FL Trusts

Question 1

Intervivos trust

Answer 1

created by grantor during their lifetime and has effect during ones lifetime

Question 2

Testamentary trust

Answer 2

created by the grantor’s will and takes effect upon death
Must comply with will formalities (1) signed by settlor and (2) two witnesses signing is presence of settlor and each other

Question 3

Requirements for creating a trust

Answer 3

1. Present intent (no precatory language; delivery of the deed creating the truth is enough)
2. Settlor (must be 18+ and have capacity)
3. Valid legal purpose
4. Trust res (trust property–needs to be funded by money or land)
5. Ascertainable beneficiaries

Question 4

Oral trusts

Answer 4

are allowed so long as the trust isn’t funded by land (then must comply with SOF)
oral trust and terms need to be established by clear and convincing evidence

Question 5

Class gifts to descendants and other multigenerational classes must be

Answer 5

per stirpes

Question 6

Effect of subsequent marriage, birth, adoption

Answer 6

Does not revoke a previous revocable trust

Question 7

If settlor and spouse get divorced

Answer 7

any provision in the trust for the spouse is void (treated as if spouse predeceased)

Question 8

Anti lapse

Answer 8

ONLY APPLIES TO BLOOD RELATED FAMILY MEMBERS
If a beneficiary dies before the settlor, their surviving descendants get the gift

Question 9

Charitable trust elements

Answer 9

1. no ascertainable beneficiaries
2. for an overall public good
3. may go on forever (not subject to RAP)

Question 10

cy pres doctrine

Answer 10

Applies to charitable trusts
1. If a charitable trust fails because the charity no longer exists or trust purpose is impracticable, the court will choose another charity to fulfil the intent of the settlor
2. If funds are leftover, the court will pick a similar charity to give the leftover funds to, to fulfill the settlor’s intent

Question 11

Equitable Trusts: what are they? what are the types?

Answer 11

Trusts created by the court
1. Constructive Trust: court will impose a trust to prevent unjust enrichment of the beneficiary named in the will
2. Resulting trust: when trust formalities fail in whole or in part, Court will enforce the trust as if the formalities were met (court will also do this if there are leftover funds)

Question 12

If there is an equitable trust, property will be distributed to

Answer 12

the settlor’s heirs

Question 13

Penalty clauses in trusts

Answer 13

unenforceable

Question 14

Trust income paid to beneficiaries

Answer 14

1. Rental income on trust property
2. Interest on bank accounts
3. Cash dividends (NOTE: stock dividends go to principal of the trust, not trust income)

Question 15

Revocable trusts

Answer 15

Settlor can amend or revoke the trust during their lifetime.
In FL, trusts are revocable unless they expressly say they are irrevocable

Question 16

truJudicial modification of irrevocable trust

Answer 16

An irrevocable trust may be modified by the court if:
1. the purpose of the trust has been fulfilled, has become illegal, impossible, wasteful, or impracticable
2. unexpected circumstances would defeat or substantially impair the material purpose of the trust
3. the material purpose no longer exists

court can modify an irrevocable trust if it is in the best interests of the beneficiaries

Question 17

who has standing to seek modification of an irrevocable trust?

Answer 17

trustee or a qualified beneficiary

Question 18

Nonjudicial modification of irrevocable trust

Answer 18

After the settlor dies, the trustee an beneficiaries can modify if they unanimously agree

Question 19

Trustee duties

Answer 19

1. duty to administer in good faith
2. duty of loyalty (no self-dealing)
3. duty of impartiality
4. duty of prudent administration (conservative investing AND reasonable diversification)
5. keep beneficiaries informed of the trust accounting
6. duty to deliver trust property how settlor intended

Question 20

Trustees power to delegate

Answer 20

a trustee can delegate their duties and powers to a prudent trustee of comparable skills

Question 21

Trustees powers

Answer 21

1. to buy, sell, invest, mortgage, or pledge trust property
2. to prosecute, defend, or compromise lawsuits

Question 22

trustee compensation

Answer 22

entitled to reasonable compensation

Question 23

If a trustee breaches their trust duties, the court may

Answer 23

SOCCERR
1. suspend the trustee
2. order a trustee account
3. compel trustee to redress a breach by paying money/restoring property
4. compel trustee to perform their duties
5. enjoin the trustee
6. reduce or deny compensation
7. remove the trustee

Question 24

Beneficiary damages for breach of trust

Answer 24

Beneficiary may recover damages for the resulting loss of the trustee’s breach

Question 25

If trustee commits a breach of trust

Answer 25

it is an automatic wrong and trustee is automatically personally liable

Question 26

attorneys fees and costs

Answer 26

get paid from the trust

Question 27

Exculpatory clauses

Answer 27

May relieve a trustee from liability for negligence but CANNOT relieve a trustee from liability for: RIB
1. Reckless indifference to the trust purpose/beneficiaries
2. Intentional misconduct
3. Bad faith

Question 28

A trustee can be removed if

Answer 28

they breach their duties or the circumstances show the trustee is unfit, or has become incapacitated

Question 29

If co-trustees cannot reach a unanimous decision

Answer 29

they can act by majority vote

Question 30

co-trustees must exercise reasonable care to

Answer 30

prevent another from committing a breach of trust and to redress a breach of trust

Question 31

If a cotrustee dissents to an action, what must they do to not be liable for that action?

Answer 31

must dissent in writing and notify the majority

Question 32

Spendthrift provisions

Answer 32

lock the $ in the trust by preventing creditors from getting to a beneficiary’s interest (except for alimony, child support, and government creditors)

Question 33

Rights of creditors after beneficiary’s interest in a spendthrift trust is distributed

Answer 33

creditors can now go after the money

Question 34

Discretionary trust

Answer 34

trustee has total discretion to distribute the assets as they deem fit

Question 35

If a discretionary trustee refuses to make payments to a beneficiary

Answer 35

they cannot be forced to make payments to the beneficiary’s creditors

Question 36

IF there is no spendthrift provision, the court may allow a creditor to reach a beneficiary’s interest in a trust by

Answer 36

attachment of present or future distributions

Question 37

Creditor claims against settlors

Answer 37

creditors have 2 years to file claims against the settlor after they die–after 2 years expires, creditors lose their right to go after the settlor’s trust