Fla. Stat. § 736.0704 - Commentary to Florida Trust Code
Legal Commentary on Fla. Stat. § 736.0704
Fla. Stat. § 736.0704 establishes the means of appointing a successor trustee when a trustee vacancy occurs. The statute section also mandates the filling of any trustee vacancy, although no penalty is given for failing to do so.
Any of the following results in a trustee vacancy, so long as no cotrustee remains in office:
A person designated in the trust instrument as trustee declines to serve;
A person designated in the trust instrument as trustee either cannot be identified or does not exist;
A trustee resigns;
A trustee is disqualified or removed;
A trustee dies; or
A trustee is adjudicated to be incapacitated (likely in a guardianship proceeding).
If a vacancy occurs, the trusteeship must be filled. A priority order is given for filling the vacancy,
If anyone is named in the terms of the trust as next in line to become the successor trustee, then that person will be the next trustee unless that person/entity is incapacitated, dead, disqualified, nonexistent, unidentifiable, or declines to serve. If that person/entity is unable or unwilling to serve, then the next person/entity named in the terms of the trust will be given the opportunity to serve. This continues until no remaining person/entity is named in the terms of the trust that could potentially serve in the role.
If no one is named in the terms of the trust that could potentially serve in the role of trustee, then a trustee may be appointed by unanimous agreement of the qualified beneficiaries. Interestingly, nothing in the statute indicates that the qualified beneficiaries must choose a trustee that aligns with the intent of the settlor or the terms of the trust. For example, if a corporate trustee resigns and no successor is named, may a trust beneficiary choose an individual to be trustee despite a clause in the trust requiring that a corporate trustee serve at all times? One might think that the terms of the trust would prevail, but a plain reading of the statute indicates otherwise. It may be that without a trustee, the qualified beneficiaries have the ability to modify the terms of the trust altogether by themselves, under Fla. Stat. § 736.0412, which would result in the qualified beneficiaries having the authority to select any trustee they desire, regardless of the terms laid out in the trust instrument. However, none of this is currently known. What is known is that unanimous agreement of the qualified beneficiaries is sufficient to appoint a trustee to fill a vacancy whenever that appointment does not contradict the terms of the trust.
For charitable trusts, if no one is named in the terms of the trust that could potentially serve in the role of trustee, qualified beneficiaries do not select a new trustee by unanimous agreement. Instead, the “charitable organizations expressly designated to receive distributions under the terms of the trust” may select a new trustee by unanimous agreement.
If no one is named in the terms of the trust that could potentially serve in the role of trustee and unanimous agreement of the qualified beneficiaries (or “charitable organizations expressly designated to receive distributions under the terms of the trust” for charitable trusts) cannot be obtained, then the last option is to have a trustee appointed by the court. In theory, this option should only be used when the first two options are exhausted. In practice, court appointment is needed whenever a third party refuses to respect an appointment made under the first two options discussed above.
Fla. Stat. § 736.0704 gives the court the authority to appoint “an additional trustee or special fiduciary whenever the court considers the appointment necessary for the administration of the trust, whether or not a vacancy in a trusteeship exists or is required to be filled.” Thus, a court need not wait for a vacancy to occur before appointing a new trustee or cotrustee to serve. Of course, the court has the authority under certain circumstances to remove a trustee under Fla. Stat. § 736.0706, which would create a vacancy. But the court need not create that vacancy before appointing a new trustee to serve.
Text of Fla. Stat. § 736.0704
Vacancy in trusteeship; appointment of successor.—
(1) A vacancy in a trusteeship occurs if:
(a) A person designated as trustee declines the trusteeship;
(b) A person designated as trustee cannot be identified or does not exist;
(c) A trustee resigns;
(d) A trustee is disqualified or removed;
(e) A trustee dies; or
(f) A trustee is adjudicated to be incapacitated.
(2) If one or more cotrustees remain in office, a vacancy in a trusteeship need not be filled. A vacancy in a trusteeship must be filled if the trust has no remaining trustee.
(3) A vacancy in a trusteeship of a noncharitable trust that is required to be filled must be filled in the following order of priority:
(a) By a person named or designated pursuant to the terms of the trust to act as successor trustee.
(b) By a person appointed by unanimous agreement of the qualified beneficiaries.
(c) By a person appointed by the court.
(4) A vacancy in a trusteeship of a charitable trust that is required to be filled must be filled in the following order of priority:
(a) By a person named or designated pursuant to the terms of the trust to act as successor trustee.
(b) By a person selected by unanimous agreement of the charitable organizations expressly designated to receive distributions under the terms of the trust.
(c) By a person appointed by the court.
(5) The court may appoint an additional trustee or special fiduciary whenever the court considers the appointment necessary for the administration of the trust, whether or not a vacancy in a trusteeship exists or is required to be filled.
History of Fla. Stat. § 736.0704
Fla. Stat. § 736.0704 became law on July 1, 2007 as part of the Florida Trust Code. It has not been amended or revised since that date.
This article is part of the PTM Legal Commentary to the Florida Trust Code. Click here to navigate through the entire commentary.