How does a Florida Directed Trust compare to Delaware Directed Trusts?
I would like to start out by stating I am a trust relationship manager administering Delaware Trusts in
Florida. I found a side- by- side comparison of Delaware verses Florida prepared by Thomas P. Barnett,
Esq, who is admitted in both Florida and Delaware together with Barbara Snapp Danberg, Esq, who are
with our outside legal counsel, Baird Mandalas Brockstedt Federico & Cardea, LLC, very informative and
easy to follow. Directed trusts can be a very attractive option for clients looking to retain some decision
making. Some directed functions include investment management of the assets (the most common)
and decisions regarding discretionary distributions.
The first bullet point of Thomas’s comparison, and I think the most important differentiator is as
follows:
DELAWARE: “Delaware’s directed trust statue has existed since 1986 and has been litigated and
upheld in the Court of Chancery to provide protections for directors and trustee.”
FLORIDA: “Florida codified its Directed Trust statute in 2021. There is to date no case law to
indicate how Florida treats directors and trustees.“
In Delaware the Court of Chancery is a well- established precedent upholding directed trusts. In Florida
there are twenty different Circuit courts. Some courts disagree on the common law protections
provided to a grantor in a trust. In Florida there was also some confusion regarding the division of
authority between the trust director and the trustee.
On June 29, 2021, the Florida Uniform Directed Trust Act (FUDTA) went into effect. Which provides
more detailed provisions regarding a trust director’s duties and liabilities and states the trust director
cannot also be a trustee. The intent is to provide ways to limit trustee liability. This makes Florida more
competitive. The drafting attorney also has the ability to reduce or increase the level of duty. With this
said, in Florida there is no case law to define willful misconduct. It is not very clear under the FUDTA.
There is also no case law regarding No Duty to Monitor.
Another important difference in Thomas’s side by side comparison mentioned Silent Trusts:
DELAWARE: “Silent Trust – Delaware trust may restrict disclosure of information to beneficiary
for a period of time.”
FLORIDA: “No Silent Trust permitted – Florida does not permit a trust instrument to restrict
disclosure to a beneficiary. Named Beneficiary has to be given disclosure of the trust instrument.”
This difference alone can be the deciding factor for choosing a Delaware Directed Trust verses a Florida
Directed Trust. Grantor’s may feel there would have a negative impact on their 18 year old knowing
they are a beneficiary of millions.
Lastly, a difference worth noting is an advantage of a Florida Directed Trust with regards to Homestead:
DELAWARE: “No homestead protection in Delaware. Placing a grantor’s Florida homestead in
a Delaware trust may have adverse consequences depending on whom the beneficiary of the
homestead property will be.”
FLORIDA: “Florida has homestead protections. If a grantor seeks to place homestead property
in a Directed Trust, the homestead law and the rule for devising homestead law will almost always
supersede the trust instrument.”
The good news is that First State Trust Company has trust administrators located in Florida (and
Delaware) who administer Delaware Trusts as well as working closely with our valued outside counsel,
Baird Mandalas Brockstedt Federico & Cardea, LLC, which also has attorneys admitted in both Florida
and Delaware, allowing us to evaluate which state’s laws best benefit the Trust and its needs. If a
change is needed then a change of administrative law can be made accordingly.
There are many factors to consider when creating a Directed Trust or taking on the role of the trust
director. If you should have any questions or would like to discuss this further, please do not hesitate to
reach out to me.
Donna A. Baudanza, ATFA, CTFA
Relationship Manager/Vice President
First State Trust Company
Phone: 561-557-5236 / Facsimile: 888-519-3305 / dbaudanza@fs-trust.com/ Website: https://www.fs-trust.com
The posts expressed are views of FSTC and are not intended as advice or recommendations. For
informational purposes only. FSTC does not offer tax, legal, or investment advice, professional counsel
should be sought for tax or legal advice.