How “Power of Direction” is Defined - Commentary to Florida Trust Code

Legal Commentary on the Definition of “Power of Direction”

Fla. Stat. § 736.0103(16) defines the term “power of direction.” The text of the subsection reads:

“Power of direction” means a power over a trust granted to a person by the terms of the trust to the extent the power is exercisable while the person is not serving as a trustee. The term includes a power over the investment, management, or distribution of trust property; a power to amend a trust instrument or terminate a trust; or a power over other matters of trust administration. The term excludes the powers excluded from part XIV of this chapter under s. 736.1405(2).

Thus, a power of direction is authority over a trust held by a person other than a trustee. The person holding the power is trust director, whose authority is largely governed by part XIV of the Florida Trust Code.

Under Fla. Stat. § 736.1405(2), the following powers do not qualify as a power of direction unless the terms of the trust explicitly state otherwise by specific reference to part XIV of the Florida Trust Code:

• A power of appointment (defined as a power that enables a person acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over trust property);

• A power to appoint or remove a trustee or trust director;

• A power of a settlor over a trust while the trust is revocable by that settlor;

• A power of a beneficiary over a trust to the extent that the exercise or nonexercise of the power affects the beneficial interest of either that beneficiary or another beneficiary represented by the initial beneficiary under Part III of the Florida Trust code with respect to the exercise or nonexercise of the power;

• A power over a trust if the terms of the trust provide that the power is held in a nonfiduciary capacity and the power must be held in a nonfiduciary capacity to achieve the settlor’s tax objectives under the United States Internal Revenue Code;

• A power over a trust if the terms of the trust provide that the power is held in a nonfiduciary capacity and it is a power to reimburse the settlor for all or a part of the settlor’s income tax liabilities attributable to the income of the trust; and

• A power to add or to release a power under the trust instrument if the power subject to addition or release causes the settlor to be treated as the owner of all or any portion of the trust for federal income tax purposes.

Outside of the exclusions above, all powers over a trust granted to a non-trustee by the trust terms qualify as powers of direction. This includes powers that fall under the large category of “other matters of trust administration.” Thus, the definition is broad, encompassing most powers that a non-trustee could be given.

History of the Definition of “Power of Direction”

The term “power of direction” was added to the Florida Trust Code in 2021 to complement the Florida Uniform Directed Trust Act, which was added to the Florida Trust Code that same year. The definition has not been amended since.

This definition was taken from § 2(5) of the Uniform Directed Trust Act.

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