This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Take a typical situation: a Florida founder built a company over twenty years, and somewhere around year twelve an estate planning lawyer moved the founder’s shares into a revocable living trust — standard Florida planning, done mostly to keep the estate out of probate. The founder kept running the company and forgot about the paperwork. Now there is a buyer, a letter of intent, and a stock purchase agreement in drafts, and the buyer’s counsel sends a diligence comment that stops the process cold: the cap table says the shares belong to “the Smith Family Revocable Trust dated March 3, 2014,” and the draft agreement says the seller is a person named Smith. One of those documents has to change, and everything downstream — signature blocks, representations, indemnities, even the wire instructions — changes with it.
The trustee is the seller, and the trustee’s authority is a diligence item
When shares sit in a revocable trust, the individual founder is not the record owner; the trustee is — even when the trustee, the settlor, and the founder are the same human being wearing three hats. The purchase agreement should name the seller as the trustee, in that capacity, and the signature block should say so. That much is cosmetic. The substantive question underneath is authority: does this trustee have the power to sell these shares on these terms, and who else, if anyone, has to act? Florida’s Trust Code answers the default version generously. Section 736.0816 grants trustees, except as the trust instrument limits, the power to sell property at public or private sale, to take any action a shareholder could take with respect to a business interest — expressly including merger decisions — and to exercise the rights of an absolute owner over securities. A garden-variety Florida revocable trust therefore usually presents no authority problem at all. But the defaults yield to the instrument, and instruments vary: co-trustees whose joint action is required, successor trustees installed after a settlor’s incapacity, spousal consent provisions in joint trusts, and powers of direction held by someone other than the trustee all change who must sign. The buyer is entitled to know which version it is dealing with, and the seller should know the answer before the buyer asks.
Section 736.1017 lets the trust prove itself without handing over the estate plan
The founder’s instinct at this point is usually resistance: the trust instrument is the family’s estate plan, it says who gets what and when, and no founder wants it circulating in a data room. Florida law anticipated exactly this standoff. Under section 736.1017, Florida Statutes, the trustee may furnish a certification of trust in place of the instrument itself. The certification states the facts a counterparty actually needs: that the trust exists and when it was executed, the identity of the settlor and the currently acting trustee, the powers of the trustee, whether the trust is revocable and who holds the power to revoke, whether powers of direction exist and whether the directors have authorized the pending transaction, how co-trustees must act, and how title is taken. It must confirm the trust has not been revoked, modified, or amended in a way that would make its representations incorrect — and, importantly for the founder, it need not contain the dispositive terms. The statute then does the work that makes buyers comfortable: a person acting in reliance on a certification without knowledge that it is wrong is protected, may assume the certified facts without inquiry, and may enforce the transaction against the trust property as if the certification were correct. A buyer who wants more can require excerpts — the trustee-designation and trustee-powers pages — under subsection (5), which is the compromise position that keeps the beneficiary schedules private while giving deal counsel the operative language. In practice, a clean certification plus targeted excerpts resolves ninety percent of trust-authority diligence without a single beneficiary name changing hands.
Who stands behind the reps when the seller is a trust
Authority is the easy half. The harder half is credit. Representations and indemnities from “the trustee, solely in its capacity as trustee” are only as good as the assets the trust holds — and a revocable trust that sells the company and distributes the proceeds to beneficiaries can become an empty shell while the survival period is still running. Buyers respond to this in predictable layers. First, they ask the founder to sign the fundamental reps and the restrictive covenants individually, alongside the trustee — the founder knows the business personally, and the noncompete has to bind the human being in any event, since the trust will not be opening a competing company. Second, they size escrows and holdbacks with the trust’s post-closing liquidity in mind, because a clawback claim against distributed trust assets is a lawsuit nobody prices cheaply. Third, where multiple trusts and family members sell together, the deal needs a coordination answer — a stockholder representative arrangement of the kind discussed in the post on post-closing stockholder representative authority — so the buyer has one counterparty for disputes instead of a family reunion. The founder’s own advisors should also look sideways at the adjacent Florida-specific issues that ride along with family-held stock: shares held jointly by spouses raise the tenancy-by-the-entireties questions covered in the post on spousal joinder at closing, and any seller note secured by the founder’s residence collides with the homestead issues covered in the post on Florida homestead and seller financing. Trust ownership does not eliminate those wrinkles; it stacks on top of them.
Two housekeeping items round out the file. If the target is an S corporation, the trust’s eligibility as a shareholder matters — a revocable grantor trust is generally a permitted holder while the settlor is alive, but a settlor’s death starts a limited window before the trust must qualify under a different regime, and a deal signed during that window needs tax counsel watching the calendar, since an eligibility slip can threaten the S election every seller rep says is valid. And if the settlor has lost capacity between the estate planning and the deal, the successor trustee provisions become the operative authority — the certification of trust should name the successor, and the buyer will want the incapacity determination documented exactly the way the instrument requires.
The takeaway
Trust ownership of founder stock is not an obstacle to a Florida sale; it is a set of mechanics with statutory answers. The trustee sells under the powers section 736.0816 supplies by default, the certification of trust under section 736.1017 proves authority without exposing the estate plan, and the credit-behind-the-reps problem resolves through individual joinders, escrows, and representative structures that deal lawyers deploy routinely. What turns any of it into a problem is sequencing — a trust discovered in diligence week instead of disclosed in the first data room index. Founders who spent money on good estate planning should let the deal team see it early, because a well-run sale process absorbs a revocable trust without breaking stride, and a surprised one absorbs it at the cost of two weeks and some buyer confidence.
If you are a Florida founder whose shares sit in a revocable trust and a sale is on the horizon, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
