How “Interests of the Beneficiaries” is Defined - Commentary to Florida Trust Code

Legal Commentary on the Definition of “Interests of the Beneficiaries”

Fla. Stat. § 736.0103(13) defines the term “interests of the beneficiaries” The text of the subsection reads:

“Interests of the beneficiaries” means the beneficial interests intended by the settlor as provided in the terms of a trust.

Defining “interests of the beneficiaries” with the phrase “beneficial interest” would by itself be little more than a tautology. Thus, the true substance of the definition is found in the portion that reads “intended by the settlor as provided in the terms of a trust.” The commentary to the Uniform Trust Code notes that its highly similar definition "clarifies that the interests are as provided in the terms of the trust and not as determined by the beneficiaries.”

The terms of a trust may be established by settlor intent but also through other means, such as non-judicial settlement agreements. However, only the terms which were “intended by the settlor” may create the “interests of the beneficiaries.” Thus, unless a contrary intent can be found in the trust instrument, it appears that the “interests of the beneficiaries” cannot be created by non-judicial settlement agreements, by court order, or by a trustee/trust director. However, the interests of the beneficiaries could be limited by such a modification to the trust terms.

Put differently, it appears that the “interests of the beneficiaries” are those beneficial interests found in the trust terms described in Fla. Stat. § 736.0103(24)(a), but not the beneficial interests found in any trust terms described in Fla. Stat. § 736.0103(24)(b).

History of the Definition of “Interests of the Beneficiaries”

The term “interests of beneficiaries” was defined slightly differently when the Florida Trust Code first took effect in 2007. At that point, the relevant portion of the code read:

“Interests of the beneficiaries” means the beneficial interests provided in the terms of the trust.

The phrase “intended by the settlor” was added to the definition in 2018. At the time, this amendment was a bit superfluous, as the phase “terms of the trust” was already narrowly defined to only include the “manifestation of the settlor’s intent regarding a trust’s provisions.” However, when the definition of “terms of the trust” was itself amended in 2021, the phrase “intended by the settlor” was no longer redundant, as discussed above.

The placement of the definition has changed over the years. The term was originally defined in Fla. Stat. § 736.0103(10).

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