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36 Cards in this Set
- Front
- Back
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Florida Trust
Defined |
fiduciary relationship in which a trustee holds legal title to specific property under a fiduciary duty to manage, invest, safeguard and administer the trust assets and income for the benefit of designated beneficiaries who hold equitable title
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Florida Trusts
Types |
1. express
2. resulting 3. constructive |
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Florida Trusts
Express Trusts Creation |
3 ways
1. settlor transfers fund to 3P trustee 2. settlor declares himself trustee For Benefit Of 3. holder of power of appointment can create trust be exerting power |
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Florida Trusts
Express Trusts Classifications |
1. inter vivos - creating during life, avoids probate unless settlor's estate is beneficiary can be:
A. Revocable B. Irrevocable - but presumption that trust is revocable 2. Testimentary - effective upon settlor's death via pour over provision in will, property is probated |
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Florida Trusts
Express Trusts Substantive Elements |
1. Settlor with capacity
2. present intent 3. definite Beneficiary 4. Res 5. Trustee 6. Purpose Note - same person cannot be sole trustee and sole beneficiariary |
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Florida Trusts
Express Trusts Substantive Elements Capacity |
two types
1. Testementary Capacity - for revocable or testementary trust (trust with testmentary capacity) 2. Gift Capacity to make irrevocable trust REquirements for trusts after 7/1/07 created as part of the will: 1. T sign will at logical temporal 2. T sign/acknowledges in the presence of 2 attesting witnesses 3. 2 witnesses must attest to T's acknowledgement of signature 4. attesting witnesses must sign in the presence of T and in the presense of each other |
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Florida Trusts
Express Trusts Substantive Elements Present Intent |
words strong to create legally binding directive, not precatory language
- A trust portion procured by fraud, duress, mistake, or undue influence is VOID. - A presumption of undue influence arrises where a substantial beneficiary who occupies a confidential relationship w/ settlor is active in procuring the trust - precatory language ordinarily does not impose a mandatory obligation |
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Florida Trusts
Express Trusts Substantive Elements Beneficiary |
at least one definite beneficiary presently assertainable or susceptible of identification win the RAP except for charitable trust, holds equitable interest
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Florida Trusts
Express Trusts Substantive Elements Beneficiary Secret Trust |
When an absolute devise by will that makes no mention of trust be extrinisic evidence is admissible to prove by CCE that trustee made an oral promise to hold property in trust results in a CONSTRUCTIVE TRUST imposed against the wrongdoer-trustee
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Florida Trusts
Express Trusts Substantive Elements Beneficiary Semi-secret |
When a will mention trustee holds "in trust" & oral agreement w trustee as to identity of beneficiaries, there are 2 split views
1. Restatement - treats the remedy the same as the secret trust and imposes a constructive trust, reasoning that testator-settlor intended for property to go to benefi 2. Majority view - imposing a resulting trust (implied reversion) to testator-settlor's heirs, reasoning that the testator-settlor violated the requirements in the Statute of wills that the beneficiaries be identifiable from the language of the T's will. |
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Florida Trusts
Express Trusts Substantive Elements Beneficiary Anti-Lapse for Trusts |
If beneficiary does not survive utnil distribution date (time when future interest is to take effect) the beneficiary's D take by substitution per stirpes regardless fo their relationship to settlor UNLESS trust document shows otherwise
WILLS: must be a grandparent or lineal decedent of grandparent for an anti-lapse to take effect |
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Florida Trusts
Express Trusts Substantive Elements Beneficiary Divorce |
Provisions of revocable trust become VOID, construe as though the settlor's spouse died on date of divorce
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Florida Trusts
Express Trusts Substantive Elements Beneficiary Killer |
Provisions of Irrevocable and Revocable trusts become void if a killer kills a settlor or a person on which benefit depends
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Florida Trusts
Express Trusts Substantive Elements Res |
Corpus - generally settlor must fund trust with certain and identifiable res at the time of its creation (contingent, executory, equitable interest), can have certain expectancies (death benefits, life insurance policy proceeds)
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Florida Trusts
Express Trusts Substantive Elements Res Types |
1. Real Property - requires WRITING
2. Personal property - does not require writen document unless the trust has testemntary aspects (ie provisions of the trust instrument that dispose of the trust property on or after death of settlor orther than to the settlors estate) because then must have testementary capacity |
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Florida Trusts
Express Trusts Substantive Elements Res Real Property |
Must comply with SOF (writing, executed by settlor in the name of trust (or else trustee will take FSA), delivered in the presence of 2 subscribing witnesses, and grantor/settlor's signature is notarized in order to be recorded. If SOF is not complied with then either a CONSTRUCTIVE or RESULTING could be imposed
- In florida when property is ownred by 2 individials who are not H&W and there is no indication that the property is held in JTWROS it is presumed to be held in TIC |
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Florida Trusts
Express Trusts Substantive Elements Res Personal Property |
need not comply w/ SOF (can be oral and proven by CCE) unless the trust has testementary aspects b/c then must comply w/ will formalities. If will formalities are not complied with then the trust part has testementary aspects gets severed and is void
- A totten trust is a bank account that testator owns during his lifetime and beneficiary succeeds to funds unless testator revoked the trust by a lifetime act that manifests the intent to revoke - Florida statutes provide that death benefits, including proceeds from an individual life insurance policy, may be payable to a trustee under a trust agreement or declaration of in existence at the time of the death of the insured |
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Florida Trusts
Express Trusts Substantive Elements Trustee |
Trustee with duties to perform, Trust will not fail for lack of trustee, holds legal interst
Competent individual of legal age with legal capacity. Majority rules form co-trustees unless instrument provides otherwise |
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Florida Trusts
Express Trusts Substantive Elements Trustee Duties |
A. Administer Trust in Good Faith
B. Loyalty to beneficiaries C. Impartiality toward beneficiaries D. Administer Prudently E. Incur only reasonable Expenses F. Use Special Skills G. Prudently exercise Power to Delegate H. Control and protect/preserve trust property I. Inform and Account J. Not to comingle |
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Florida Trusts
Express Trusts Substantive Elements Trustee Duties Loyalty |
Loyalty to beneficiaries (self-dealing is voidable)
- trustee cannot sell assets to the trust even if the price is a fair one, - cannot borrow funds, - cannot use trust assets to secure personal loans - cannot gain through her position as trustee - Corporate trustee cannot purchase its own stock as trust investment but may retain if part of original trust property |
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Florida Trusts
Express Trusts Substantive Elements Trustee Duties Administer Prudently |
as a prudent investor looking at the total return of the portfolio and diversification
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Florida Trusts
Express Trusts Substantive Elements Trustee Duties Inform and Account |
Irrevocable trusts gives qualified beneficiaries annual accounting
Revocable trust - give accounting to settlor Trust accounting - income - ordinary expenses charged to beneficiaries, and remander to trust corpus - extraordinary items charged to remainderman trustee fee (split between the two) Trust created after (1/2003) an trustee sends notice to beneficiaries, truste has power to adjust the normal classification rules if necessary to comply with trustee's duty of impartiality - TRUSTEE can convert to Unitrust that pays beneficiary 3-5% of trust value isntead of income |
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Florida Trusts
Express Trusts Substantive Elements Trustee Duties Liabilities |
Each breach of trust is judged in isolation, the beneficiary having a choice of options (VOIDABLE)
Beneficiaries may 1. ratify/waive 2. surchage - sue trustee for resulting loss, - breach of fiduciary duty is automatic wrong - good faith and reasonableness is no defense or justification 3. Trace and recover the property for the trust, imposing a constructive trust 3d Parties 1. tort: trustee is not personally liabile and may be reimbursed/indemnified from trust estate if: - he acted within his trust powers - in course of proper trust administration - and was not personally at fault 2. Contract - although majority rule says trustee is personally liable unless disclosure of trustee's capacity. FLORIDA rule is trustee not personally liable unless a stipulation in the contract imposes prsonal liablity. |
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Florida Trusts
Express Trusts Substantive Elements Valid Trust Purpose |
a purpose that is possible to achieve
A. Charitable B. Honorary C. Private |
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Florida Trusts
Express Trusts Substantive Elements Valid Trust Purpose Charatible |
indefinite beneficiaries RAP inapplicable, CY PRES Doctrine will apply
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Florida Trusts
Express Trusts Substantive Elements Valid Trust Purpose Honorary |
No private beneficiary not for charitable purpose, limited to 21 years, Eg.
- care of an animal - care of cemetary plot |
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Florida Trusts
Express Trusts Substantive Elements Valid Trust Purpose Private Spendthrift |
Provision that explicitly restricts a beneficiaries right to voluntarily or involuntarily alienate interest. Beneficiary may not transfer an interest in violation of a valid spendthrift provision
Creditor may not reach the interest or distribution before receipt by the beneficiary + may not compel a distrubution subject to trustee'd discretion unless 1. Support Obligation (alimony. child support) 2. judgment creditor - who helped create the trust 3. to extent beneficiary's interest not subjec tto spendthrift provision, court may authorize a creditor to reach beneficiary interest by invasion of trust corpus or attachment of distributions 4. In a self-settled spendthrift the settlor-beneficiarycreditors can access the interest the Settlor beneficiary retained in the trust (if irrevocable creditors can force distribution of max amount trustee has authorized to distrubute) or revocable (all the trust) |
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Florida Trusts
Express Trusts Substantive Elements Valid Trust Purpose Private Discretionary Support Trust |
trustee has the duty to suppor beneficiary according to terms of trust, especially for necessities, but must consider all sources of income
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Florida Trusts
Modification/Termination Charitable trust |
WHen a charitable purpose can no longer be accomplished, trust may be reformed under doctine of CY PRES (as near as possible) by looking at the primary intention of the settlor and specific directio of the instrument itself
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Florida Trusts
Modification/Termination Revocable Trust |
Power: unless the terms of trust expressly provide trust is irrevocable, settlor may revoke or ammend a trust created after 7/1/07 (presumption of revocable trust) if a trust is created/funded by more than 1 settlor, each settlor may revoke or amend the trust with regard to the portion or trust property attributable to that settlors contribution
Method: settlor may revoke/amend revocable trust 1. by substnatial compliance with a method provided in the trust 2. if no method, a later will/codicil that expressly refers to the trust, or specificaly devies property that would have passed according to the terms of the trust 3. any other method manifesting a CCE of settlors intent |
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Florida Trusts
Modification/Termination Irrevocable Trust |
Fla statutory provisions are in addition to and not to derogation of common law
1. common law 2. florida statutory law a. nonjudicial modification b. judicial modification |
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Florida Trusts
Modification/Termination Irrevocable Trust nonjudicial |
By trustee: trustee distributed all of res, not economically feasable, trust has res valued than 50k and notice given to qualified benefiaries
under CL - an irrevocable trust can prematurely terminate by the beneficiaries only if there is: A. unanimous consent of the beneficiaries B. a trust has no material purpose that would be violated by early termination (otherwise, need settlor's consent) NOTE: spendthrift provision is a material purpose Florida Statutory laws: 1. after settlors death 2. unamimous consent of the qualified (living) beneficiaries 3. consent of the trustee 4. not be expressly prohibited |
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Florida Trusts
Modification/Termination Irrevocable Trust judicial |
Where the rquirements for nonjudicial modifications cannot be met, an irrevocable trust can never the les be modified/terminated by a court
AT CL: if the request for modification is due change in circumstances not anticipated by settlor Florida statutory law: provides for judicial modification when it is: A. not inconsistent w the settlor intent and - material purpose of trust no longer exist, illegal/impossible/wasteful/impracticable/unanticipated change in circumstances and complaince w original terms would defeat or substantially impar material purpose of trust B. complaince w/ the trust is not in the best interest of the beneficiaries - court must ocnsider spendthrift provision - A court can modify or terminate a trust whether or not the trust contains a spendthrift clause A. at the request of any beneficiary if the modification or termination is not inconsistent with settlor's intent B. at the request of all qualified (living) beneficiaries even if the modification or termination would interfere w/ a material purpose of settlor |
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Florida Trusts
Modification/Termination Irrevocable Trust Settlor Prevention |
Settlor can block either judicial or non-judicial modification if the trust instrument
A. expressly prohibits such a modification AND B. the trust was drafted to comply with the shorter RAP (CL 21 or 90 years instead of Fla. default 360 years) |
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Florida Trusts
Modification/Termination Irrevocable Trust Reformation |
A court may reform the terms of a trust even if ambiguous to conform to the terms of settlor's intent if proven by CCE that both the accomplishment of S's intent and terms of the trust were affected by a mistake in fact or law (either in execution or inducement)
NO trust, conclude w/ Resulting Trust or if no wrongdoing the Constructive Trust but BFP cuts off beneficiary equitable remedies |
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Florida Trusts
Resulting Trust |
arrises
A. upon failure of express trust, or when express trust purpose accomplished & corpus not exhausted B. Purchase money resulting trust, Defenses are gift, loan, gift presumed when person providing consideration bears close family relationship to title holder. |
