FL Trusts

Question 1

elements of a trust

Answer 1

A valid trust must include 1) the present intent to create a trust with no precatory language, 2) a settlor over 18 with capacity, 3) a valid legal purpose, 4) trust res, 5) ascertainable beneficiaries, and 6) a trustee.

Question 2

if a trust is being funded by land:

Answer 2

it must comply with the statute of frauds and therefore be in writing.

Question 3

testamentary trust

Answer 3

has the intent to take effect upon someone’s death.

testamentary trusts need to comply with will formalities: 1) signed by will formalities 2) two witnesses sign in presence of settlor and in presence of each other

Question 4

Elements of a Trust: 1) Present intent to create a trust

Answer 4

No precatory language- nothing about the future. Cant be speculative. Cant say “im thinking about creating a trust”

Question 5

Elements of a trust: 2)

Answer 5

There must be a settlor- person who is creating a trust

i. Must be 18 or older and have capacity.

Question 6

elements of a trust: 3) there has to be trust res.

Answer 6

i. The property itself has to be in existence, must be a description and identify the property
ii. Normally, trust could be oral. But if trust is being funded by land, must comply with SOF
1. SOF would require that the trust be in writing if it involves land

Question 7

elements of a trust: 4) valid legal purose

Answer 7

the trust must have a valid legal purpose

Question 8

elements of a trust: 5) ascertainable beneficiaries

Answer 8

Must include definite, certain people

Question 9

elements of a trust: 6) must have a trustee

Answer 9

i. If a trustee is not named, the trust will not fail. A court will appoint one for you

Question 10

Trusts in FL are:

Answer 10

are presumed revocable unless it expressly states that it is irrevocable.
a. If irrevocable, nothing can change. Creditors cant go after

Question 11

spendthrift provision

Answer 11

b. a Spendthrift provision prevents voluntary or involuntary transfer of the beneficiary’s interest.
i. The beneficiaries can’t get it nor can the creditors get it.
1. Exception for creditors: child support, alimony, or government creditors can reach the beneficiary’s interest
(Where the settlor is concerned that the beneficiaries are going to blow the money)

Question 12

charitable trust

Answer 12

1. No ascertainable beneficiaries. Must have a broad public/charitable purpose.
2. May be perpetual. Not subject to RAP
3. Cy pres: if the purpose of the charity has failed/no longer exists, the court will select another charity to fulfill the intent of the settlor.

Question 13

Cy Pres

Answer 13

if the purpose of the charity has failed/no longer exists, the court will select another charity to fulfill the intent of the settlor.

Question 14

Discretionary trusts

Answer 14

i. When the trustee is given total discretion to distribute the assets. Beneficiary cant tell trustee what to do with the assets.
ii. Trustee distributes on behalf of settlor’s intent.

Question 15

support trust

Answer 15

i. If the trust sets up to support the beneficiary’s daily existence (food, housing, daily life) but no luxuries.

Question 16

Pour Over trust

Answer 16

Contents of a will pours over into a trust.
Elements:
1. The trust must be established before or at the time the will was created
2. Trust identified in the will
3. Trust terms in writing

Question 17

honorary trust

Answer 17

Expenses set aside for grave site or pet

1. Pet must be alive during the settlor’s lifetime
2. Ends when the pet dies
3. Needs to be in writing

Question 18

Totten trust

Answer 18

Bank account where someone takes care of it for you until they’re 18.

Question 19

Equitable trusts:

Answer 19

Something happened and now court the court is going to say we have an official legal trust.

Question 20

resulting trust (type of equitable trust)

Answer 20

a. If the trust itself fails in whole or part: one of the elements fails or formalities fails. Court will enforce it and call it a resulting trust.
b. Can sometimes argue resulting trust if the purpose of the trust is satisfied but there is excess funds/property and it reverts back to the settlor or settlor’s estate

Question 21

Constructive trust (type of equitable trust)

Answer 21

a. Court will enforce or impose a trust to avoid or prevent unjust enrichment.
i. Looking for fraud. If trustee screws up, someone misrepresents, etc

Question 22

Trustee duties

Answer 22

Must be a named trustee

Must be 18 yrs. or older and competent to hold/acquire property 

Must act prudently and in good faith to comply and fulfill the intent of the settlor and to be prudent to look out for the beneficiaries. Trustee has a fiduciary duty to beneficiaries.

In these essays, trustee may be doing something wrong

Question 23

specific duties of trustee

Answer 23

1) act like prudent investor, 2) duty of loyalty, duty to earmark property

Question 24

Trustee has to act like a prudent investor:

Answer 24

a. Invest and manage the property or funds conservatively and prudently. Look out for beneficiaries
b. Reasonable diversification
i. Don’t put all eggs in one basket/all money in one account or stock. No diversification here

Question 25

Trustee duty of loyalty:

Answer 25

No self-dealing. Cannot be investing or managing anything where they themselves are going to benefit.

Question 26

Duty to earmark property

Answer 26

Have to label the property as trust property. No commingling with personal property. Trust property must be kept separate as trust property.

Question 27

Trustee can make reasonable compensation from its work:

Answer 27

Reasonable is based on circumstances. What is the amount, frequency, and time spent on decisions, work, etc?

Question 28

Trustee can be a beneficiary, but

Answer 28

the sole trustee cannot be sole beneficiary. The trust would fail here.

Question 29

Grounds for removing trustee:

Answer 29

Breach of trust. Trustee breached one of their duties. Circumstances show trustee is unfit or lacks capacity to make decisions. Trustee is incapacitated If trustee is sick, surgery, stressed, has trauma etc

Question 30

Termination of the trust

Answer 30

Is possible when: a. The trust purpose is fulfilled b. It is now impracticable to continue the trust Ex a trustee/beneficiary can terminate if funds so insufficient that it doesn’t justify administration c. Current circumstances make it inconsistent with the material purpose of the trust

Question 31

RAP and trusts

Answer 31

1. Trust must vest from 21 years of the death of the life and being, at the time the trust is created, or in 360 years a. If the trust was created prior to Dec 31, 2000, must vest within 90 years 2. Not for charitable trusts

Question 32

trusts and PR

Answer 32

• If trustee is self dealing and a lawyer, conflicts of interest

Question 33

Trusts and property:

Answer 33

Homestead issues, TBE, land and SOF