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How Do You Terminate a Trust in Florida?

Terminate a Trust in Florida
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How Do You Terminate a Trust in Florida?

By Adrian P. Thomas, LL.M., J.D. | Shareholder and Founding Partner, Adrian Philip Thomas, P.A.

Quick answer. A Florida trust can terminate four ways: by its own terms, upon full distribution, by unanimous consent of the trustee and qualified beneficiaries after the settlor's death under Section 736.0412(1), or as an uneconomic trust under Section 736.0414. The uneconomic route is nonjudicial below a value threshold and judicial above it.

Key takeaways

  • A trust may terminate by its terms, by full distribution, by unanimous consent, or as uneconomic.
  • Nonjudicial termination of an uneconomic trust under Section 736.0414(1) applies below a value of fifty thousand dollars, a default a settlor may raise.
  • Judicial termination of an uneconomic trust above the threshold proceeds under Section 736.0414(2).

What are the routes to termination?

The first is termination by the terms of the trust, which the trustee simply follows. The second is nonjudicial termination by unanimous consent after the settlor's death under Section 736.0412(1). The third addresses the uneconomic trust and splits into a nonjudicial path under Section 736.0414(1) and a judicial path under Section 736.0414(2).

What must the trustee do on termination?

Upon termination under Section 736.0414, the trustee must distribute the trust property in a manner consistent with the purposes of the trust. The trustee may enter agreements or make other provisions to protect the interests of the beneficiaries and the trustee. The parties should settle the distribution before filing any complaint for approval.

Can a settlor raise the nonjudicial termination ceiling?

Yes. Many practitioners find the fifty thousand dollar ceiling impractically low. The Florida Trust Code permits a settlor to draft a higher threshold, such as one hundred thousand or two hundred fifty thousand dollars. See Section 736.0105. Read the instrument before advising a client, because a higher contractual threshold may make nonjudicial termination available.

Frequently asked questions

Can a trustee terminate a small trust without court approval?

Yes, below fifty thousand dollars under Section 736.0414(1), after notice to the qualified beneficiaries, unless the instrument sets a different threshold.

Does terminating a trust require beneficiary consent?

Nonjudicial termination under Section 736.0412 requires unanimous consent. Other routes have their own requirements.

Should tax advice precede a termination?

Yes, especially for credit shelter, marital deduction, or GST-exempt trusts.

About the author

Attorney Adrian Philip Thomas is a shareholder and founding partner of Adrian Philip Thomas, P.A., a boutique attorney law firm located in Fort Lauderdale, Florida. He has practiced law for the past 30 years, maintaining an office in Fort Lauderdale, Broward County, Florida. Mr. Thomas is "AV" rated by Martindale-Hubbell and has been selected on multiple occasions as one of Florida's Legal Elite by Florida Trend Magazine and selected as a Super Lawyer. Mr. Thomas concentrates his practice in estate and trust litigation, both prosecuting and defending, which includes matters involving estates, trusts, and probate. He represents clients with disputes throughout the State of Florida. Attorney Adrian Philip Thomas has a Master of Laws from the University of Miami, a Juris Doctor from Nova Southeastern University, and a Bachelor of Science from the University of Florida. Attorney Adrian Philip Thomas has lectured at continuing legal education seminars on various probate topics.

This article is general legal information about Florida law, not legal advice, and does not create an attorney-client relationship. Consult a Florida-licensed attorney about your specific situation.