. Stat. § 736.0412

Nonjudicial modification of irrevocable trust.—

(1) After the settlor’s death, a trust may be modified at any time as provided in s. 736.04113(2) upon the unanimous agreement of the trustee and all qualified beneficiaries.

(2) Modification of a trust as authorized in this section is not prohibited by a spendthrift clause or by a provision in the trust instrument that prohibits amendment or revocation of the trust.

(3) An agreement to modify a trust under this section is binding on a beneficiary whose interest is represented by another person under part III of this code.

(4) This section shall not apply to:

(a) Any trust created prior to January 1, 2001.

(b) Any trust created after December 31, 2000, if, under the terms of the trust, all beneficial interests in the trust must vest or terminate within the period prescribed by the rule against perpetuities in s. 689.225(2), notwithstanding s. 689.225(2)(f) and (g), unless the terms of the trust expressly authorize nonjudicial modification.

(c) Any trust for which a charitable deduction is allowed or allowable under the Internal Revenue Code until the termination of all charitable interests in the trust.

(5) For purposes of subsection (4), a revocable trust shall be treated as created when the right of revocation terminates.

(6) The provisions of this section are in addition to, and not in derogation of, rights under the common law to modify, amend, terminate, or revoke trusts.

History of Fla. Stat. § 736.0412

Fla. Stat. § 736.0412 became law in 2007 as part of the broader Florida Trust Code. In 2022, a reference was added to Fla. Stat. § 689.225(2)(g)—which at the time was brand new law—in Fla. Stat. § 736.0412(4)(b).

The 2007 version of Fla. Stat. § 736.0412 was based on Fla. Stat. § 737.4032 of former Chapter 737 of the Florida Statutes.

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