FL TRUSTS Flashcards
Trust
An arrangement under which the trustee holds legal title to property for the benefit of the beneficiaries. The trustee has burdens and the beneficiaries, who hold equitable title, have benefits of property ownership. The trustee is subject to fiduciary standards - they are not privileged to use trust property as their own.
Express Private Trust Elements
- A settlor (creator) with capacity to convey
- a trustee
- Delivery of specific trust property
- Definite Beneficiaries
- A present intent to create a trust
- A valid trust purpose
Self Declaration of Trust
Settlor declares themselves trustee of own property for the benefits of others. No delivery requirement.
Testamentary Trust
A testamentary trust is a trust made during the settlors lifetime through their will and is effective at death. A testamentary trust will not fail for want of trustee and must comply with the Statute of Wills.
Trust Creation
- A inter vivos trust may be created by declaration of trust by a property owner, stating that he holds the property as trustee in trust (self declaration trust)
- An intervivos trust may be also created by transfer of property by the settlor during his lifetime (delivery)
- A testamentary trust is created by will.
Intention to Create a Trust
The settlor’s manifestation of intention to create a trust is essential to the existence of an express trust. This intention may be manifested by written or spoken words or by conduct and no particular language is needed. The intention to create a trust must have been manifested by the settlor at the time they owned the trust property and prior conveyance to another.
Precatory Expressions
A settlor’s expression of a hope, wish, or mere suggestion that the property be used in a certain way is called precatory language. The usual inference is that these do not create trusts. The inference can be overcome when
1. Directions are definite and precise
2. Directions are addressed to executor or administrator
3. Failure to impose trust results in unnatural disposition
4. Extrinsic evidence shows that the transferor had been supporting the alleged beneficiary prior to executing the instrument and beneficiary wouldn’t have sufficient support without trust
Trust Purpose
A trust may be created for any purpose that isn’t illegal, contrary to public policy, or impossible to achieve.
Condition attached against public policy
If condition attached is against public policy
- The settlor’s alternative desire controls if expressed
- If a condition subsequent, the condition invalidated but not the trust
- If condition precedent, preferred view is to hold the interest valid unless evidence that the settlor’s wish would be to void the benficiary’s interest altogether if the condition is unenforceable
Trust Property
Trust property must be certain and identifiable. Where there is no specific property, there is no trust. The trust res must be sitting property that the settlor has the power to convey. Debtor cannot hold own debt in trust but can declare himself trustee of particular property from which the debt is to be paid.
Unenforceable Gratuitous Promise Cannot be Res
An unenforceable gratuitous promise can not be the subject of a trust. Where a promise to create a trust isn’t supported by consideration (gratuitous), a trust arises when all elements of a valid trust have been met if, but only if, at that subsequent time the settlor manifests an intention then to create the trust by word or conduct.
Promise Supported by Consideration
When a promise is supported by consideration, a trust attaches automatically when the property is received.
Does a legatee have a property interest that can be held in trust?
Yes
When otherwise empty trust valid
Trust is named as beneficiary of
- life insurance policy
- pension plan death benefit
- gift under settlor’s will
Beneficiaries in Private trust vs Charitable trust
A private trust must have ascertainable beneficiaries and a charitable trust must benefit reasonable large and unidentifiable segment of public
Unascertained Beneficiaries
Beneficiaries need not be identified at the time a trust is created, but they must be susceptible of identification by the time their interests are to come into enjoyment.
Can a trust invalid for want of definite beneficiaries by given effect as a power of appointment?
No under traditional rule but YES under FL
Class Gifts
A private trust may exist for the benefit of members of a class as long as the class is reasonable definite, it is permissible that the members of the class are to be selected by the trustee in their discretion, or that the property is to be held for such members of the class as the trustee finds meet certain requirements.
Unborn Beneficiaries
Beneficiaries need not be alive, they just must be described so that we will know who they are when they are born. Guardian ad litem enforces the trust. No beneficiaries born means that property is returned to settlor by resulting trust
Honorary Trusts
An honorary trust is one without beneficiaries who can enforce the trust, such as a trust for the care of pets. Valid for lifetime of animals. Leftover money returns to settlor by resulting trust.
Pour over Clause
Clause in will that leaves property at the settlor’s death to previously created trust.
Beneficiary as trustee
Sole beneficiary cannot be sole trustee. Beneficiary can be trustee if multiple trustees OR multiple beneficiaries.
Revocable Trusts
Settlor retains right to revoke, alter, or amend the trust. Valid because interest passes to the beneficiaries during the settlor’s lifetime, it merely becomes possessory on settlor’s death. Must comply with formal requirements for making a will. Assets in a revocable trust are reachable by creditors unless there is a spendthrift provision.
Florida Pour Over Requirements
Gift to trust identified in will
Trust instrument executed before or concurrently with will.
Trust executed with formalities required of will.
Totten Trust
Revocable during life by an intent to revoke. Reachable by depositors creditors. Can be revoked by will, withdrawal of funds, any life time act manifesting the intent to revoke.
A bank account depositor declares himself trustee of the account for a person who is to receive the money in the account at the time of the depositor’s death.
Irrevocable Oral Trusts
Irrevocable oral trusts of personal property are enforceable. Trusts containing land must be evidence by a writing that satisfied the SOF. Oral trusts may be established only by clear and convincing evidence.
Oral Promises
Irrevocable trusts of personal property are enforceable; trusts containing land must be evidenced by a writing that satisfies the SOF. oral trusts may be proven by clear and convincing evidence.
Testamentary Trusts
Secret and Semi Secret Trusts
Secret Trust
Where a will makes a gift that is absolute on its face but was in fact made in reliance on the Bs promise to hold the property in trust for another, the intended trust B may present extrinsic evidence of the promise. Clear and convincing evidence. Constructive trust is imposed.
Semi Secret Trust
In a semi secret trust, the will makes a gift in trust but fails to name the B. The fight fails, and the named trustee holds the property on a resulting trust for the T’s heirs.
