trusts Flashcards
Express trust
express intent of owner of property to create trust typically private express trust or charitable trust
mandatory statutory rules
apply regardless of trust terms
- trust creation reqs
- Trustee duties of GF and loyalty to Bs
- trust purpose - lawful, capable of achievement
- court has power to modify/terminate
- effect of spendthrift provisosn
- periods of lmitation for commencing judicial proceedings
- rights of third partties engaging in commercial transactions with trustee
Private express trust - testamentary trusts
- Secret trust - devisee promises testator to hold/manage devised property for someone else’s benefit, promise doesn’t appear in will
- semi secret - will provides for devisee to use devised propety for benefit of an unsepcfiied person
Private express trust - inter vivos
formalities required dpeend on whether trust property is RP and trust is revocable
- RP - in writing and signed by S, RP adequately described
- irrevocable trust - no formalities required (if no RP)
- revocable trust - no formalities required unless there are testamentary aspects (no RP involved)
S can specify choice of law to govern trust,but must be nexus between jx and trust, not contrary to FL law
charitable trusts
- charitable purpose
- indefinite beneficiaries - unless specific chartiable org, Bs must be indefinite
- Not subject to RAP
cy pres docrine - application of trust property to difffernt purposes. If (i) purpose becomes unlawful, impractiable, impossible, wasteful and (ii) property may be applied consistent w/ S’s charitable purposes, court can modify/terminate
Deviation - methods of accomplishing purposes. Trustee can deviate from trust terms if compliance is impossible or would prevent accomplisment of trust purpose
Can be enforced by AG, settlor, or qualified B
remedial trusts
created by operation of law as equitable remedies
no need for creation requirements that express trusts have
- resulting trust - imposed when trust failed or incomplete disposition of trsut property. Court directs trustee to return property to S or S’s estate
- constructive trust - equitable remedy to prevent unjust enrichment of person holding legal title to propery through wrongful conduct
Spendthrift provisions
expressly restricts B’s power to transfer trust interest - both voluntary and involutnary
Exception creditors:
- support claims by spouse, ex-spouse, child
- claims by J creditor who provided services fo protection of B’s interest
- claims of fed governemnt or state of FL
Discretionary trust - distributions
B’s creidtor usually can’t reach B’s interset in discretionry distribution it’s actualyl made
B can bring ation against trustee seeking distribtuion, B’s creditor cannot
Trustee duties
- Adinister trust in GF
- Loyalty - owed to Bs. Trustee can’t engage in acts that personally benefit him, conflict with fiduciary duty, appropriate opportunity of trust. Self-dealing = per se breach of DOl
- Impartiality - applies when there are 2 Bs.
- Reasonable care and prudence
- Delgation - what prudent comparable trustee would do
- Control & protection of trust property
- Separate & identify trust property
- Inform - must keep qulaified B reaosnably informed
- Account - annually, change of trustee, terination of trust
Trustee liability
Breach of trust - violation of trustee duty.
Remedies
- compelling trustee to perform duties
- enjoining from comitting breach of trust
- ordering trustee to account
- suspending/removing trustee
- other appropriate relief
Trustee can be liable for damages
Statute of limitations
Generally, 4 years from breach of trust. Shortened to 6 months if B receives trust disclsoure doc
Action based on fraud - begins when B should have known or learned of fraud
Statute of repose - bars claims by B against trustee after passage of time; later of:
- 10 years after trust terminates or trustee resigns (B had actual knowledge of truste and B’s status)
- 20 years after act/omission of trustee (B had actual knowledge of truste and B’s status)
- 40 years after trust terminates or trustee resigns
Trustee protection from liablity
- reasonable reliance on trust terms
- event affecting admin of trust and trustee lacked knowledge (marriage, divorce)
- consent, ratification or release by B
- exculpatory clause in trust instrument (if fair)
Will subs
- revocable inter vivos trust (avoids probate - assets held by trustee on S’s death)
- pour-over devise - devise in will may be made to trustee of trust, can remain unfunded during S’s lifetime, trust must be executed prior to/same time as will
- life insurnace trust - desginates trustee as B of policy
- UTMA (Uniform Transfers to Minors Act) account - convenient way to set up account for minor, with custodian managin gaccoutn for minor. not a true trust (custodian doesn’t hold legal title), and funds transferred to minor at 21 (or 25 subject to notice to B)
- Totten trust - not a true trust - designation given to bank account in depostior’s name as “trustee” for named B. During depositor’s lifetime, B has no standing to object
- pay on death (POD) bank account - one or more designated POD Bs. When ast account holder dies, paid out to B(s). Goes to estate if Bs are all dead
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Powers of attorney
grant of authority to act on behalf of another prson. Durable POA permits person to act when principal incapacitated
- notaraized, signed by 2 Ws
- Agent - 8+, financial insttution with trust power, business in FL, or authorizatio nto conduct trust business in FL
- Acceptance - exercise authority, perform duties
- Effective upon execution
POAs - Agent duties
mandatory
- act within scope of authority
- not act contrary to reasonable expectations
- GF
- not delegate authority to 3P
Unless POA provides otherwise
- loyalty and sole benefit of principal
- not create conflict of interest
- care, competenene, diligence
- special skills or expertise
Breach of duties - court can termiante authority, remove agent, other appropriate relif
COIs - A must prove by C&C evidence that he acted soley in principals’ interest or in GF therein, and conflict was expressly authorized in POA
