Fla. Stat. § 736.0507 - Commentary to Florida Trust Code

Legal Commentary on Fla. Stat. § 736.0507

Fla. Stat. § 736.0507 establishes that a personal creditor of a trustee cannot go after trust assets to satisfy the debt of the trustee. For example, if Jim serves as trustee but owes $10,000.00 on a personal credit card, the bank who issued the credit card loan would need to pursue Jim’s personal assets to satisfy the loan; trust assets would not be available to the bank. However, if Jim paid himself compensation as trustee, the bank could potentially go after that compensation because it is no longer a trust asset. Simply put, trust assets can be used to pay trust debts, not trustee debts. If a trustee did use trust assets to repay a personal debt, this would be a breach of trust under Fla. Stat. § 736.0801, Fla. Stat. § 736.0802, and Fla. Stat. § 736.0805.

The opening phrase (“Except to the extent of the trustee’s interest in the trust other than as a trustee,”) clarifies the text to indicate that trust property can be used for a trustee’s personal obligations to the extent that the trustee has a personal interest in the trust. For example, the settlor of a revocable trust cannot use Fla. Stat. § 736.0507 as a shield against creditors if the settlor is also trustee of that same trust. Creditors would still be able to reach any assets that the settlor could reach by revoking the trust. Similarly, an individual who is both trustee and a beneficiary of a trust could not hide behind Fla. Stat. § 736.0507 to avoid having a legitimate creditor reach the trust assets available to that beneficiary under the terms of trust.

Text of Fla. Stat. § 736.0507

Personal obligations of trustee.—Except to the extent of the trustee’s interest in the trust other than as a trustee, trust property is not subject to personal obligations of the trustee, even if the trustee becomes insolvent or bankrupt.

History of Fla. Stat. § 736.0507

Fla. Stat. § 736.0507 became law on July 1, 2007 as part of the Florida Trust Code. It has not been amended or revised since that date.

Fla. Stat. § 736.0507 is based on Section 507 of the Uniform Trust Code. The opening phrase was added by the Florida legislature, but after the first comma in the statute section, every word was taken word-for-word from the Uniform Trust Code.

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