TRUSTS

I.

Terminology Related to Trusts A. Trust: An instrument to transfer interest. An agreement where someone holds someone else’s property to distribute to a beneficiary. 1. Standard tools for transferring property between a family within a single generation or to younger generations. 2. Can be powerful tools for implementing a client’s charitable goals. 3. Can be used to avoid most aspects of probate, reduce certain taxes, protect the privacy of the estate plan, avoid estate taxation, and shield trust assets from creditors. i. Probate creates a public record, while the details of a trust are private. 4. Can avoid someone contesting a will → it is less likely that a trust will be voided due to undue influence. 5. Some people create trusts because they provide them with dead hand control: The continued control through a trust after your death which can continue for years. B. Express Trust: An intentional agreement that separates legal and equitable title to property and provides for management of that property for the benefit of the trust’s beneficiaries. 1. An express trust can either be private or charitable. C. Inter Vivos Trust: The establishment of a trust by the property owner during their lifetime. 1. There are 2 types of inter vivos trusts: i. Revocable Trust: A trust which can be revoked by the settlor without the consent of the trustee or a person holding an adverse interest. a. The settlor can either revoke the trust completely or simply modify the trust in some way. b. For federal tax purposes, a settlor who has the right to revoke or amend the trust is viewed as the true owner of the trust assets and as such will continue to be responsible for federal income taxes on the trust’s income, even if the settlor is not the beneficiary, during the settlor’s lifetime. 1. Similarly, the assets held in a revocable trust are included (at their fair market value) in the settlor’s gross estate for federal tax purposes. 2. However, there are no federal gift tax consequences when a settlor makes an inter vivos transfer to a revocable trust because the gift is not deemed complete. ii. Irrevocable Trust: A trust which once it is created by the settlor cannot be revoked or modified.

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2. Assets held in an inter vivos trust (whether revocable or irrevocable) do not

need to be re-titled through the probate process because those assets are not held in the decedent’s name at death. 3. § 736.0602 provides that unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke or amend the trust. i. NOTE: Because this is a change in the law, it does NOT apply to trusts created before July 1, 2007. 4. Assets in an inter vivos trust deemed to be revocable, as opposed to irrevocable, could become accessible to the settlor’s creditors even if the settlor is not a beneficiary and even if the trust was created years before the creditor’s claims arose. 5. Pour over Provisions (from a will): § 732.513: i. A devise can be made to the trustee of a trust and the property being disposed of in probate will go into the trust and be disposed of by the trust. D. Testamentary Trust: The establishment of a trust by the property owner in their will, thereby taking effect only upon the settlor’s death. 1. Because created at the death of settlor/testator, it is by its nature, irrevocable by the settlor once it becomes effective. 2. Testamentary trusts do NOT avoid probate because it is a type of devise that needs to be transferred during probate as it does not become effective until death and must probate the assets that were placed in the trust. E. Settlor/Grantor: The person who transfers property into a trust (the creator of the trust). 1. There can be more than one settlor of a trust. i. Example: See § 736.0602(2): A trust can be created or funded by more than one settlor and be funded with community property or non-community property. F. Trustee: The person responsible for administering the trust property. 1. Can have one trustee or co-trustees, whereby majority rules. 2. The trustee can be an individual person or a corporation, a third party, the settlor, or one of the beneficiaries. i. A law firm can be a trustee. 3. The settlor has a significant amount of flexibility when designing a trust with respect to when income or principal can or must be distributed to the beneficiaries. As such, the responsibility of the trustee as to the distribution of income or principal, or both, may vary from case to case. i. The trustee could be required to distribute income currently to a beneficiary on a periodic basis.

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ii. If there are several beneficiaries the trustee could be required to distribute

the income to more than one of the named beneficiaries or to a class of beneficiaries. iii. The trustee could be required to distribute principal prior to the trust’s termination date. iv. The trustee could be given discretion with regards to the distribution which could be either to distribute income, principal, or both, to the beneficiary(ies). v. The trustee could be limited to distributing to the beneficiary based on their health, education, support, or maintenance. vi. The settlor could give the trustee unlimited discretion in distributing to the beneficiary. However, the trustee, when exercising this discretion, must do so in good faith. vii. The settlor could require the trustee to accumulate income and not distribute it for a particular period of time, e.g., six years. G. Beneficiary: A person for whose benefit the trust is administered. H. Res: The subject matter of a trust, the property/assets in the trust. II. Introduction to Trusts A. Changes in Trust Laws in Florida: 1. § 736.1303: The new trust laws apply to all trusts created before, on, or after July 1, 2007. 2. § 736.0105: There are 22 provisions which are mandatory for trusts created in Florida which prevail over any terms stated in the trust. They are broken down into 5 categories including substantive elements, procedural matters, public policy restrictions, provisions on court powers, and duties of trustees, which must be taken into account when creating the trust. B. Parties in Private Express Trust 1. The parties to a typical private express trust are: (See § 736.0103): i. The settlor: Which is either referred to as the grantor, creator, trustor, or transferor; AND ii. The trustee: The one charged with managing the trust assets for the benefit of the beneficiaries (possesses legal interest in the trust); AND a. Can have co-trustees → usually a successor trustee if the first one cannot perform their duties. iii. The beneficiaries: Those with equitable interest in the trust and for whom the trust is administered. 2. NOTE: A person can serve more than one role in a trust. For example the settlor can serve as a beneficiary (and it would be deemed a self-settled trust) or the settlor could also serve as trustee.

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2.0401: i. an executory interest.However. or an equitable interest. C. The trust must have identifiable beneficiaries. which one obviously does not have a valid interest in until the death occurs. 3. a devise under a will to satisfy the res requirement. Substantive Trust Elements A. Res: Property or assets in the trust. Death benefits include life insurance policy.808 also permits death benefits to qualify as a property interest in a trust. when named as a beneficiary. § 733. AND ii. III. Future profit from a stock does not qualify as a res. Trust Elements for Express Trusts: 1. a. A res must be something that you would definitely receive. AND iii. If that were to be permitted there would be no separation of legal and equitable ownership. Self-Declared or Created by Declaration: A trust can be created when a settlor declares themselves trustee of the trust assets for the benefit of the beneficiaries. A holder of a power of appointment can create a trust by exercising the power. AND v. 2) Been executed with the requisite trust formalities (See V Below). B. An express trust requires the manifestation of trust intent which has 3 facets: i. ii. Cannot create a trust with the winnings you might receive from the Florida lottery when you haven’t even bought a ticket yet.0402(1)(e) provides that a sole trustee CANNOT be the sole beneficiary. it must have: A. The trust must be have a lawful purpose. In order for a trust to survive a challenge to its validity. Something as little as $1 is enough to create res in a trust. Settlor Intent and Capacity: 1. ii. The res requirement can be satisfied by any type of recognized property interest including a contingent interest. i. C. 1. 1) Met the substantive elements of an express trust (See IV Below). etc. The trust must have a trustee with fiduciary duties. The settlor must indicate the intent to create a trust. An express trust can be created in 3 ways: § 736. Trust Created by Transfer: A trust can be created when the settlor transfers funds to a third party who serves as trustee. AND iv. iii. Methods for Creating an Express Trust 1. 4. AND B. § 736. There are 5 elements required for the valid creation of a private express trust which may NOT be altered by the settlor or by agreement: i. accident policy.513 also permits the possible expectancy of receiving. The trust must have a res. IV. 4 . § 732.

iii. this is based on common law. Example: Testator did not include the granddaughter in trust. Sole question is whether the settlor manifested an intent to create the trust. Would be the same requirement for the creation of a testamentary trust. Do not need to use the words trust or even trustee but better to be clear from the beginning otherwise the court will be left to interpret your intent. 5 . Precatory Language: Statements such as: “I wish. Express Intent to Create a Trust: i.0601: The capacity required of a settlor to form a revocable trust is the same as that required for a will. The transferor must have intended a trust. a.i. The settlor must have capacity to formulate the requisite trust intent. 3. which is legally unenforceable. Must be NOW. even though the testator had hoped the legatee would carry out his desire. the language and surrounding legal circumstances however may not demonstrate an intention to impose a legal duty upon the legatee to carry out the desired purpose and leave the legatee free to carry it out or not. at the time of creation. 1. 5.” “I fervently hope. 1) Manifesting an intent to create a trust with its attendant enforceable legal obligations on the trustee. 2. The testator’s use of precatory language may establish a trust. mere intent is all that is required. There is NO statute. The intent to create a trust must be a present intent. AND ii.” and “I request. OR b. Capacity of Settlor: i. therefore the uncles did not have to. a. Present Intent to Create a Trust: i. ii. he hoped that her 4 uncles would care for her. ii.” i. This facet creates an inquiry as to the settlor’s capacity to create the trust. AND a. The capacity required of a settlor to form an irrevocable trust is the same required to give a gift. a. Intent to create a trust can either be express or implied → the Florida statutes have not specifically codified which is required. § 736. 4. but the language used did not impose the legal obligation for them to do so.” “I strongly desire. ii. Any person who is of sound mind and who is either 18 or more years of age or emancipated minor may make a will. This type of language can create confusion as to the settlor’s intent and can be construed as either: a. 2) As merely indicating a desire on the part of the transferor to impose a moral obligation.

Both mother and daughter were beneficiaries. Can include adopted children as the beneficiary. they cannot also be the trustee. daughter was the trustee. Therefore. iii. Trustee with Duties 1. Cannot include unborn children. § 736.0404: A trust may created only to the extent the purposes of the trust are lawful. therefore the trust was dissolved. 2. the trust is invalid and will be dissolved. i. A valid trust only exists if there is separation of legal and equitable interests. Merger Doctrine: If there is no separation of legal and equitable title. There are 2 parts of the trustee element: i. not contrary to public policy. Because beneficiaries have equitable interest. AND a. 3. § 736.0402(1)(c): There must be at least one definite beneficiary presently ascertainable or ascertainable within the applicable Rule Against Perpetuities. Testamentary trust has the same requirement as the creation of a will. i. 6 . upon mother’s death the daughter was the only beneficiary and was also the trustee. § 736. if the settlor fails to name the actual trustee or names a trustee who refuses to serve. The ascertainable beneficiaries may be present or future beneficiaries with vested or contingent interests. a. the titles have merged. or becomes incapacitated. While the mother was alive this was permissible because there was more than one beneficiary. Example: An 80 year old woman cannot have a trust for the benefit of their unborn child because it is highly unlikely they will ever be able to have one.” D. The trustee must have trust duties to perform. a.ii. iii. must at least been in gestation.0402(3) provides that a trust is valid even if the trustee is given the power to select a beneficiary from an indefinite class (with the particular beneficiary not yet being identified from that class). An inter vivos trust isn’t valid if you say “when I’m older I’ll set up a trust. if there is only one beneficiary. ii. Valid Trust Purpose 1. F.0201(4)(b): Failure to have a trustee at any particular point in time generally will not invalidate the trust because the court can appoint one. The trust and its terms must also be for the benefit of its beneficiaries. ii. Example: Mother was the settlor. Beneficiaries 1. iv. dies. § 736. and possible to achieve. The selection must be done within a reasonable time or else the power fails and the trust fails all together. The trust must have a trustee. However. There was no separation of legal and equitable title. the court could appoint a trustee to fill the role. E.

Unless the will that creates the trusts complies with the formalities for executing a will. At least two witnesses must attest to the settlor/testator’s signature or the settlor/testator’s acknowledgment of his signature. The writing must manifest the trust intention and reasonably identify the trust property. AND 3. iii. Whether the trust’s res is real property or personal property. 3 Factors determine the formalities required for a valid trust (the first 2 apply in most states. and if so. The settlor/testator must sign (or acknowledge his signature) in the presence of at least two attesting witnesses. Inter Vivos Trust Formalities: 1.502: 4 requirements for the valid execution of a will: a. 7 . a trust to pay the fines of any of them who may be convicted of committing such acts is invalid. the testamentary trust will fail.: testamentary trust) must comply with the state’s requirements for proper execution of a will. i. AND d. etc. ii. 1. A trust would be invalid if it was established to pay someone’s liability for operating a nuisance. The trust must be in writing and signed by the settlor. Cannot create trusts that advocate discrimination. Its purpose is for unlawful or the performance calls for the commission of a criminal or tortious act. iv. B. C. A properly signed memorandum or letter signed by the trustee is sufficient to satisfy the requirements of the Statute of Frauds. Testamentary Trust Formalities: 1. Whether the trust is revocable. If certain persons are likely to engage in the commission of certain crimes. Whether the trust is testamentary or inter vivos. whether it contains any testamentary aspects. a. § 732. Trust Formalities A. i. AND c. V. Real Property: Must comply with the Statute of Frauds for Trusts: § 689. Formalities depend on whether the trust res is personal or real property. the beneficiaries. OR b.05: a.A trust is invalid if: a. i. a trust created as part of a will (i.e. i. The settlor/testator must sign the will at the end. The attesting witnesses must sign in the presence of the settlor/testator and each other. AND 2. and the purposes of the trust. AND b. In all states. It violates the Rule Against Perpetuities. the third is Florida specific): 1. terrorism. An oral express trust is NOT valid.

Must be signed by the settlor before or at the time of the declaration of the creation of the trust or after the time of the declaration but before the transfer of property. iii.0403(2)(b) 689. other than the substantive elements discussed above. i.0403(2)(b) Real Statute of Frauds for Statute of Will formalities § Property Trust of Land § 689.05 8 . Additionally. Requires the testamentary aspects of all revocable trusts (whether the res is real or personal property) executed by a Florida domiciliary to comply with the formalities for wills contained in § 732. b. ii. Summary: Inter Vivos Trust Testamentary Trust Revocable Irrevocable Personal Property Testamentary aspects None Will formalities § must be executed like 732.502 and Testamentary Trusts of Aspects must be executed Land § Like will § 736. trusts consisting of personal property need not comply with any formalities. executed by a settlor who is a domiciliary of Florida at the time of the execution. the testamentary aspects of a revocable trust containing personal property must also follow the formalities for the execution of a valid will. 2.502 will § 736.502. § 736.ii.05 Frauds for 732. ii.0403(2)(b): Testamentary aspects of a revocable trust.0403(1): The trust is validly created if the creation complies with the law of the jurisdiction in which the instrument was executed or the law of the jurisdiction in which at the time of creation the settlor was domiciled. Personal Property: In most states. are invalid unless the trust instrument is executed by the settlor with the formalities required for the execution of a will in this state. However. § 736. E. Formalities for Testamentary Aspects of Revocable Trusts 1. a constructive trust or a resulting trust could be imposed in cases where the elements for either are met. Therefore. the testamentary aspects of a written revocable trust of land that complied with the Statute of Frauds for Trusts could still fail if those provisions were not executed in accordance with the formalities for a will. D.

A constructive trust can be imposed if the transfer of the trust was procured by fraud. ii. 2. Example: Celebrities that don’t want the public to know they own the property. Rather. 1. The resulting trust arises in this case because the trustee is not entitled to keep the assets that were in the express trust. A resulting trust arises because an express trust failed or because the express trust did not completely dispose of the trust assets. A resulting trust arises in 2 circumstances: i. The interest reverts back to the settlor based on a legally inferred intent that if the settlor had contemplated these results they would have intended the property to revert. a. 1. A constructive trust can be imposed when the transferee at the time of the transfer was in a confidential relationship with the transferor. undue influence. this presumption can be rebutted. Purchase Money Resulting Trust: Can arise when the purchase price of the property is paid by one person but title is taken by another. An equitable remedy that can be imposed to prevent unjust enrichment in certain cases. Constructive Trust: Arises through the operation of law where one through fraud. 9 . 1. Constructive Trusts and Resulting Trusts A. b. The law presumes that the person holding title is holding it in trust for the person who paid the purchase price. or duress. 5. If an oral trust cannot be enforced because it does not satisfy the Statute of Fraud for Trust of Land. b. An express trust can fail for reasons such as its purposes became illegal. the intended beneficiary of the oral trust could ask the court to impose a constructive trust on the property. An express trust may not completely dispose of trust assets when for instance the trust assets exceed those necessary to fulfill its purpose. a. or other questionable means gains property which in equity or good conscience he should not be permitted to retain. 3. abuse of confidence. It is an equitable reversionary interest implied by law. The constructive trust will be created with the assets that can be traced. c. However. 2.VI. the trustee successfully assets the statute of frauds on trust of land as a defense to enforcement of the trust. 4. the beneficial interest reverts (results) back to the settlor or the settlor’s successors in interest. Can be rebutted by the title holder showing that it was a gift. B. Resulting Trust: 1.

i. Rules Governing Revocable Trusts: 10 . 1.: pour over desire. § 736. 1) During the settlor’s lifetime. the trust res is NOT part of the settlor’s probate estate. a. AND 1. The trust provisions would be an alternative to the use of a testamentary trust. a revocable trust is NOT treated as a testamentary trust. b. b. 2. Generally a revocable trust avoids the probate process because the settlor already transferred title to the assets prior to their death. A revocable trust is usually designed with distribution provisions that apply during 2 different time periods: a.075: During the settlor’s lifetime. VII. It does not matter that a revocable trust may have testamentary characteristics such as not taking effect in enjoyment or possession until the death of the settlor. Trust may provide for outright distributions when the settlor dies or may provide for assets to continue to be held in trust for the beneficiaries. the settlor may choose to be the trustee or co-trustee and may retain the right to direct the distribution and administration of the trust assets. 4. Revocable Trust: A trust which is revocable by the settlor without the consent of the trustee or a person holding an adverse interest. A trust can contain provisions that if trustee becomes incapacitated a successor trustee is appointed and would administer the trust and make distributions for the benefit of the settlor. § 689. Revocable Trust and Properly Funding Trusts A. a. it is not a testamentary trust. Settlor may have will that provides for the residuary to be distributed to the revocable trust. Can be rebutted if the payor was under a legal obligation to provide for the title holder.2. Revocable Trusts and Probate: i. iv. 2) After the settlor’s death. ii. because the interest still passes to the beneficiary during the settlor’s life. iii. Although § 736. 3.0403(2)(b).05053: Assets in a revocable trust may be used to pay certain expenses and obligations of the decedent/settlor’s estate. Outright distributions or continuing trust provisions would be deemed to be testamentary aspects of the trust for purposes of § 736. Designing a Revocable Trust: i. ii. iii.0403 requires the testamentary aspects of a trust to be executed using will formalities. Therefore. therefore the assets are in the trustee’s name.e.

x. or to direct the actions of the trustee of a revocable trust. b. c. If a trust is revoked or amended the trustee must deliver the property as the settlor directs. Modification or Termination of a Revocable Trust: § 736.1105: A provision in a revocable trust in favor of a former spouse is generally void upon annulment or dissolution unless the trust instrument or the judgment for dissolution provides otherwise.0604: Statute of Limitations for contesting trusts that were revocable immediately prior to the settlor’s death. amend. A later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust. § 736. or undue influence. § 736. 11 . in whole or in part.§ 736. An agent with power of attorney or a guardian of the settlor’s property can exercise the settlor’s right to revoke. iv. duress. ii. the duties of the trustee are owed exclusively to the settlor. § 736. iii. A settlor of a revocable trust may revoke or amend such a trust by substantial compliance with a method provided in the terms of the trust. Any other method manifesting clear and convincing evidence of the settlor’s intent. § 736. 6.0602(1): If an inter vivos trust is silent as to revocability it is presumed that the trust is revocable. viii. § 736. mistake.0813(4): While the trust is revocable (meaning during the settlor’s lifetime) the trustee’s duty to account is owed to the settlor. ii. § 736. a.0403(2): Rules governing revocable trusts with testamentary aspects. or distribute the trust property. is void if creation was procured by fraud. If the trust instrument does not include a method.0406: Either a revocable trust. § 736.0601: The capacity required of a settlor to create. or add property to a revocable trust. amend. Summary of the Formation of a revocable inter vivos trust: i.0602: i. OR b. vi. A trustee who does not know that the trust has been revoked or amended is not liable for distributions made or other actions taken. vii. revoke. the statute provides that modification or revocation of such a trust can be accomplished by: a. v. 5.0603(1): While the trust is revocable (meaning before the settlor’s death). the property within the trust is subject to the claims of the settlor’s creditors during the settlor’s lifetime to the extent that the property would not otherwise be exempt by law if owned directly by the settlor. § 736. ix. is the same as that required to make a will. § 736.0602: Revocation or amendment of a revocable trust.0505(1)(a): Whether or not the revocable trust contains a spendthrift provision.

it goes back to his estate. B. AND ii. Res can also consist solely of pour over assets from the will. Should state on the deed that it is being transferred for purposes of a trust and who the beneficiary is. ii. A settlor transfers assets to himself OR transfers assets to somebody else as trustee. vi. v. Usually a writing where settlor retains right to revoke. the trust must be properly funded before their death. ii. Unless § 736. 3) delivery of the deed to the trustee must be effectuated. vii. Funding a Revocable Trust: If the settlor wants to obtain the benefits of avoiding probate and continuity of asset management after their death.808 permits the res to consist solely of death benefits or insurance proceeds. 2007 the trust is deemed revocable unless you state otherwise. so then you don’t avoid probate. otherwise the trustee will take the deed in fee simple. Contains distribution provisions during 1) benefits that occur during settlor’s lifetime (trust was created where income is given to S during S’s life) and 2) after S’s death (ex: to S for life and then to S’s children or spouse or to S for life then to S’s spouse for life. 3. Trust can terminate upon death or continue. 2) signed in front of 2 witnesses. The deed must be 1) signed by the settlor. Generally. and 5) should be recorded. § 733. 1. Complying with the requisite formalities for transferring the assets to the trustee. Assessing the nature of the assets. viii. 2.0602.i. Settlor does retain some benefits for himself during his lifetime and then upon death assets are either distributed to other beneficiaries or held in trust for other beneficiaries. which is typically done in writing. then to S’s children). the settlor may fund the res with any type of property: i. 1. For any trust to be valid you must have a res/asset. as of July 1. 2. iv. iii. Transferring assets into a trust requires: i. some assets are more appropriate than others: 12 . Settlor acts as trustee or transfers property to someone else as trustee. 4) notarized. However. ix. Transferring Real Property to the trustee is generally accomplished by means of a properly executed deed recorded in the county where the real property is located. iii. a. If settlor stays quiet about what happens to the trust after his death. Title that would have gone to minor children would go to guardianship if trust doesn’t specify.

You can create a trust with $1. if done the owner that is devising the homestead still retains the homestead while they are alive and still retain homestead protection against creditors.a. Tangible Personal Property: Depends on what it is. general. Mistake. VIII. The trust will actually become funded when the personal representative distributes the assets to the trustee. iv. Cash can be transferred by writing a check payable to the trustee. Mistake in Drafting (scriveners error). a. and other securities will need to be re-registered in the trustee’s name(s). Three types of Mistakes in Wills: a. and Construction 1. Funding an Irrevocable Trust: Can be done with the same assets and in the same manner as a revocable trust. Mistake: i. More value tangible personal property such as jewelry and furniture that are without title are typically transferred by making an assignment or bill of transfer which provides written evidence that you are giving the property to the trustee. Reformation. Crossover Issues with Wills & Trusts A. bonds. but more care should be taken when funding because the assets are irrevocable. ii. This is the ONLY mistake that will invalidate a will. The devise may be specific. Stocks. v. demonstrative. When there is a mistake in the terms of a trust refer to § 736. D. Life insurance and retirement plans: Name trust as beneficiary of the policies. vi. b. or residuary. b. However. c. For example. Not a good idea to fund a revocable trust with homestead property because the home could then be subject to bankruptcy creditors.0415: 13 . b. Funding a Testamentary Trust: Funding is done by means of a devise. § 732. depends on the court. Unless you want to prevent your family from selling the homestead immediately after your death there is really no need to put the homestead in a revocable trust because they will be protected from creditors anyways. Intangible Personal Property: a. C. Mistake in Inducement (mistaken belief about something).5165: Mistake in Execution (mistaken belief as to what you were actually signing). it would be easier to include that property in an inter vivos trust rather than having to go through ancillary administration of that probate asset in North Carolina. if you have vacation property located in North Carolina. vii. but cars and boats for instance need to be re-titled.

A court will fix mistakes. No property interest is created when the devisee fails to survive the testator. survivorship was not necessary. If a will is executed with a mistake in inducement or a scrivener’s error it will NOT be reformed. giving a court more power with trusts than with wills. it voids the provision(s). ii. mistake. i. 2. Lapse and Antilapse: 1. Active procurement. There are 2 types of ambiguities: a. whether in expression or inducement. even if unambiguous. AND ii. or conflicts with regards to a trust. a. Florida Law: 14 . Undue Influence: 1. 2. 2. Confidential relationship. ii. Latent: Look outside the document → bringing in extrinsic and intrinsic evidence. iii. b. Common Law: i. (This is the same for wills). ambiguities. Substantial beneficiary. B. ii. § 736. Court will interpret an ambiguity in a trust. C. In a will if there is an ambiguity the court will interpret the will as to the testator’s intent. or undue influence. to conform the terms to the settlor’s intent if it is proved by clear and convincing evidence that both the accomplishment of the settlor’s intent (inducement) and the terms of the trust (either drafting or execution of the trust) were affected by a mistake of fact or law. duress. The court may reform the terms of a trust. AND iii. Property interest created when inter vivos trust is created because the beneficiary obtains his property interest when the trust is created and unless there was express language providing otherwise. as they will also do with a will. thus. it will stand as is.0406: A trust is void in whole or in part if procured by fraud. To raise a presumption of undue influence in a will must show: i. Interest was vested upon creation and for a beneficiary to receive a gift they did not have to survive to the time of possession. 3. The court will not reform (rewrite) the will if there is an ambiguity. Reformation: The changing of terms or fixing a mistake. Mistake in execution does not reform either. a beneficiary of a testamentary trust who predeceases the testator/settlor never obtains his recognized property interest.a. Patent: Looks at the four corners of the document. a. Ambiguity: i.

703. Difference with Wills and Trusts: i. accession. a. nonademption Look up. 3. E. § 736.1106(3)(a): If the trust instrument has words of survivorship and the beneficiary fails to survive to the distribution date this is valid intent to show that the beneficiary’s descendants will not receive the gift.1107 Changes in Securities. § 736. § 736. ii. Killer: 1. and the trust will be administered or construed as if the spouse had died on the date of the annulment or dissolution. you have to be a descendant of the beneficiary 736. whether a present or future interest. ii. any provision in the trust that affects the settlor’s spouse will become void. The future interest is treated as a contingent interest. whereby it is contingent upon the beneficiary surviving to the distribution date. you must be a descendant of the testator’s grandparent. § 736.1106(4): The order in which property will pass from a trust if there is no surviving beneficiary or taker.1105: If the settlor created the revocable trust before the annulment of dissolution of a marriage. taking per stirpes what the beneficiary would have been entitled to. NOTE: Terms of the trust are changed for a revocable trust. 466 D. i. (1) (2) Brundage v. In order to take from the antilapse statute under a will. as opposed to being treated as a vested interest.1106 requires a beneficiary of a future interest under either a testamentary trust or an inter vivos trust to survive to the distribution date. pay close attention to distribution date. but not for an irrevocable trust. their descendants will receive the gift. including i. § 736. Loook at 732. iv. and unless the trust instrument or dissolution decree provides otherwise.1106(2): Unless a contrary intent appears in the trust instrument.§ 736. v. iii. with a trust. 15 .1104: A beneficiary of a trust who unlawfully or intentionally kills or unlawfully or intentionally participates in procuring the death of the settlor or another person on whose death such beneficiary’s interest depends (such as another beneficiary who will share in their benefits → does not only apply to the killing of the settlor). A beneficiary’s property interest in an inter vivos trust still arises when the trust comes into existence. However. is not entitled to any such trust interest. Nak of America pg. Divorce: 1. if a beneficiary fails to survive to the distribution date.

1. if an equitable interest is clearly determinable and freely alienable by the trust beneficiary. The settlor can include a provision in the trust document explicitly restricting a beneficiary’s right to voluntarily and involuntarily alienate his interest. Spendthrift Provision: § 736. Restricts the beneficiary’s creditors from getting access to interests in the trust. 1) Type of Creditor: 1. Exceptions that Give Creditors Access: i. i. i. giving away. Now. or otherwise alienating his beneficial interests. Example: No interest of any beneficiary in the income or principal of this trust shall be assignable in anticipation of payment or be liable in any way for the beneficiary’s debts or obligations and shall not be subject to attachment.homestead. the beneficiary’s creditor can generally reach that interest.> pg 475 iii. IX. Attorneys Fee -> 736. § 736.0501 applies: A creditor MAY reach the beneficiary’s interest by attachment of present or future distributions. spendthrift provisions are included in virtually every trust. Trusts Providing Protection from Creditors A. 3. 0504 -> Discretionary Trust: Is subject to a 4. 2. If a spendthrift provision is NOT included § 736. Assuming it is not a discretionary trust/clause ii. These provisions also include language restricting the beneficiary’s creditors from accessing the interests in trust. Exampls on 474 -> 3 different Types ii. Spendthrift Clause . Generally. and such interest shall devolve as though the killer had predeceased the victim. a.0502: Generally include language restricting a beneficiary from selling. Kids. dependent on the victim’s death.” someone who was liable to overspend. v. Creditor Access: 1. Super Creditors – Gov. Florida law will look at 2 factors to determine whether a spendthrift provision or additional creditor protection feature of a trust will in fact block a creditor’s access to the debtor/beneficiary’s trust interest: a. vi. Applies to BOTH revocable and irrevocable trusts.0502 i. 0503(2):There are 3 types of creditor’s (known as special creditors) that a spendthrift provision is invalid against: 16 . iv. assigning. Originally created so that the settlor could protect their assets that they were leaving to benefit another if that other was known to be a “spendthrift. following standard creditor access principles.

If a settlor creates a trust and names themselves a beneficiary. or former spouse can obtain a judgment if the beneficiary is liable to them for support maintenance. 4. b. and education of a designated beneficiary. 17 . health. ii. The creditors can only take up to the amount that can be distributed to the beneficiary. i. And all can be reached by creditors. 1. A beneficiary’s child. All of these provisions can be intertwined and work together. 2. The court can limit the award.i. A discretionary trust with a spendthrift provision CANNOT be reached by creditors. The maximum that the trustee can potentially give to the beneficiary can be reached by the creditor. a. ii. Support Provision: Settlor places assets in trust for the care. a. This applies to discretionary support trusts as well. NOTE: Differs from a self-declared trust whereby the settlor and the trustee are the same person. They can attach to present or future interests. Example: A lawyer. Discretionary Provision: A trustee can make certain decisions as to when to distribute to the beneficiary. Special creditors may reach interests in mandatory trusts whether or not there is a spendthrift provision. Mandatory Provision: A trustee must make distributions pursuant to the settlor’s instruction. and education. ii. and can only be used as a last resort. b. a. comfort. ii. Cannot create a trust to protect their own interests from creditors. the interest the settlor retains in the trust can be reached by creditors. i. 2) The type of interest the debtor/beneficiary has in the trust. 3. A creditor who has provided services for the protection of a beneficiary’s interest in the trust. spouse. maintenance. iii. 2. Example: Trustee shall distribute income as necessary for A’s support. NOTE: To break through the spendthrift provision the creditor must have a court order. Example: Trustee shall distribute all trust income quarterly to A. Self-Settled Trusts: A trust in which the settlor is also a beneficiary. ii. i. A claim of the State of Florida or the United States. Example: A trustee can be given the right to decide which beneficiary out of a group will receive the income. Support provision can be considered a hybrid between mandatory and discretionary provision. iii.

Once a trust meets the requirements of an elective share trust the next step is to determine how the assets of the trust are valued for the purposes of satisfying the surviving spouse’s 30% elective share amount. § 732. 2) The surviving spouse has the right to require the trustee either to make the property productive or to convert it within a reasonable time. i. The spouse receives only testamentary power. Based on the terms of the testator’s will. § 732.2095(1)(c): Qualifying Invasion Power: A power held by the surviving spouse or trustee to invade trust principal for the health. AND 2. There are 3 requirements for establishing a valid elective share trust: a. Rather than transferring property outright to a spouse. b. the value of the spouse’s interest is 100% of the value of the trust if the spouse has both: 1.0505(1)(a) provides that the property in a revocable trust is subject to the claims of the settlor’s creditors. § 736. the more the spouse’s interest in the trust can be used to satisfy the elective share amount. AND b. In contrast. i. a.2095(1)(b): Qualifying Power of Appointment: General power of appointment exercisable by the surviving spouse in favor of the spouse or the spouse’s estate. a creditor of the settlor may reach the maximum amount that can be distributed from the trust to or for the settlor’s benefit.1. § 736. The more rights the surviving spouse has in the elective share trust.2095(2)(b) provides that if the surviving spouse has an interest ina trust that meets the requirements of an elective share trust. 18 . however. 2. Establishing an Elective Share Trust: § 732. the client might transfer assets to an elective share trust. 3. they must have the power to exercise it in favor of their estate without consent of any other person. and maintenance of the spouse. 1) The surviving spouse is entitled for life to the use of the property or to all the income payable at least as often as annually. Elective Share Trusts: 1.0505(1)(b): With regards to an irrevocable trust. § 732. 3) During the surviving spouse’s life no one other than the surviving spouse has the power to distribute income or principal to anyone other than the surviving spouse. a spouse who is dissatisfied with the amount they are being devised may exercise their right to an elective share.2025(2): i. Additional Uses for Trusts A. X. AND c. ii. support.

v. Only the cash surrender value of the insurance policy. Instead of paying life insurance proceeds directly to the surviving spouse. Trusts for Animals: 1. § 732.2095(2)(b)(2): If the surviving spouse receives only a qualifying invasion power but no qualifying power of appointment. The trust can be enforced by someone named in trust or if silent the court can appoint someone or someone can ask to be appointed. If an animal is in gestation. presumably they should be included. such trusts were referred to as Honorary Trusts. the value of the spouse’s interest in the trust is 50%. Using Life Insurance for Elective Share Trusts: i. animal can’t enforce it. only the $20K would be included in the elective estate. 4. ii. Trust terminates when last animal dies. 19 .0408. Prior to the enactment of this legislation.808 trusts can funded with the expectation of receiving life insurance proceeds. Any animal that is alive while settlor is alive can be included in the trust.2095(2)(b)(3): If the trust does not include either power. Under § 733.0408(2): The settlor can appoint someone in the trust instrument to enforce the trust on behalf of the pet. a. If the surviving spouse is the beneficiary. Example: If an insured has a whole life policy with a face amount of $500K and a cash surrender value of $20K. ii. The settlor can also appoint someone to enforce the trust terms. or if includes a general power of appointment but no power of invasion. the decedent may have those proceeds payable to the elective share trust. Trust needs to be enforced by someone. 4. their interest is only valued at 80% of the trust. 3. the full $500K would be counted toward satisfying the 30% share. The trust can be created during the settlor’s lifetime (inter vivos) or as a testamentary trust. i.0402(1)(c)(2): if the trust is in care for an animal as provided in § 736. § 732. under common law. § 736.3. 2. The first exception to the requirement of having an identifiable beneficiary for a valid private express trust is § 736. NOTE: The elective share trust does NOT have to include either provision. B. and not the much larger amount of the policy proceeds. i. iii. i. Cannot add animals after the settlor is dead. iv. But the full proceeds payable to the spouse are counted in determining if the spouse has received the 30% elective share trust. because the trustee was on his honor to carry out these terms. iii. is included in computing the elective estate.

a. Purpose Element: May not be illegal and is capable of being fulfilled AND must be for a charitable purpose.05. 2. AND iii. If the res if the inter vivos charitable trust is land. B. Inter Vivos Charitable Trusts must meet same requirements as an inter vivos private express trusts. and the promotion of government or municipal purposes. Res. Trust intent (and capacity to formulate intent). (Same regarding funds left over after the last animal dies). religion. Substantive Elements of a Charitable Express Trust: i. therefore: i. Charitable Trusts A. 20 . Beneficiaries may be indefinite or charitable organization (definite) a.0405(1): Included but not limited to: advancement of arts. education. Charitable Purpose: § 736. Formalities of a Charitable Trust: 1. Charitable: 1. In the rare case of a revocable charitable trust. A Charitable Trust must have a purpose that benefits the community generally. AND ii. Identifiable beneficiary. sciences. thus: a. Trustee with duties. AND ii.0403(2)(b). Substantive Elements of a Private Express Trust: § 736. AND iii. the trust must comply with the Statute of Frauds for Trusts of Land. The same requisite formalities for private express trusts apply to charitable trusts. but can be particular as to a specific charity. Trustee with duties.0404 i. Testamentary Charitable Trusts must be executed like a will and comply with § 732. ii. XI. C. A revocable charitable trust would be rare because the revocation feature would prevent the settlor from receiving federal income and transfer tax benefits. Res. Valid purpose. b. AND v. v. 1.502. Money in the trust needs to be used for their intended purposes – if funds are excessive the court can distribute it back to the settlor if they are still alive or have it made part of the settlor’s estate. Trust intent (and capacity to formulate intent). any of the trust’s testamentary aspects (regardless of its res) must comply with will formalities as required under § 736.vi. § 689. AND iv. Substantive Elements of a Trust: Private vs. Be careful not to limit the beneficiary so much as to identify a particular person. AND iv.

iii. Beneficiaries have standing to enforce. a. Duration Exception to Charitable Express Trusts: i. iii.225(5)(e): 1. 2. A settlor DOES NOT have standing to enforce unless he is a beneficiary or if it is a revocable trust he can simply revoke it. Not every gift to a charity is exempt from the Rule Against Perpetuities. AND ii. does not apply to private express trusts. A charitable trust does NOT have to be for an indefinite duration. 90 years. § 736. Private Express Trust: i.1. The people in the community cannot enforce the terms of the trust. § 736.0110(1): Charitable organization as beneficiary of a trust a. the settlor could choose to have it terminate after a period of time. Only applicable to charitable express trusts. 2. The interest must vest or fail to vest in 21 years. or illegal to carry out the particular purpose.0110(3): State Attorney General’s Office. If the trust has BOTH private and charitable beneficiaries (mixed) the exception does not apply and may be vulnerable to the Rule Against Perpetuities. A court will allow modification of a charitable trust using the cy pres doctrine if 2 conditions are met: i. ii. ii. E. Charity to Charity Exception: § 689. a. 1) it has become impossible. b. The exception applies only to a purely charitable trust. 2) The settlor manifested a more general charitable intent with regard to the trust rather than a specific intent. ii.0405(3): Settlor can enforce the terms of the trust. Rule Against Perpetuities and Charity to Charity Exception 1. Represents the people. § 736. F. impracticable. D. However. 21 .0413: 1. Standing and Enforcement: Who has standing to enforce a trust? 1. wasteful.0405(2): The court can select a particular charitable purpose or beneficiary when the settlor fails to do so. The settlor of a charitable express trust has the option to establish the trust with indefinite duration. or 360 years. § 736. A future interest in a charity is not vulnerable to the Rule Against Perpetuities if the preceding interest was also held by a charity. whereby the settlor of a private express trust is limited by the Rule Against Perpetuities: a. Charitable Express Trust: i. Cy Pres Doctrine: § 736. the selection must be consistent with the settlor’s intent and the court can only select a beneficiary if they are able to ascertain the settlor’s intent.

Termination and Modification of Irrevocable Trusts A. it has been extended to modification of an irrevocable trust. C. 2) The termination would not jeopardize a material purpose of the settlor creating the trust. Under common law. i. A spendthrift trust was deemed to give a trust a material purpose. it cannot be done if it would be inconsistent with the material purpose of the trust. The trust cannot be enforced for more than 21 years (so is only valid for a limited duration). a trust MAY be created for a non-charitable purpose (private) without a definite or definitely ascertainable beneficiary or for a non-charitable but otherwise valid purpose to be selected by the trustee. EXAM NOTE → Do NOT confuse with the termination or modification of a revocable trust which can be found in § 736.e.0408. 4. the trustee’s consent.. unless the settlor consented. Even if all the beneficiaries agree to terminate or modify the trust. trusts for animals. The Florida Statutes. or after the settlor’s death. Common Law: Non-Judicial Termination and Modification of an Irrevocable Trust: 1. 736. 21 Year Trusts for Non-Charitable Purposes 1. simply all of the beneficiaries must consent. D.0409(1): Except as otherwise provided in § 736. Cy Pres is used to approximate the settlor’s goal as closely as possible while maintaining the public benefits of the perpetual charitable trust. b. 3. XII. NOT appropriate if the settlor provided an alternate disposition in the trust or specific intent. Material Purpose: i. or by any other provision of law. The common law rule was originally just for termination of an irrevocable trust.3. AND ii. Under the common law a trust was deemed to have a material purpose when: a. & 736. modify. Common Law Rule for Prematurely Terminating an Irrevocable Trust: 1. 2. G. or discretionary trust. there is no need for the settlor’s consent. terminate. And a postponement of enjoyment trust was created by the settlor with a material purpose.0412. § 736. An irrevocable trust could be prematurely terminated by the beneficiaries only if there was : i. 2. c. or revoke an irrevocable trust. B. with authorization of 22 . § 736.04115.0602. are all in addition to and not in derogation of the rights under the common law to amend. support trust.04112. The trustee has discretion on when and how to make distributions to the beneficiaries. 1) Unanimous consent of all the trust beneficiaries for such premature termination. ii.

if there is a minor child. b. Amend the administrative or distributive terms. AND a. Since the consent of all the beneficiaries is required. a. § 736.0412(1): i. iii. 2. the termination or modification will be permitted. If the consent of a person cannot be obtained. E. guardian of an unborn child can contest. c. Terminate the trust in whole or in part. And modification or deviation will further the purpose of the trust. or an incompetent person included in the trust as a beneficiary. There must be unanimous consent of all qualified beneficiaries. unborn child. who is a distribute or permissible distribute of trust income or principal.: power of appointment. i.e. § 736. Type of Relief for both non-judicial and judicial termination and modification: i. is often left to be inferred from 1) specific terms of a trust. 2. Unanimous Consent of Beneficiaries: i.0412(3): An agreement to modify a trust is binding on beneficiary who was represented in the agreement by another. it is determined that the reason(s) for termination or modification outweigh the material purpose. 2) the nature of the various interests created. 23 . it can nevertheless be modified by a court if the requested modification was due to: i. Where non-judicial requirements for termination or modification of an irrevocable trust could not be met. Increase or decrease the acts a trustee is authorized to perform. ii. Florida Statutory Law on Termination and Modification: 1. § 736. etc. unless stated specifically by the settlor in the trust. but the termination or modification will ultimately benefit them. Settlor must be dead at the time of the modification or termination.0103(14): A living beneficiary.e. Common Law: Judicial Termination and Modification of an Irrevocable Trust: 1.. In contrast to the common law provision where the settlor must consent. this statute only applies when the settlor is dead. a. Lack of settlor’s consent has no effect if all the beneficiaries agree to the termination or modification. i.0410: Any beneficiary can contest a non-judicial modification. Florida Law: Non-Judicial Termination and Modification of an Irrevocable Trust: 1. These statutes do not apply unless or until the trust has become irrevocable. OR ii. § 736. a guardian can consent for them. or 3) the circumstances surrounding the creation of the trust.the court. The material purpose. OR iii. Change in circumstances not anticipated by the settlor ii. AND a. G. F.

therefore the court can modify the terms in derogation of the settlor’s intent. taking into account current conditions and the best interests of the beneficiaries. In making its determination the court will consider: a. When the terms of the trust are not in the best interests of the beneficiaries. 2001. a. However. and the terms of the trust do not expressly allow for non-judicial modification. the court can modify the terms and should attempt to conform the changes to the extent possible to the settlor’s intent. Florida Law: Judicial Termination and Modification of an Irrevocable Trust: 1.0412(4): a. § 736. b. § 736. In contrast to the common law provision where only the consent of all beneficiaries is required. iv. There must be consent of all trustees.0412(2): i.iii. § 736. 1) The terms and purposes of the trust. c. The modification or termination must not be prohibited under § 736. H.04113: Termination and Modification Consistent with Settlor’s Intent: a. § 736. 1. Need to allege that the terms and purposes of the trust have been fulfilled or have become illegal. ii. Cannot modify or terminate a charitable trust until all charitable interests in the trust are terminated. compliance with original terms would defeat or substantially impair a material purpose of trust or material purpose of trust no longer exists. the beneficiary’s best interest controls. Non-judicial modifications are still permitted even if the trust has a spendthrift provision.04115: Termination and Modification for the Best Interest of the Beneficiaries: a. Under both of these circumstances a trustee or a qualified beneficiary may ask the court to terminate the trust or modify the trust’s terms.04115(3)(b): The settlor can block this best interest modification by using the shorter Rule Against Perpetuities period (21 or 90 years) instead of 360 years by drafting the trust to comply with the shorter period and including trust provisions that expressly prohibit judicial modification. 2. b. OR b. impossible. Cannot modify a trust created after December 31. 2. Unanticipated change in circumstances. 2000 if the settlor of the trust uses the shorter Rule Against Perpetuities period (21 or 90 year) instead of the 360 years for the trust. AND 24 . or impracticable to fulfill. wasteful. i. Florida law permits for Judicial Modification under 2 circumstances: i. Cannot modify a trust created prior to January 1.

XIII. 2. it does NOT automatically bar modification.0410(1): A trust terminates to the extent the trust expires or is revoked (i.b. ii. § 736. Powers of a Trustee: What the trustee is permitted to do. natural termination). ii. NOTES: 1. New trust must include the same beneficiaries. Duties. a. § 736. AND c.e. 2) The surrounding facts. Other Termination. If over $50K need a court order but must prove that it is unwise to continue the administration of the trust. Common Law or implied Powers. Can take out principal and create a whole new trust. See More Under Charitable Trusts Above. Court orders to a trustee. A spendthrift provision is only one factor the courts should consider. § 733. they can decline and court can appoint another trustee.” 3.0413: Cy Pres Doctrine. iii. Cannot impose fiduciary duties on someone. § 736. 25 . 3) All relevant extrinsic evidence. Fiduciary Powers. I. § 736. The trustee can terminate the trust if they conclude that the value of the trust property is insufficient to justify its continued cost of administration. Once it completes its purpose it terminates “naturally. The express provisions of the trust document. A spendthrift clause does not block termination under this section.04117: A trustee can modify the distributive provisions if the trustee has been given the absolute power to invade the principal. as limited by their duties. 4. 1. because a person should not have that burden if doesn’t want to act in that capacity.0701(2): A person designated as a trustee may decline. i. Modification. iii.602: A Personal Representative is a fiduciary who should observe standards of care similar to those of trustees. a support trust). i. ii. § 736. 1. ii. A trust does not live beyond its purpose.0414(1): Termination of an uneconomical trust with a total value less than $50K. Trustee derives powers from 4 sources: i. and Liabilities A. iii. State statutes granting trustees certain powers. i. and Reformation Statutes: 1. As long as power is not limited to specific or ascertainable purpose (i.e. Therefore the court can go beyond the four corners of the trust instrument. B. 2. iv.

C. (2) Except as limited by the instrument. such as a bank that is the trustee investing funds in its own bank. General Duty of a Trustee: i. § 736. § 736. such as: i. Self dealing can include dealing with persons or entities that are associated with the trustee. See . § 736.0801: General duty to administer the trust in good faith and for the benefit of the beneficiaries.0816 contains 25 extensive. the trustee could get the settlor’s consent to do self-dealing.0802(2): Under the common law it was an outright prohibition. (1) All the powers granted in the trust instrument. i. and wide range lists of trustees powers. Example: Bad faith for the trustee to sign checks on the trust bank account. 4. This section lists 7 exceptions where it may be found that the trustee was not breaching their duty of loyalty. 4. (i) All the powers over trust property that an unmarried competent owner has over individually owned property. now they are voidable rather than void. because the purpose and interest will benefit the beneficiaries. Powers that are listed in this section will apply unless the settlor limits in the trust instrument itself. b.0802(5): There are certain lawful activities which are not considered self dealing. Under § 736. Duty of Loyalty: i. a. 3. Duties of a Trustee: § 736. 5. (A conflict between the trustee’s fiduciary duty and personal interests). 3. You can not force a trustee to remain.0802(1): The duty of loyalty requires a trustee to administer the trust solely in the interests of the beneficiaries.0801–736. § 736. Mandatory provision. ii. Duty to Administer Trust in Good Faith: i.0105(2) 2. 1. Generally prohibits self-dealing.0815(2): May not exercise a power that will violate a duty.0815 a trustee has: a. The settlor may use the trust instrument to expand or limit statutory or common law powers: i.0817: i. AND 2. 1. AND b. detailed. § 736. 2. The beneficiaries consented to the self-dealing or if it is a revocable trust.2. ii. (ii) The powers listed in the Code. Duty of Impartiality: 26 . §736.

If you possess a greater degree of skill than you will be held to a higher standard. a. b. or the trustee was selected on the basis of representations of special skills or expertise. Encourages a modern portfolio investment theory. 27 . § 736. a. a.6.0805: The trustee should incur only expenses that are reasonable in relation to the trust property. § 736. Must be able to be loyal to different beneficiaries competing economic interests. § 736. ii. skill. b. c. not just delegating and leaving it all up to them. View the investment portfolio as a whole. a. ii.0806: If the trustee has special skills. § 736. b.11(1)(a): To invest and manage the trust assets as a prudent investor. terms. distribution requirements and other circumstances of the trust. Reviewing the agents actions periodically. § 736. Duty to Administer Trust Prudently: i. Duty to Incur Only Reasonable Expenses: i. including the delegation of investment functions if not capable of making prudent investments themselves. Must have due regard for the diverse beneficial interests created by the terms of the trust.0804: A trustee must administer the trust as a prudent person would. i. 9. Prudent Investor Rule: § 518.0803: A trustee must administer a trust impartially such that the administration is equitable to all trust beneficiaries. and caution. rather than looking at each individual investment and encourages greater return. by considering the purposes. Requires the trustee to exercise reasonable care. the purpose of the trust and the skills of the trustee. skill and caution in selecting an agent and establishing the scope and terms of the delegation. See Prudent Investor Rule here as well. b. the trustee is under a duty to use those skills. 8. Duty to Use Special Skills: i.0807: A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. Cannot favor one set of beneficiaries over the other. Built in tension between income beneficiaries and remainderman beneficiaries – trustee needs to remain impartial between the two. Duty to Prudently Exercise Power to Delegate: i. The trustee must exercise reasonable care. 7.

Duty to Control and Protect Trust Property: i. a. and creditors. If the trustee complies with the terms of this section they are not liable for an action of the agent to whom the function of investing was delegated. Duty to Inform and Account: i. etc. What if a trustee is also a beneficiary? A trustee has to be careful because trustee owes duty to everybody.0809: Trustee shall take reasonable steps to control and protect trust property. prudent investor. 10. § 736. so in order to control or protect property you have to sue. Notify the qualified beneficiaries of the existence of a trust and make accounts detailing the nature of the trust and the amount of the trust and how you have been administering it. v. 12. ii. (12): Can buy insurance for the property 2. On a yearly basis. § 736. b. iv. ii. the trustee has to give an annual account so beneficiaries can see reasonable expenses. 1. but be careful in selection.0812: Trustee has duty to compel the delivery of trust property from any previous trustee or any other persons holding that property.0814: A trustee who is also the beneficiary of a trust with discretionary powers will be prohibited from making discretionary distributions unless a trust instrument states this statute does not apply. impartialities.0811: Imposes on trustee a duty to enforce/defend claims. § 736. §736. (9): Trustee is given power to repair buildings.112(1): Proper Delegation of Investment Function. Trustee can delegate duty to invest.0810(2): Absolute duty to keep trust property separate from trustee’s own personal property.0813: The trustee must keep the qualified beneficiaries reasonably informed as to the trust administration. vi. a.0813(1)(d): The annual accounting goes to qualified beneficiaries in an irrevocable trust.0813(4): If it’s a REVOCABLE trust the accounting goes to the settlor. Can file an action against a trustee for failing to provide beneficiary with an accounting. § 518. a. § 736. Duty Not To Commingle: i.0806: Gives power for trustee to fulfill these duties: i. Have to have necessary powers to accomplish these duties. 11. 28 . § 736. ii. iii. 3. § 736. not just him or herself. An executor stands in the position of a trustee holding the estate in trust for the heirs.c. distributees. § 736. § 736. and supervise.

If beneficiaries have waived accounting of a prior trustee.0810(4) provides exception to this duty: 1. engages in self-dealing. contract. OR 2. Liabilities: § 736. OR 3.431 this is permitted by trust companies. if: 1. Successor trustee is not personally liable to qualified beneficiaries for any actions taken by prior trustee. Damages: What happens is a trustee co-mingles assets.08125: What is successor’s trustee position regarding duties and liabilities? a. Get the trustee’s profits. they will usually pick whichever greater. 4. § 736. § 736. OR 29 .1001(2): The trustee can be enjoined from committing further breaches. 2. and compelling the trustee to pay money or restore property.a. Restore trust to position it was in. a.42 and 660. then successor trustee isn’t required to sue prior trustee for bad accounting. D. there are losses to a trust. 3. Beneficiary decides what they want. because the more money in one fund the more interest that builds and the more money each trust will make.1001–736. or personally to persons who aren’t beneficiaries and to whom he owes no fiduciary responsibilities. AND Not required to sue prior trustee under certain circumstances. i. Under § 660. or trustee made profit for themselves? i. External Liability: A trustee may be also liable in tort. The settlor was a previous trustee and the trustee was a revocable trust. 3.1002(1): Beneficiary can collect from trustee because the trust could have made a profit had it not been for their wrongdoing. OR 2.1018: 1. § 736. Trustee is NOT automatically liable for an investment downturn. b. ii. Liabilities to Beneficiaries: i. 2. removing the trustee. Internal Liability: A trustee who violates any of the trustee’s duties can be held liable to the beneficiaries. § 736. If there’s a breach of duty. you can get greater of these two: 1. A trustee is permitted to “invest as a whole the property of 2 or more separate trusts” as long as distinct interests are clearly indicated. ordering the trustee to account. If a super majority of beneficiaries release successor trustee from liability. Have to keep really good records.

a trustee isn’t personally liable on a contract entered into by trustee in such fiduciary capacity.1013(2): A trustee is personally liable for torts committed in the course of administering a trust or for obligations arising from ownership or control of trust property only if the trustee is personally at fault. Including: possibility of reverter. iii. 2.” 1. § 736. The Rule allows you to control property during your life and after your death dependent on the life in being. trustee would be liable not only for own actions but also for acts of agents based on respondent superior. a. Liability to Third Parties: i. Example: Office building could be an asset in a trust and say that someone slips and falls because there is water on the floor. The trustee would not be personally liable (not cause of water being there). and reversion. 5. Future interests retained by the grantor. If the person slips and falls they may end up suing building that is owned by the trust. right of re-entry. ii.1013(1): Contractor claims by third parties against trustees: a. Under Common Law.1016: Protects third parties who deal with trustees. XIV. Designed to prevent the perpetual entailment of estates and to give them over with free and unhampered conveyances. § 736. B. Interests that are NOT vulnerable to the Rule Against Perpetuities: i. However if the trustee were at the place and was the one who spilt the water. Provides that a person other than a beneficiary who in good faith deals with a trustee is not required to inquire into the extent of trustee’s powers or the propriety of their exercise. a. 2. The rule does NOT apply to charitable trusts. iv. Introduction: 1. unless it must vest. Common Law Rule Against Perpetuities: “No interest is good. Present interests. i. Future interests which are indefeasibly vested remainders. a. if trustee in contract discloses fiduciary capacity. if at all. 30 . If the beneficiaries don’t sue successive trustee within a certain time period. or if contract says otherwise. then the trustee could potentially be liable because they caused the tort iii. § 736. Meaning: The vesting of an estate under a will or deed can be postponed no longer than a life or lives in being and twenty-one years plus the period of gestation. Generally. not later than 21 years after some life in being at the creation of the interest. Rule Against Perpetuities A.4. ii.

If this trust terminates pursuant to this clause. Look to see if there are any natural persons that are alive – they are the life in being. Notwithstanding anything in the instrument to the contrary. 3. The Common Law declares the interest void at its inception if it does not vest within the required period.iv. iii. but if there are no set proportions. in the proportions to which they are entitled to said income. i. Questions to AsK. When was the interest actually created? a. Charity to Charity Exception: A charitable future interest preceded by a charitable interest is not subject to the Rule. then equally. the entire gift is void. 7. Executory interests. These clauses typically tie the length of the trust to particular lives in being at the time the trust is created plus 21 years. iii. Any interests in a class. c. Perpetuities Savings Clauses: Settlor provides in the trust for it to terminate and for the remaining trust property to be distributed to then existing trust beneficiaries within the perpetuities period. 31 . 1. Interests that ARE vulnerable to the Rule Against Perpetuities: i. Revocable Trust: Created either at the death of the settlor or when they are completely incompetent and it then becomes irrevocable. Irrevocable Trust: Created at the time the trust is created. Future interest with a vested remainder subject to complete divestment. Testamentary Trust: Created at the time of the settlor’s death. a. Contingent remainders. this trust shall terminate 21 years after the death of the last surviving trust beneficiary living at [the settlor’s] death. 5. Whom does that created interest vest in? a. b. divestment. the trustee shall distribute the trust principal and accumulated income to the beneficiary or beneficiaries of this trust who are entitled to receive discretionary or mandatory distributions of income. b. Is it the type of interest that we apply RAP? ii. i. 6. Example of a Revocable Trust Perpetuities Savings Clause: a. Look to who the lives in being are at the time of the settlor’s death and measure 21 years and see if the trust could vest or fail within that period. Including: A future interest with a vested remainder subject to 4. ii. If any person could join the class after the perpetuities period.

Must contain the words “This durable power of attorney is not affected by subsequent incapacity of the principal except as provided in 709.” b. Any competent individual over 18. Revocation ends power of attorney ii.225: 1. Death iii. b. Can be revoked by: i. A nonvested property interest in real or personal property is invalid unless: i. it is certain to vest or terminate no later than 21 years after the death of an individual then alive. D. There are 2 options as to when the durable power of attorney becomes effective: 32 . Incapacitation. i. 2. ii. How do you create a Durable Power of Attorney? § 709. XV.08(1): a. NOTE: Know that a will can violate RAP if not properly drafted. 1. unless the terms of the trust require that all beneficial interests in the trust vest or terminate within a lesser period. B. The interest either vests or terminates within 90 years (the wait and see rule) after its creation. Must be very careful because you are giving another person a lot of general powers because they have a court document which says that they can act on your behalf. (Must abide by the Statute of Frauds). The 360 year Wait and See Rule for Trusts: i. OR ii. 1.08. You can have an extensive power of attorney or limited. § 689. Florida Statutory Rule Against Perpetuities: § 689. Who can serve as a durable power of attorney? § 709.C. 2000. Financial institutions and charities can serve. except it lasts beyond the grantor’s incapacity. So when you need that power of attorney after incapacitation. they are already there and you don’t need to go to court for a guardianship because you have planned ahead of time. Must be in writing and contain the same formalities as required for the conveyance of real property. Signed by the principal and 2 witnesses and must be notarized. Documents Used in Wills and Trusts A.225(2)(f): This section applies to a nonvested property interest or power of appointment that is contained in a trust which was created after December 31. When the interest is created. iii. Can substitute the 90 year rule above with 360 years. The following are documents that a testator or settlor may want to execute as a part of their estate planning. Durable Power of Attorney: Similar to a Power of Attorney. 2. Power of Attorney: Gives someone the authority to act on your behalf.08(2): a.

1) The agent is authorized to act as of the time the durable power of attorney is signed.a. 3. Giving them the power to make decisions for you when you cannot make them on your own. E. DNR: Do Not Resuscitate Order: 1. How do you terminate? a. 1. 5. 1 of the witnesses should not be the spouse or a family member. C. 2. 4. Why do people sign living wills? Don’t want to inflict a burden on family (financially or having to decide when to pull the plug). Need 2 witnesses.303: Form of a living will. OR b. § 765. By revocation or death. If always on you. Need 2 witnesses. Rather.203: A designated healthcare surrogate is like doing a durable power of attorney for medical/healthcare services ONLY. § 765. AND is 2) up to 160 acres of contiguous land outside a municipality or ½ acre of land within a municipality. doctors can act on it quickly. death with dignity. i. Homestead Analysis: Homestead protection protects a homeowner. 2.514: 1. b. iv. 3. from certain creditors and may also safeguard the family from transfers or disinheritance. it is sufficient that: 33 . Important for same sex couples because if not legally married you cannot make medical decisions for one another. D. Living Will: Document which permits someone to “pull the plug” for the patient. Better to have as a separate document than in the will. § 765. Requires a doctor’s signature. or the owner’s family. Anatomical gift by using a Uniform Donor Card § 765.000.101: Definitions and general provisions. 2) The durable power of attorney only springs to life when the principal is incapacitated and a physician provides an affidavit attesting to the fact. Incapacity of grantor DOES NOT TERMINATE. Homestead protection applies to homestead property which is: 1) property owned by a natural person. i. The original person claiming the homestead exemption need not hold the property in fee simply title. For patients who may end up in a state in which resuscitation will just be to sustain life. not to save life. or 3) personal property to the value of $1. You can add additional instructions in the form if you wish to.

Otherwise. they may devise homestead property to whomever they wish. passing per stirpes. Although a homestead may be devised. A homestead cannot be devised if the owner is survived by a spouse or minor child. However. the homestead owner may devise the homestead in their will or it will pass through intestacy. Additionally. Once the home obtains homestead status it remains homestead until abandoned. If the testator is not survived by a spouse or a minor child. the surviving spouse takes the property as the surviving owner. only the homestead owner’s surviving spouse and lineal descendants can claim the homestead exemption. A homestead cannot be devised if the decedent owned it with their surviving spouse as tenants by the entirety. A homestead can be forcibly sold to pay: 1) debts for the payment of taxes and assessments. The owner must actually occupy the residence or it must be being prepared for occupancy. Determined the same as domicile. 34 . You can only have 1 primary residence.The individual has legal or equitable interest which gives them the legal right to use and possess the property as a residence. 2) debts for the purchase or improvement of the home. the surviving spouse will take a life estate in the homestead with a vested remainder going to the descendants. or 3) debts for labor performed on the real property. If there is no minor child the homestead can be devised to the surviving spouse. it generally cannot be forcibly sold to pay a homeowner’s creditors. there are 3 exceptions to this. AND The individual must have the intention to make the property their homestead. If the owner is survived by a spouse and one or more descendants. AND The individual actually maintains the property as their principal residence (either have to be a primary resident of Florida or have the intent to remain in Florida). If the owner has no surviving spouse the homestead will pass to their minor children.

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