How “Beneficiary” is Defined - Commentary to Florida Trust Code

Legal Commentary on the Definition of “Beneficiary”

Fla. Stat. § 736.0103(4) defines the term “beneficiary.” The text of the subsection reads:

“Beneficiary” means a person who has a present or future beneficial interest in a trust, vested or contingent, or who holds a power of appointment over trust property in a capacity other than that of trustee. An interest as a permissible appointee of a power of appointment, held by a person in a capacity other than that of trustee, is not a beneficial interest for purposes of this subsection. Upon an irrevocable exercise of a power of appointment, the interest of a person in whose favor the appointment is made shall be considered a present or future beneficial interest in a trust in the same manner as if the interest had been included in the trust instrument.

The definition of “beneficiary” is broad, even encompassing those with interests that may never materialize into receiving trust income or principal. To quote Rachins v. Minassian, 251 So.3d 919 (Fla. 4th DCA 2018):

The Florida Trust Code defines a "beneficiary" as "a person who has a present or future beneficial interest in a trust, vested or contingent, or who holds a power of appointment over trust property in a capacity other than that of trustee." § 736.0103(4), Fla. Stat. (2017) (emphasis added). In other words, "[t]he term ‘beneficiary’ refers to the universe of persons who have a beneficial interest in a trust." John G. Grimsley, Florida Law of Trusts , 18 Fla. Prac. § 16:1 (2016–2017 ed.). "It is immaterial for this purpose whether the beneficial interest is present or future, vested or contingent, or whether the person having the interest is ascertainable or even living." Id.

However, the definition is constrained by the second portion regarding permissible appointees of powers of appointment. If a trust beneficiary has the ability to potentially designate another individual as a recipient of trust principal/income, that possible future designation is not sufficient to create a beneficiary status. But once the designation has been irrevocably made, then a new trust beneficiary is created. To understand this, consider the following example:

Patricia has been given the ability to choose which of her nephews are to receive trust assets when the trust terminates on January 1, 2040. This choice will become irrevocable once made in writing by delivering a signed, notarized writing to the nephew or nephews of her choice. Patricia has not yet made a decision about which nephews will receive assets on January 1, 2040. No nephew is entitled to receive any trust property unless Patricia designates as such in the manner described above.

In this example, none of the nephews are trust beneficiaries. Patricia has a power of appointment and could potentially make a nephew a beneficiary, but until she irrevocably exercises that power, no beneficiary status is conferred on the beneficiaries. However, should Patricia make that irrevocable designation for a nephew, then the chosen nephew will become a beneficiary. However, Patricia is a beneficiary so long as she holds the power of appointment.

A similar scenario to the example above played out in Ammeen v. Sjogren, 313 So.3d 157 (Fla. 1st DCA. 2021). In Ammeen, Kirsten Ammeen, a trust beneficiary, had the power to designate which of her daughters, if any, would one day receive trust assets. The court held that Kirsten held a power of appointment and that her daughters were therefore not beneficiaries of the trust because they had not been irrevocably designated as such.

History of the Definition of “Beneficiary”

Fla. Stat. § 736.0103(3) became law on July 1, 2007, as part of the broader Florida Trust Code. Originally, the text of Fla. Stat. § 736.0103(3) read:

 “Beneficiary” means a person who:

(a)  Has a present or future beneficial interest in a trust, vested or contingent; or

(b)  Holds a power of appointment over trust property in a capacity other than that of trustee.

The original definition was largely influenced by the Uniform Trust Code, which uses a nearly identical definition.

The statute section was amended in 2009 to the current version. It has not been amended since that point.

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