Can Florida Trusts Be Combined or Divided?

The Florida Trust Code gives this power to the trustee. The precondition stated in the statute is notice to the qualified beneficiaries. A qualified beneficiary is a living beneficiary who is a current distributee or permissible distributee of income or principal, or who would become one if the current interests ended or if the trust terminated on that date.

The power has two limits. A combination or division cannot impair the rights of any beneficiary, and it cannot adversely affect achievement of the purposes of the trust or trusts involved. A change that fails either test is outside the power the statute grants.

Tax and administration rules follow the change. Subject to the terms of the trust, the trustee may consider differences in federal tax attributes and other pertinent factors when administering the property of a separate account or trust, making tax elections and making distributions. A separate trust created by severance is treated as a separate trust for all purposes from the date the severance takes effect, and that date may be earlier than the date the trustee exercises the power.

Combining or dividing trusts is part of trust administration, so the trustee's general duties still apply. Those duties are covered in the duties a Florida trustee owes beneficiaries and the information a trustee must give a beneficiary.