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When it comes to a Florida Trust, who is a Qualified Beneficiary?

by | Oct 20, 2022 | Estate Planning, qualified beneficiary, Trust |

Florida’s Trust Code, set forth in Chapter 736, Florida Statutes, defines who is a “qualified beneficiary” and sets forth the rights which such a beneficiary has under a Florida Trust. Section 736.0103 (19) Florida Statutes provides as follows:

“Qualified beneficiary” means a living beneficiary who, on the date the beneficiary’s qualification is determined:

(a) Is a distributee or permissible distributee of trust income or principal;

(b) Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph (a) terminated on that date without causing the trust to terminate; or

(c) Would be a distributee or permissible distributee of trust income or principal if the trust terminated in accordance with its terms on that date.

So, what does this mean? In simple terms, the statute sets forth three categories for defining who is a qualified beneficiary. First, it is a person to whom the Trustee must make distributions or may make discretionary or permissible distributions. Secondly, it is someone to whom the Trustee must or may make distributions if the interests of the persons described in the first category terminated. Third, it would be someone to who the Trustee must or may make distribution if the Trust terminated.

Some examples might help demonstrate how this works. Mr. Jones creates a Trust which provides that upon his death, the residue of the Trust will be held by the Trustee who will distribute all of the income to Mr. Jones’ mother during her lifetime. Upon his mother’s death, the remainder will be distributed to Mr. Jones’ children equally. After establishing this Trust, Mr. Jones dies. Under this example, who is a qualified beneficiary of the Trust? Mr. Jones’ mother is a qualified beneficiary because she survived him and she is to receive the income during her lifetime. Mr. Jones’ children, if living, are also qualified beneficiaries because they will receive the residue upon the death of Mr. Jones’ mother.

Contrast the above example with the following: Mr. Jones creates a Trust which provides that upon his death, the residue of the Trust will be distributed by the Trustee outright to Mr. Jones’ mother. The Trust further provides that if Mr. Jones’ mother predeceases him, the residue will be distributed outright to St. Jude’s Children’s Cancer Research Hospital. After establishing this Trust, Mr. Jones dies and his mother is still living. Who is a qualified beneficiary under this example? Mr. Jones’ mother is a qualified beneficiary because she is living and she to receive the residue outright upon Mr. Jones’ death. St. Jude’s would not be a qualified beneficiary in this situation because, upon Mr. Jones’ death, the residue is distributed outright to the mother and the Trust closes without anything going to St. Jude’s. If Mr. Jones’ mother predeceased him, then St. Jude’s would be a qualified beneficiary.

One observation should also be noted. The applicable statute specifies that whether someone is a qualified beneficiary is made as of the date of determination. So in the second example above, St. Jude’s is not a qualified beneficiary because at the time Mr. Jones died, his mother was still living. If at that same time, Mr. Jones’ mother was not living, then St. Jude’s would be a qualified beneficiary.

The rights of a qualified beneficiary under a Florida Trust are significant and will be discussed under a separate blog post.

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