Effective July 1, 2007, Florida will have new trust laws which will have a sweeping impact on lawyers, clients and their families, accountants, trustees, courts and trust beneficiaries. This new law is titled the new Florida Trust Code ("Code"). The Code will affect trusts and trust administration as follows:

Trust Creation. The Code requires trusts containing land to be in writing. The Code also specifies that a person creating a revocable trust must have the same capacity as a person who signs a will. Furthermore, in order for the testamentary aspects (post death) of trusts for Florida domiciliaries to be valid, the trust must be signed with the formalities required for a will. This rule applies regardless of the law of the place of execution or the location of the property held in the trust.

Representation. In order to help keep trust administrations outside of the courts, and recognizing that beneficiaries of a trust are frequently minors, adults who lack capacity or are unborn, the Code expands the provision dealing with representation and adds a new provision permitting a trust Grantor (a person who creates a trust) to designate a representative for the trust (e.g., a trust protector).

Trust Modification. Due to the extensive use of trusts in estate planning and the desire to limit court intervention, there is a need for increased flexibility to permit a trust termination or modification other than as provided in the trust document. Accordingly, the Code revises provisions relating to trust creation and termination. It also grants authority to the Attorney General to enforce charitable trusts and extends standing to enforce charitable trusts to the Grantors who create them and to charitable organizations designated in an instrument to receive distributions from them.

Trustee Powers. A trustee's powers are expanded. For example, the Code now authorizes a trustee to exercise federal, state and local tax elections; to select payment options with respect to retirement plans, annuities and insurance contracts; to make loans, including loans to a beneficiary on fair and reasonable terms and conditions; and to exercise necessary powers to wind up and distribute the trust property.

Creditors' Rights. Effective spendthrift provisions can provide creditor protection for trust beneficiaries. The Code provides that, for trusts created after the effective date of the code, a spendthrift clause must prohibit both voluntary and involuntary transfers and slightly modifies the principle which allows the garnishment of trust distributions from a spendthrift trust to enforce orders such as child support and alimony as a last resort for fulfilling these financial obligations.

Revocable Trusts. The Code provides that trusts are revocable by default unless otherwise stated in the document. The Code also provides that a method of revocation expressed in an instrument is the only way a trust may be revoked, and that while a trust is revocable, the trustee owes duties only to the Grantor. The trustee's duties to the settler also apply to beneficiaries who have a right of withdrawal over trust property (i.e., holders of a right of withdrawal (usually in an insurance trust or gift trust) are treated as a Grantor while the power is exercisable).

Application to Existing Trusts. The new Code applies retroactively to all trusts, whenever created, except where stated otherwise, however, the Code will not affect any act taken prior to July 1, 2007.

This article only highlights some of the major changes to the trust code as the Code changes are too extensive to cover here in great depth. However, we encourage you to contact us with any questions related to the new trust code. Send an email to info@law-morris.com or call 800-353-3752.

Many clients are concerned about minimizing estate taxes, asset protection, minimizing expenses and avoiding probate in their estate plans. In addition, we have seen a recent trend by clients to communicate their values, ethics and purpose in their plans to their family members. This is known as "Legacy Planning."

Legacy Planning takes estate planning to another level and involves the spiritual, intellectual and ethical development of family members. This kind of planning recognizes that wealth extends beyond a net worth statement by realizing that emotional strength, spiritual maturity, ethical principles and wisdom are all components of true wealth.

Our firm has always made sure that clients obtain, at a minimum, the basic estate planning documents including a pour-over will, a revocable living trust, a health care surrogate, a durable power of attorney, an Authorization for Release of Protected Health Information and a living will. For many clients, we also utilize more sophisticated strategies such as irrevocable trusts, family limited partnerships, irrevocable life insurance trusts, grantor retained annuity trusts and other techniques.

Many of our clients realize that their heirs will inherit substantial wealth, and are concerned how they will handle it. Consequently, we focus on determining what clients want for their families and for themselves. We then help actualize their wishes through Legacy Planning, which is a means of passing on values, ethics, wisdom and purpose to heirs.

Many people want to use their wealth as a force for good in the world, as well as in their families. For them, success is more than just money; they want to help their family remain harmonious and cohesive. They want their children and succeeding generations to lead fulfilling and meaningful lives; they want to cultivate their potential, to make a difference in their community.

One aspect of a Legacy Plan is the family mission statement which codifies the client's thoughts on these issues. It expresses the values and philosophy of the family and takes into account the values, ideals, ethics, spirituality and morals of all who have come before. The goal of the family mission statement is to achieve a desired vision for the family.

Legacy planning provides many benefits. Clients experience a great sense of relief as they are assured their wealth and values will be transferred in accordance with their wishes. They are also comforted by having a clear understanding of the ramifications of their own decisions and by having a vehicle to communicate their life's story and important values to their heirs.

Similarly, heirs gain peace of mind from Legacy Planning. In addition to knowing that they are receiving their inheritance according to their loved one's wishes, the heirs benefit from receiving a written family mission statement that answers the one question most heirs ask: "Why did you prepare your estate plan this way?" This mission statement goes along way in helping heirs understand the reasons behind their loved ones' decisions and actions.

Legacy Planning is not for everyone, but for many, it is a worthwhile planning experience.

We always appreciate referrals from our satisfied clients and business partners to friends, family members or business contacts. We welcome the opportunity to serve the people you care about. Click on the blue Forward Email at the bottom of the page to send this newsletter to someone who will benefit from our insights.

We'd love to hear from you. Click here Info@Law-Morris.com to submit comments or a question for an upcoming issue of Wealth Preservation Update.

This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client.