This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1363a.CIV
DATE: 2/2/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 1363 Pub. Rec./Trust Proceedings
SPONSOR(S): Civil Justice & Property Rights Subcommittee, Fetterhoff
TIED BILLS: IDEN./SIM. BILLS: SB 1304, HB 1229
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Civil Justice & Property Rights Subcommittee 14 Y, 4 N, As CS Mawn Jones
2) Government Operations Subcommittee
3) Judiciary Committee
SUMMARY ANALYSIS
Article I, section 24(a) of the Florida Constitution establishes the state’s government records access policy,
guaranteeing each person a right to inspect or copy any public record of the legislative, executive, and judicial
branches of government. However, the Legislature may provide a public records exemption by general law if
the exemption passes by a two-thirds vote of each chamber, states with specificity the public necessity
justifying the exemption (“public necessity statement”), and is no broader than necessary to meet its public
purpose.
A trust is a relationship in which one party, the “settlor,” gives another party, the “trustee,” the right to hold title
to the settlor’s property or assets for the benefit of a third party, the “beneficiary.” Under Florida law, families
may choose to form a family trust company, licensed family trust company, or foreign licensed family trust
company to provide the family services similar to those provided by a trustee or a financial institution; such
companies are often formed to manage the wealth of families with a high net worth in lieu of relying on
traditional individual or institutional trustee arrangements. Although trusts are not generally subject to judicial
supervision, most family trust companies, licensed family trust companies, and foreign licensed family trust
companies will need to access the court system at some point, as certain matters of trust administration cannot
be accomplished without judicial intervention. However, information contained in the records related to trust
proceedings involving these companies is not currently exempt from public disclosure. Such proceedings may
expose private information about family wealth and other sensitive matters that may lead to exploitation of
family members by financial predators, unwanted solicitations, and a heightened risk of kidnapping. This
information may also reveal extensive private and highly personal information, including information about
family disputes.
CS/HB 1363:
Creates a public records exemption for certain information related to a family trust company, licensed
family trust company, or foreign licensed family trust company in a trust proceeding in which such a
company is a party.
Requires a court to seal documents filed with the court in a trust proceeding in which a family trust
company, licensed family trust company, or foreign licensed family trust company is a party, with
exceptions.
Provides a public necessity statement.
The bill does not appear to have a fiscal impact on state or local governments.
The bill provides an effective date of July 1, 2022.
Under article I, section 24(c) of the State Constitution, the bill requires a two-thirds vote of the
members present and voting for final passage. STORAGE NAME: h1363a.CIV PAGE: 2
DATE: 2/2/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Public Records
Article I, section 24(a) of the Florida Constitution establishes the state’s government records access
policy, guaranteeing each person a right to inspect or copy any public record of the legislative,
executive, and judicial branches of government. However, the Legislature may provide a public records
exemption by general law if the exemption passes by a two-thirds vote of each chamber, states with
specificity the public necessity justifying the exemption (“public necessity statement”), and is no broader
than necessary to meet its public purpose.
1
Additionally, s. 119.07(1), F.S., guarantees each person a right to inspect and copy any state, county,
or municipal record, unless the record is exempt. Under the Open Government Sunset Review Act,
2
a
public records exemption may be created or maintained only if it serves an identifiable public purpose
and the “Legislature finds that the purpose is sufficiently compelling to override the strong public policy
of open government and cannot be accomplished without the exemption.”
3
Further, the exemption may
be no broader than is necessary to:
Allow the state or its political subdivisions to effectively and efficiently administer a governmental
program, which administration would be significantly impaired without the exemption;
Protect sensitive personal information that, if released, would be defamatory or would jeopardize
an individual’s safety;
4
or
Protect trade or business secrets.
5
Under s. 119.15(3), F.S., a new public records exemption or substantial amendment of an existing
public records exemption is generally automatically repealed on October 2 of the fifth year following
enactment, unless the Legislature reenacts the exemption. However, this provision does not apply to an
exemption that:
Is required by federal law; or
Applies solely to the State Legislature or the State Court System.
6
Court Proceedings and Records
Independent of constitutional and statutory provisions that generally require court files to be open to the
public, the courts have found that "both civil and criminal court proceedings in Florida are public events"
and that courts must "adhere to the well-established common law right of access to court proceedings
and records.”
7
A court may close a court file or a portion thereof on equitable grounds, but its ability to
do so is limited due to the Florida Supreme Court’s ruling that closure of court proceedings or records
should occur only when necessary to:
Comply with established public policy set forth in the constitution, statutes, rules, or case law;
Protect trade secrets;
Protect a compelling governmental interest (such as national security or confidential informant
identity);
Obtain evidence to properly determine legal issues in a case;
1
Art. I, s. 24(c), Fla. Const.
2
S. 119.15, F.S.
3
S. 119.15(6)(b), F.S.
4
Only an individual’s identity may be exempted under this provision.
5
Id.
6
S. 119.15(2), F.S.
7
Barron v. Florida Freedom Newspapers, Inc., 531 So. 2d 113, 116 (Fla. 1988). STORAGE NAME: h1363a.CIV PAGE: 3
DATE: 2/2/2022
Avoid substantial injury to innocent third parties (such as to protect young witnesses from
offensive testimony or children in a divorce); or
Avoid substantial injury to a party by disclosure of matters protected by a common law or
privacy right not generally inherent in the specific type of civil proceeding sought to be closed.
8
Additionally, the legislature has exempted from the public record certain court records when disclosure
of such records would implicate privacy interests, including:
Records relating to dependency matters, termination of parental rights, and child abuse,
neglect, and abandonment.
9
Adoption records.
10
Guardianship records.
11
Social security, bank account, charge, debit, and credit card numbers.
12
Birth records and portions of death and fetal death records.
13
Estate inventories and accountings included in court records.
14
Family Trust Companies
A trust is a relationship in which one party, the “settlor,” gives another party, the “trustee,” the right to
hold title to the settlor’s property or assets for the benefit of a third party, the “beneficiary.”
Types of Family Trust Companies
A “family trust company” is a corporation or limited liability company (“LLC”) that:
Is exclusively owned by one or more family members;
15
Is organized or qualified to do business in the state;
Acts or proposes to act as a fiduciary to serve one or more family members;
Does not serve as a fiduciary for a person, entity, trust, or estate that is not a family member,
except that it may serve as a fiduciary for up to 35 individuals who are not family members if the
individuals are current or former employees of the family trust company or one or more trusts,
companies, or other entities that are family members.
16
A “licensed family trust company” is a family trust company that operates in accordance with ch. 662,
F.S., and has been issued a license by the Office of Financial Regulation (“OFR”) that has not been
suspended or revoked.
17
A “foreign licensed family trust company” is a family trust company that:
Is licensed by a state other than Florida or the District of Columbia (“D.C.”);
Has its principal place of business in a state other than Florida or D.C.;
Is operated in accordance with family or private trust company laws of the state in which it is
licensed or of D.C.;
Is subject to statutory or regulatory mandated supervision by the state in which the principal
place of business is located or by D.C.; and
8
Id. at 118.
9
Ss. 39.0132(3) and 39.0132(4)(a), F.S.
10
S. 63.162, F.S.
11
Ss. 744.1076 and 744.3701, F.S.
12
S. 119.0714(1)(i)-(j), (2)(a)-(e), F.S.
13
Ss. 382.008(6) and 382.025(1), F.S.
14
This exemption was created because the legislature found that the public disclosure of such information “would produce undue harm
to the heirs of the decedent or beneficiaries of the decedent’s estate.” S. 733.604, F.S.; Ch. 2009-230, Laws of Fla.
15
“Family member” means a designated relative; a person within the fourth degree of lineal kinship to a designated relative of a family
trust company, or a person within the sixth degree of lineal kinship to a designated relative of a licensed family trust company; the
spouse or former spouse of an individual qualifying as a family member and an individual who is within the fifth degree of lineal kinship
to such spouse or former spouse; a family affiliate; a trust established by a family member if the trust is funded exclusively by one or
more family members; a trust established by an individual who is not a family member if all of the noncharitable qualified beneficiaries
of the trust are family members; the probate estate of a family member; the probate estate of an individual who is not a family member if
all of the noncharitable beneficiaries of the estate are family members; or a charitable foundation or other charitable entity in which a
majority of the governing body is composed of family members. S. 662.111(11), F.S.
16
S. 662.111(12), F.S.
17
S. 662.111(16), F.S. STORAGE NAME: h1363a.CIV PAGE: 4
DATE: 2/2/2022
Is not owned by, or a subsidiary of, a corporation, LLC, or other business entity that is organized
or licensed by any foreign country as defined in s. 663.01(3), F.S.
18
Formation and Oversight
A family may form a family trust company, licensed family trust company, or foreign licensed family trust
company to provide the family services similar to those provided by a trustee or a financial institution;
such companies are often formed to manage the wealth of families with a high net worth in lieu of
relying on traditional individual or institutional trustee arrangements.
19
Neither a family trust company
nor a foreign licensed family trust company must be a licensed family trust company, but such
companies must register with OFR before beginning operations in the state.
20
Certain information disclosed to OFR in connection with its oversight of family trust companies, licensed
family trust companies, and foreign licensed family trust companies is confidential and exempt from the
public record, including:
Personal identifying information;
The names of shareholders or members of the company; and
Information received by OFR from persons from another state or nation or the federal
government which is otherwise confidential and exempt from public disclosure under the laws
of such state or nation or under federal law.
21
Trust Proceedings
Although trusts are not generally subject to judicial supervision, most family trust companies, licensed
family trust companies, and foreign licensed family trust companies will need to access the court
system at some point, as certain matters of trust administration cannot be accomplished without judicial
intervention.
22
Additionally, a hearing conducted under the Administrative Procedures Act must be held
if timely requested in proceedings for the issuance, denial, renewal, or amendment of a license or
approval of a merger related to a family trust company.
23
However, information contained in the records related to trust proceedings involving family trust
companies, licensed family trust companies, and foreign licensed family trust companies is not currently
exempt from public disclosure. Such proceedings may expose private information about family wealth
and other sensitive matters that may lead to exploitation of family members by financial predators,
unwanted solicitations, and a heightened risk of kidnapping.
24
This information may also reveal
extensive private and highly personal information, including information about family disputes, which
appeals to the prurient interest but is of limited legitimate public interest.
18
S. 662.111(15), F.S.
19
See generally ch. 662, F.S.
20
Ss. 662.114 and 662.122, F.S.
21
S. 662.148(2), F.S.
22
These matters include final settlement of trust accountings, conclusive validation of trustee fees, approval of specific trustee actions,
trust instrument construction, the determination of a trust’s validity, and a trust’s modification, reformation, or termination. S.
736.10201(3), F.S.
23
OFR must publish notice of the application within 21 days of receipt in the Florida Administrative Register (“FAR”). Within 21 days
after publication of such notice, any person may request a hearing, and failure to timely request a hearing is a waiver of any right to a
hearing. S. 120.80(3)(a), F.S.
24
Plante v. Gonzalez, 575 F.2d 1119 (5th Cir. 1978) (recognizing that financial privacy is important for reasons including the irritation of
solicitations and the threat of kidnapping). STORAGE NAME: h1363a.CIV PAGE: 5
DATE: 2/2/2022
Effect of Proposed Changes
CS/HB 1363 provides that, in trust proceedings in which a family trust company, licensed family trust
company, or foreign licensed family trust company is a party, the identities of those who establish,
administer, or benefit from a trust and any information relating to the trust are confidential and exempt
from the public record and must be protected in any court proceeding or filing related to the trust. The
bill also directs the court to seal and not release to the public any document filed with the court in such
a trust proceeding, including, but not limited to:
The trust instrument;
Any petitions, briefs, or inventories;
Any statement or report filed by a fiduciary;
Any court orders; and
Any other document in the court case file.
However, the bill directs the court to make such documents available to:
The settlor;
A fiduciary of the trust;
A beneficiary of the trust;
An attorney for such persons; and
Any other person if, upon the person’s showing of a specific interest in the trust, a transaction
relating to the trust, or an asset held or previously held by the trust, the court determines that
there is a compelling need for releasing the requested information.
The bill states that it is a public necessity that trust proceedings involving family trust companies,
licensed family trust companies, or foreign licensed family trust companies be made confidential and
exempt, as public disclosure in such proceedings of information relating to the clients, family members,
members, or stockholders of such trusts would vitiate other protections granted by law to such
companies and their constituents. The bill also states that public disclosure of sensitive family and
financial information in such trust proceedings can result in specific harm to beneficiaries and other
interested parties, as such proceedings often involve large sums of money or vulnerable people who
could be targeted for exploitation or abuse. Finally, the bill states that the need to protect the identities
of beneficiaries of trusts for which a family trust company, licensed family trust company, or foreign
licensed family trust company is a trustee and the sensitive financial information available in such
proceedings is sufficiently compelling to override the state’s public policy of open government and that
the such information cannot be protected without the exemption.
The bill provides an effective date of July 1, 2022.
B. SECTION DIRECTORY:
Section 1: Creates s. 662.1465, F.S., relating to confidentiality of certain trust proceedings and other
filings.
Section 2: Provides a public necessity statement.
Section 3: Provides an effective date of July 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
STORAGE NAME: h1363a.CIV PAGE: 6
DATE: 2/2/2022
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may protect from financial exploitation and other dangers the members of a family trust
company, licensed family trust company, or foreign licensed family trust company by keeping certain
personal information and information related to the trust out of the public record unless an exception
applies.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
Vote Requirement
Article I, section 24(c) of the State Constitution requires a two-thirds vote of the members present
and voting for final passage of a newly created or expanded public records exemption.
Public Necessity Statement
Article I, section 24(c) of the State Constitution requires a public necessity statement for a newly
created or expanded public records exemption. The bill expands an existing public record exemption
and, thus, it requires, and includes, a public necessity statement.
Breadth of Exemption
Article I, section 24(c) of the State Constitution requires a newly created or expanded public records
exemption to be no broader than necessary to accomplish the stated purpose of the law.
B. RULE-MAKING AUTHORITY:
Not applicable.
C. DRAFTING ISSUES OR OTHER COMMENTS:
The bill may inadvertently prohibit OFR from publishing the notice of application for a family trust
company in the FAR, as the exemption applies to “trust proceedings in which a family trust company,
licensed family trust company, or foreign licensed family trust company is a party” and to “any
information related to the trust,” which information must be protected in any “filing related to the trust.”
This may in turn cut off the right of a person to request a hearing on the license application.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On February 2, 2022, the Civil Justice and Property Rights Subcommittee adopted one amendment and
reported the bill favorably as a committee substitute. The amendment: STORAGE NAME: h1363a.CIV PAGE: 7
DATE: 2/2/2022
Clarified that the documents a court must seal under the bill, absent an exception, are those filed in
a trust proceeding in which a family trust company, licensed family trust company, or foreign
licensed family trust company is a party.
Narrowed the public necessity statement to specifically address the protection of the beneficiaries
of a trust in which a family trust company, licensed family trust company, or foreign licensed family
trust company is a trustee.
This analysis is drafted to the committee substitute as passed by the Civil Justice and Property Rights
Subcommittee.