TRUSTS

1. Introduction
a. Inherently flexible nature i. Derived from case law now codified in FTC b. FTC default rules when the trust does not state otherwise, except pertaining to mandatory terms or characteristics i. Mandatory: 1. Substantive elements for creation of a trust 2. Procedural matters (jurisdiction, venue, limitations on commencing actions) 3. Public policy restrictions on place of administration 4. Effect of penalty, spendthrift and exculpatory clauses 5. Provisions of court powers (assign trustee, modify or terminate trust) 6. Duties of trustees

2. Definitions 736.0103

a. (20) Trust Instrument instrument executed by a settlor that contains terms of a trust, including any amendment to that trust i. MUST have a division between legal and equitable interests 1. This is why sole trustee (legal) CANNOT be sole beneficiary (equitable) ii. Trust = 5 substantive requirements + trust formalities b. (16) Settlor person who transfers assets to or otherwise funds the trust i. If there is more than one person, each is a settlor c. (21) Trustee person charged with managing the trust assets for the benefit of the beneficiaries i. Can either be original trustee, successor trustee or co-trustees d. (3) Beneficiary person who has an equitable interest and for whom the trust is administered e. (14) Qualified Beneficiary a beneficiary living at the time interest is created who will or would be a distribute of trust or trust income f. ***CAN SERVE MORE THAN ONE ROLE*** i. EXCEPT sole trustee cannot be sole beneficiary

3. Methods of Trust Creation 736.0401

a. 736.0401 3 methods of creation i. Transfer: settlor transfers funds to a 3rd party who serves as trustee ii. Declaration: settlor declares himself trustee of trust assets for the benefit of beneficiaries 1. a.k.a. self-declared trusts iii. Power of Appointment: holder of PoA can create a trust by exercising that power b. 2 types of trusts i. Inter vivos: trust that takes effect during the settlors lifetime (assets in inter vivos trust avoid probate) 1. Revocable: settlor retains the right to modify, amend or revoke the trust a. Effect on creditors settlors creditors can reach ALL of the trust assets

b. Effect on taxes ignored fro federal income, estate and gift tax purposes 2. Irrevocable: settlor has to authority to alter the trust a. Effect on creditors settlors creditors can ONLY reach the beneficial interest of trust retained by the settlor 3. ***UNLESS terms of trust state otherwise, the trust is presumed revocable*** (736.0602) a. Not applied retroactively, not applied to trusts created before FTC (2007) i. Policy: changed from trust common law which held the opposite ii. Testamentary: trust that takes effect only upon settlors death; trust created as part of a will

4. Substantive Trust Elements 736.0402

a. .0402 5 elements for express trust: i. Res 1. Trust must have a valid principal or corpus which is satisfied by any type of recognized property interest 2. Timing: trust must have res when trust declared 3. 733.808 trust res valid even if the only property is an expectancy interest in a death benefit a. Life insurance policy b. Health or accident policy 4. Testamentary trust does have res, even though the assets may be presently tied up in probate ii. Settlor Intent to Create a Trust and Capacity 1. 3 intent requirements: a. Settlor must have intended a trust i. Thus, if transferor intended anything other than a trust (gift, bailment) then intent fails ii. CANNOT have an implied trust 1. Issue spotter of intent problems: precatory language a. I wish b. I strongly desire c. I request 2. Courts generally interpret precatory language as NOT legally enforceable for lack of trust intent a. Court have found and can find a legally enforceable trust from precatory language, look at facts of the case to determine b. Settlor must have capacity to formulate the requisite intent i. Opens door to capacity of settlor at the time of trust creation ii. Revocable trust 1. 736.0601 need same requirements as with a will iii. Irrevocable trust

1. Governed by common law and need same capacity as if giving a gift c. Present intent to create the trust i. CANNOT be an intent to create a trust sometime in the future iii. Trustee with Fiduciary Duties 1. 2 part test: a. Trust must have a trustee i. Can have 1 or many; can be people or entities ii. Failure of trust to name a trustee is not fatal court will name a trustee if necessary b. 736.0402 Trustee must have duties to perform i. See infra for trustees fiduciary duties iv. Identifiable Beneficiaries 1. Hold equitable interest in trust property and hold the trustee accountable to perform his duties 2. CAN wear different hats: a. Beneficiary can also be settlor b. Beneficiary can also be trustee, so long as not the sole beneficiary and not the sole trustee i. legal and equitable power in same person and trust merges 1. Merger Doctrine: trust disappears and res belongs to sole beneficiary 3. 736.0402 a trust has a definite beneficiary OR is: a. Charitable trust b. Trust for care of an animal c. Trust for non-charitable purpose pursuant to736.0409 4. 736.0402 beneficiary is definite if: a. Beneficiary can be ascertained now OR in the future subject to any RAP 5. 736.0402 trustee has the power to select beneficiaries from an indefinite class a. HOWEVER, if power not exercised within a reasonable time, then power fails and the property is subject to the power passes to person(s) who would have taken the property had the power never existed i. if power not exercised in reasonable time then the trust may fail altogether v. Lawful Purpose 1. 736.0404 trust purpose MUST be: a. Lawful, AND b. Not contrary to public policy, AND c. Possible to achieve, AND d. For benefit of beneficiaries

5. Formalities
a. 3 factors determine the trust formalities: i. Types of trust 1. Inter vivos

a. Real property must comply with SOF regardless of whether revocable or irrevocable i. Found in 689.05 1. Must be in writing and signed by the party to be bound ii. If transfer real property into trust via deed 1. Deed: signed by the grantor and at least 2 witnesses iii. Constructive trust found after semicolon of SOF 1. Created as equitable remedy, usually to avoid unjust enrichment 2. Have a deed but no trust instrument 3. Imposed when there is a confidential relationship between the parties and the confidence breached OR duress, fraud, undue influence or other wrong-doing a. Constructive trust will not be imposed for a mistake 4. Ex. Wodonos v. Wodonos a. Father deeds interest in apartment building to daughter and son-in-law with daughters name only on the deed b. Son-in-law argues constructive trust bc deeded but no trust instrument i. Son-in-law wanted trust because then kept an interest ii. Daughter wanted deed because then all belonged to her c. There was no evidence to show trust intended; only evidence shows gift to daughter i. No wrong-doing, so court left as a deed to daughter for entire complex 5. Ex. Williams v. Grogan a. Father gave trust to mother and son and son was convinced that to give his mother his trust interest with the understanding she would deed it to him when he was older and more responsible b. Mother willed all of sons interest to other beneficiaries c. Son wanted constructive trust i. Here, confidential relationship breached so constructive trust created 6. Ex. Allen v. Dalk a. Settlor forgot to sign the will and beneficiaries wanted court to impose constructive trust

b. Court held that a settlor mistake is not sufficient to create a constructive trust b. Personal property i. Irrevocable no formalities ii. Revocable any testamentary aspects must be executed like a will 1. Testamentary Aspects: provisions of the trust instrument that dispose of the trust property on/after the settlors death other than to the settlors estate 2. Testamentary a. Since the trust is created as part of a will, it must comply with the formalities of a will i. If formalities not followed, then struck and the rest of the trust remains valid b. Found in 732.502 ii. Type of property in trust (inter vivos) 1. Real property SOF issue supra 2. Personal property a. Irrevocable inter vivos no formalities b. Revocable inter vivos any testamentary aspects must be executed like a will iii. Whether trust is revocable and if so, does it contain testamentary aspects? 1. If there is personal property in a revocable trust has testamentary aspects then those aspects must be executed with the formalities of a will Inter vivos Revocable If any testamentary aspects formalities of a will Follow SOF, any testamentary aspects formalities of a will Inter vivos Irrevocable None Testamentary Trust Formalities of a Will

Personal Property

Real Property

Follow SOF

Formalities of a Will

iv. Oral Trusts 1. 736.0407 no formalities required for an oral trust and the trust only needs to be established by CCE (BOP on proponent) 2. Even though oral trust can be created, cannot do so for: a. Inter vivos trust with real property b. Revocable inter vivos trust with testamentary aspects c. Testamentary trust d. all of these would violate SOF

6. Revocable Trusts

a. 736.0103(15) revocable means revocable by the settlor without the consent of the trustee or any person holding adverse interest

b.

c. d.

e.

i. Beneficiarys interest is created immediately in an inter vivos trust, regardless of whether the possessory right is postponed ii. An interest passes to the beneficiary during the life of the settlor, although that interest does not take effect in enjoyment of possession before the death of the settlor, the trust is not testamentary. Zuckerman Revocable trust res is not part of probate estate, even if there are testamentary aspects i. Avoids probate because the settlor transferred these assets before death Revocable trusts CANNOT be testamentary because once settlor dies he can no longer change the trust (negates revocability characteristic) Can contain interest created during: i. Settlors life, AND 1. Income to settlor for life, then to B ii. After settlors death 1. Income to settlor for life, then to B Governed by 736.0601.0604 i. .0601 if trust does not state otherwise, it is presumed revocable; settlors capacity is the same as needed under a will ii. .0602 revocation and amendment 1. Settlor can revoke or amend by: a. Substantial compliance with a method provided in the terms of the trust 2. If trust silent (no method in trust), modification by: a. Later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the trust b. Any other method manifesting CCE of settlors intent iii. .0603 settlors powers 1. While trust revocable the trustees duties are OWED SOLELY to the settlor a. Trust is no longer revocable after settlors death iv. .0604 limitation on action contesting revocable trust 1. SOL for contesting trust that were revocable immediately prior to settlors death 2. Action barred, unless commenced within the earlier of: a. Time in chapter 95, OR b. 6 months after the trustee sent the person a copy of the trust instrument and notice informing the person of trusts existence i. Person whoever is trying to sue

7. Funding Trusts
a. Revocable Trusts i. Probate avoided ONLY for the assets that were actually transferred into the trust prior to death ii. Transferring assets into trust requires: 1. Assessing nature of assets, AND a. Personal property: i. Publically titled tangible personal property retitle

ii. Non-publically titled tangible personal property often not transferred, BUT can be by drafting an assignment document 1. Assigned by settlor, AND 2. Accepted by trustee 3. essentially the same requirement for gifts a. Intent, delivery and acceptance iii. Intangible personal property contacting applicable entity and re-registering 1. Ex. stock, securities b. Real property usually through deed recorded in the country where the real property is located i. Signed by GR or GR agent in the presence of two Ws, delivery (does not have be recorded, just delivered), language of conveyance and signed by notary (if going to recorded then must be notarized) ii. Trust can also serve as a deed, so long as language of conveyance in document 1. Just trust language is insufficient to transfer real property 2. Follow 689.07 a. State the nature and purpose of trust in deed b. Record trust c. Identify trust, by name or date, in the deed d. Name beneficiaries in deed e. In deed express that trustee should not hold land in FSA 2. Complying with the requisite formalities a. See supra, formalities b. Irrevocable Trusts i. Generally, assets place in revocable trust can also be transferred into irrevocable trust AND in the same manner as revocable trust c. Testamentary Trust i. Created by means of devise which will be effective upon settlors death 1. Four types of devises: a. Specific b. Demonstrative c. General d. Residuary ii. Trust not funded until PR distributes assets to the trustee iii. Devises may abate or be subject to ademption; thus, trust may lose funding d. Transferring Homestead i. To retain homestead protection must be a revocable trust where settlor retains benefits 1. Super-creditors are still able to pierce homestead protection, even if it protected in a trust ii. Do not just put homestead in trust because it does not need the added protection, it has constitutional protection

8. Creditor Protection
a. Generally, creditor stands in the shoes of the debtor i. Thus, creditor can reach all property to which the debtor has access b. Distributive provisions (all work together and overlap): i. Mandatory 1. Trustee must do something, must make distributions pursuant to settlors directions and instructions ii. Discretionary 1. Trustee has the option to make certain decisions a. Who, how much, how often, pay out or reinvest i. Ex. trustee can decide monthly which of A, B, C, and D get income. Can be all four or just one ii. Ex. trustee must distribute at least as often as semiannually iii. Ex. trustee can decide to pay up to amount iv. Ex. trustee may in his sole discretion distribute some, all, or no income to A or instead distribute such income to other trust beneficiaries 1. Who and how much iii. Support 1. Settlor places assets in trust for the care, comfort, maintenance and education of designated beneficiary or beneficiaries a. Can designate ONLY one support or support in GENERAL i. Only one for sons education ii. General to support my wife 2. Bridge between mandatory and discretionary a. Must give property to beneficiary but the how much or when is discretionary 3. Ex. trustee shall distribute such income as necessary for As support, health and education. iv. Spendthrift provisions 1. Provision in trust explicitly restricting a beneficiarys right to voluntarily or involuntarily alienate his interest a. Settlor restricts beneficiarys right to manipulate his interest and prohibits creditors from touching it 2. 736.0502 Spendthrift Provision a. Elements: i. Must restrict both voluntary and involuntary transfers of beneficiarys interest ii. Must state that the interest of the beneficiary is subject to a spendthrift, or similar words b. Effect beneficiary cannot transfer and creditor cannot reach c. EXCEPTION: spendthrift clauses do not prevent the appointment of interests through the exercise of a PoA 3. EXCEPTIONS: spendthrifts do not protect against the following special creditors 736.0503: a. Alimony only as a last resort i. Must exhaust all other avenues of collection; if creditor does, then can attach a trust with spendthrift provision ii. Ex. Bacardi v. White b. Child support only as a last resort

c. Attorneys fees judgment creditor who has provided services for the protection of beneficiary i. Only as last resort d. U.S. government does not have to be last resort; free reign to attach property 4. These special creditors attach trust by: a. Obtain court order attaching present and future interest b. Court can limit the award as it deems appropriate 5. HOWEVER (exception to exception) 736.0504 a. If discretionary trust, trustee cannot be compelled into making a distribution creditors cannot force trustee to make a distribution i. Creditor cannot obtain more rights than the beneficiary had 1. If or when trustee makes the distribution then creditor can garnish the interest b. If discretionary trust and trustee fills both that role and the role of beneficiary AND trustees discretion is limited by ascertainable standard creditor can only reach interest of trustee to the same degree the creditor could reach interest of any other beneficiary (of a discretionary trust) i. Cannot compel distribution c. BUT beneficiary can sue trustee to force distribution if trustee is abusing discretion or failing to comply with distribution scheme established in trust 6. Creditors to beneficiaries with spendthrift provisions can only reach interests in mandatory trusts 7. Ex. no interest of any beneficiary in the income or principle of this trust shall be assignable in anticipation of payment or be liable in any way for the beneficiarys debt or obligations and shall not be subject to attachment 8. Ex. no beneficiary shall have any power to dispose of or charge by way of anticipation or assignment any interest in this trust and the beneficiarys interest shall not be subject to the beneficiarys creditors in any legal or equitable process c. 736.0505 creditors claim against settlor i. Rules for self-settled trusts ii. Whether or not trust contains a spendthrift clause: 1. Property of revocable trust is subject to claims of settlors creditor during settlors lifetime a. Concept: settlor still holds the property since he can change his mind until death 2. Property in a irrevocable trust is subject to settlors creditors to the extent the settlor receives any interest from the trust

9. Elective Share Trusts

a. 732.201 Right to Elective Share i. Surviving spouse of a person who died domiciled in FL has the right to a share of elective estate, to be designated by elective share b. 732.2065 Amount of Elective Share

i. Elective share is 30% of elective estate 1. Elective Estate is the same from wills c. Elective Share Trusts i. 732.2025 elective share trust 1. Trust under which: a. Surviving spouse is entitled for life to the use of the property or to all the income payable at least as often as annually, AND b. Surviving spouse has the right to require the trustee either to make the property productive or to convert it within a reasonable time, AND c. During surviving spouses life no one other than the surviving spouse has the power to distribute income or principal to anyone other than the surviving spouse ii. Once the trust meets the requirement of an elective share trust, then must determine how the assets of the trust are valued for purposes of satisfying surviving spouses 30% elective share amount 1. 100% if spouse has both a qualifying invasion power AND qualifying PoA 2. 80% only has qualifying invasion power 3. 50% only has qualifying PoA 4. 50% neither power iii. 732.2095(c) Qualifying invasion power: power held by surviving spouse or trustee to invade trust principal for the health, support and maintenance of the spouse iv. 732.2095(b) Qualifying PoA: general power of appointment exercisable by the spouse in favor of the spouse or the spouses estate d. Connection with elective estate i. Elective share trust can be used to fund surviving spouses 30% so that no other devises have to abate

10. Life Insurance Trusts

a. Trust that have life insurance policy as part of res i. Trust is the beneficiary of the life insurance policy which is permitted by the expectancy rights b. Primary reasons: i. Tax evasion ii. Secure assets for minor children without having a guardian appointed 1. If guardian appointed then all distributions must occur through court order 2. No guardian, trustee already appointed, more pain-free process a. Dead hand control c. Life insurance policies are a method for funding surviving spouses elective share i. Settlor makes elective share trust (elements above) beneficiary of life insurance policy 1. Proceeds can be treated as satisfying elective share AND only smaller cash surrender value used in calculation of elective estate

11. Trusts for Animals 10

a. 736.0402 trust has a definite beneficiary OR is (2) trust for the care of an animal b. 736.0408 Trust for the Care of an Animal i. Trust created to provide for care of an animal alive during settlors lifetime 1. Alive during settlors life 2. Added to trust during settlors life 3. In gestation 4. Future animals not protected under pet trusts a. Can be protected under 736.0409 for 21 years ii. Trust terminates: 1. Upon death of animal, OR 2. If more than one animal, upon the death of last one iii. Overseer of trustee must be appointed or court will appoint one 1. Concept: animal cannot force trustee to act iv. Trust must be used for its intended use UNLESS the court finds the trust overfunded 1. If excessive funds, then court will take portion not needed by animal back. Funds go to the settlor, if living, or to settlors estate.

12. Termination and Modification of Irrevocable Trust

a. 736.0602 termination, modification and amendment of revocable trusts supra, revocable trusts b. 2 types of termination and modification (governed by both CL and Statute): i. Non-judicial (courts not needed) 1. Common Law a. If all the beneficiaries of an irrevocable trust consent, they can compel the termination or modification of a trust i. Beneficiaries cannot compel if it would frustrate the material purpose of the trust UNLESS: 1. They obtain settlors consent, OR 2. After settlors death, the court determines that the reason(s) for termination or modification outweigh the material purpose b. All beneficiaries: either through direct or indirect consent i. Indirect consent through guardians: 1. Needed for minors or incompetent adults ii. EXCEPTION: if cannot obtain consent of a beneficiary, court may still allow modification if it gives the same beneficiaries equal or greater benefit 1. Only applies to modification, by analogy to termination c. Material purpose: i. If purpose has yet to be fulfilled then trust cannot be terminated 1. Spendthrift trust 2. Postponement of enjoyment trust a. Ex. get principal when reach 25 b. Ex. get principal when graduate law school 3. Discretionary trust 4. Support trust

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d. No court decree needed, trustee is in charge of assuring the rule is applied appropriately and acting upon it 2. FL Statutes a. 736.0412 Nonjudicial Termination of Irrevocable i. 4 requirements: 1. Unanimous consent of the qualified beneficiaries 2. Trustee consent 3. Settlor must be dead at the time modification or termination is sought 4. Modification/termination must not be prohibited ii. Settlor can block this statute if: 1. Uses CL or 90 year RAP, AND 2. Trust does not expressly allow nonjudicial modification ii. Judicial (court steps in) 1. Common Law a. Change in circumstances not anticipated by the settlor AND the modification will further the trusts purpose b. If trustee of aware of these differing circumstances, then trustee has a duty to petition the court for appropriate modification or termination c. Concept: give effect to what settlors intent probably would have been had the circumstances in question been anticipated 2. FL Statutes a. 736.04113 Not Inconsistent with Settlors Purpose i. Trustee or qualified beneficiary may ask court to terminate or modify trust terms ii. Court considers: 1. Terms and purpose of trust 2. Surrounding facts 3. All relevant extrinsic evidence 4. Spendthrift clause, it is not dispositive iii. Petitioner must allege: 1. Purposes of trust have been fulfilled, are illegal, impossible or impracticable to fulfill 2. Circumstances not known or unanticipated by the settlor have come up and compliance with terms of trust would defeat or substantially impair the accomplishment of a material purpose of the trust 3. Material purpose no longer exists iv. Remedies, court can: 1. Amend or change trust terms 2. Terminate trust, in whole or part 3. Direct or permit trustee to act, even though actions may not be authorized or are prohibited by trust 4. Prohibit trustee from performing authorized or required action b. 736.04115 Best Interest of Beneficiaries

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i. Trustee or qualified beneficiary may ask court to terminate or modify trust terms if compliance with the existing terms is not in the best interest of the beneficiaries ii. If modifications made: 1. Court shall modify in a manner that conforms to settlors intent to the best extent possible taking into account the best interest of beneficiaries AND: a. Terms and purpose of trust b. Surrounding facts c. All relevant extrinsic evidence d. Spendthrift clause, it is not dispositive iii. Settlor can block this statute by: 1. Using CL or 90 year RAP, OR 2. Expressly allowing nonjudicial modification c. Other statutes governing modification or termination i. 736.0410 trust terminates to the extent the trust expires or is revoked or is properly distributed pursuant to the terms of the trust ii. 736.0414 termination of non-economical trusts 1. Trustee of trust holding less than $50,000 may terminate the trust if the value of trust property is insufficient to cover administration costs 2. If trust value is equal to or greater than $50,000 then trustee or qualified beneficiary can petition the court to terminate because not worth sustaining iii. 736.04117 Trustees Power to Invade Trust Principle 1. Trustee can modify the distributive provisions of the trust if trustee give absolute power to invade the principal of the trust a. Trustee has power to invade principle in order to make distributions 2. So long as power not limited to specific or ascertainable purpose a. Ex. support trust clearly ascertainable purpose, so trustee cannot modify 3. If trustee has the power: a. Trustee can take principle from one trust and place it in another UNLESS trust expressly prohibits such actions i. essentially creating a new trust 4. NEW trust must: a. Have the same beneficiaries as the original b. Cannot reduce income or annuities c. Cannot disqualify or reduce certain tax benefits 5. Notice: must tell qualified beneficiaries of the first trust at least 60 days prior to action

13. Charitable Trusts

a. 736.0405 Charitable Purposes and Enforcement i. Charitable trust elements: 1. Charitable intent a. Present charitable intent when trust created

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b. Relief of poverty; advancement of arts, sciences, education, or religion; promotion of health, governmental or municipal purposes 2. Indefinite beneficiaries a. Only definite beneficiary is the charity i. No other ascertainable beneficiary because should be created for the good of society (not to benefit one individual) ii. CANNOT be a specified group 1. Ex. 5 women living on 4th floor Adams 3. Enforcement by: a. State Attorney-General b. Charitable organization that is beneficiary of trust c. Settlor 4. RAP a. Charitable trust can live on forever, in perpetuity i. RAP still an issue if trust has both charity and noncharity purposes 1. To son, then to charity ii. Insulted from RAP if charity-to-charity trust 1. To charity A, then charity B b. 736.0413 Cy Pres Doctrine i. Only applicable to charitable trusts 1. Only apply is settlor did not name an alternate take 2. Only apply if settlor had specific intent which is now impossible, impracticable, etc. a. If settlor had general intent then court will direct trustee to distribute funds as near as possible to original purpose ii. If a particular charitable purposes becomes unlawful, impracticable, impossible to achieve, or wasteful court apply cy pres to modify or terminate trust 1. Court can direct trust to be applied or distributed, whole or part, in a manner consistent with the settlors charitable purposes iii. Settlor, trustee or qualified beneficiary can petition the court iv. Ex. charity dies, new statute, not enough money to fulfill purpose c. 736.0409 Non-charitable Trust without Ascertainable Beneficiary i. Trust can be created for non-charitable purpose without a definite beneficiary or a beneficiary to be selected by trustee BUT the trust is limited to 21 year enforcement

14. Resulting Trusts

a. Not an express trust; arises because a trust failed i. A fail-safe trust where settlor intent inferred when original trust failed 1. Legally inferred intent that if the settlor has contemplated these results, he would have intended the property to revert b. Arising from 2 scenarios: i. Corresponding express trust failed or did not completely dispose of trust assets 1. Trust can fail because purposes have become illegal, SOF issue, assets not completely disposed of because assets exceed purposes 2. Effect beneficial interest results back to settlor or settlors successors in interest

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a. If undue influence, fraud, etc. involved then constructive trust created in fairness and to avoid unjust enrichment 3. Ex. to charity A, then to charity B; Charity A and B both close, cannot apply Cy Pres because settlor had specific intent a. Trust now fails intent inferred here i. Trustee holding for beneficiaries that are no longer existent so the res goes back to the settlor or the settlors estate ii. Purchase money resulting trust that arises when the purchase price of property is paid by one person but title it taken by another 1. If payor and title holder are NOT related PMRT created a. Law presumes the person holding title is holding it in trust for the person who paid the purchase price b. Presumption can be rebutted 2. If unrelated potential PMRT a. Presumption of gift intentions i. Must have close familiar relationship b. Presumption can be rebutted

15. RAP
a. 689.225 Statutory RAP b. CL RAP: measuring life in being + 21 years at the time the interest was created i. Testamentary trust interest created at settlors death ii. Inter vivos revocable interest created when trust becomes irrevocable iii. Inter vivos irrevocable interest created when trust created c. Perpetuities saving clauses i. If settlor thinks that trust may violate RAP then can put in a RAP savings clause ii. 3 examples on pages 559 560 1. Revocable trust: notwithstanding anything in the instrument to the contrary, this trust shall terminate 21 years after the death of the last surviving trust beneficiary living at the settlors death. If this trust terminates pursuant to this clause, the trustee shall distribute that trust principle and accumulated income to the beneficiary or beneficiaries of this trust who are entitled to receive discretionary or mandatory distributions of income, in the proportions to which they are entitled to said income, but if there are no set proportions, then equally.

16. Estate Planning Related Documents

a. Power of Attorney i. Gives someone the authority to act on your behalf 1. Can be either extensive or limited ii. Revocation, death and incapacity will terminate PoA 1. Ex. when elderly person, who gave PoA to son, becomes incapacitated; the sons PoA is invalid b. Durable Power of Attorney i. Same as PoA, except that it lasts beyond grantors incapacity 1. Can be general or limited ii. Need magic words DPoA is not affected by settlors incapacity

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c. d.

e. f. g.

iii. Terminated by death or revocation iv. Effective: 1. On date of creation, OR 2. Upon grantors incapacity (springing DPoA upon incapacitation) a. Need doctors affidavits to prove incapacity Deployment contingent PoA i. PoA effective when military personnel deployed Living Will i. Pull the plug document ii. Do not want to be sustained under artificial means Healthcare Surrogate i. Akin to DPoA but specifically limited to healthcare decisions Anatomical Gifts i. Document detailing that someone is an organ donor DNR i. Do not resuscitate 1. Different from living will if I already die, I am gone ii. Requires doctor to sign off on it 1. Only for those patients that resuscitation is prolonging the inevitable

17. Trustees Fiduciary Powers

a. 736.0815 trustees powers are limited to trustees duties i. Trustee CANNOT exercise a power if doing so would cause trustee to violate one or more of trustees duties b. 733.602 PR is a fiduciary who shall observe the standards of care applicable to trustees i. PR has same duties as trustee and visa versa c. Trustee Powers i. Breach of these duties get trustee into trouble: 1. Express provisions of trust as limited by duties 2. State statutes granting trustees certain powers a. 736.0815 general powers i. Can do whatever needed to administer the trust UNLESS the trust states otherwise b. 736.0816 specific powers i. These powers will apply UNLESS the settlor limits these powers in the trust itself 1. Power to sell trust property 2. Power to lease 3. Etc. etc. etc. 3. CL powers 4. Authorization by the courts d. Trustee Duties i. Duty to Administer Trust 1. 736.0801 duty to administer the trust in good faith and in accordance with the terms and purposes of the trust instrument for the benefit of the beneficiaries a. Intrinsic and mandatory ii. Duty of Loyalty

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iii.

iv.

v.

vi.

vii.

viii.

ix. x.

xi.

1. 736.0802 trustee to administer the trust solely in the interests of the beneficiaries a. Transactions entered into by a trustee for his personal benefit is voidable (as opposed to outright void from CL) i. Voidable UNLESS one of ag met b. Self dealing: transactions with persons or entities that are associated with the trustee c. EXEMPTION for lawfully authorized entities i. Trustee can enter into transactions with itself it meets the statute 726.0802(5) Duty of Impartiality 1. 736.0803 trustee must administer a trust impartially such that the administration is equitable to all beneficiaries a. Power struggle between income beneficiaries and remaindermen beneficiaries i. Income want aggressive trustee so they get more funds ii. Remaindermen want conservative trustee so money is left in trust for them Duty of Prudent Administration 1. 736.0804 trustee administer the trust as a prudent person would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust Duty to Incur ONLY Reasonable Expenses 1. 736.0805 trustee to incur only expenses that are reasonable in relation to the trust property, the purpose of the trust, and the skills of the trustee a. DO NOT overspend Duty to use Special Skills 1. 736.0806 if the trustee has special skills, or the trustee was selected on the basis of representations of special skills or expertise, then trustee is under duty to use those skills Duty to Delegate 1. 736.0807 trustee may delegate duties and powers that a prudent trustee of comparable stills could property delegate under the circumstances 2. If delegate, then must be prudent: a. In deciding what to delegate b. Who to delegate to c. Prudent in supervision of delegatee Duty to Control and Protect Trust Property 1. 736.0809 trustee shall take reasonable steps to take control of and protect trust property 2. Need powers to execute this duty as enumerated in .0816 or by trust document Duty to Enforce and Defend Claims 1. 736.0811 part of controlling and protecting trust property Duty to Collect Trust Property 1. 736.0812 duty to compel delivery of trust property from any previous trustee or another person holding the property a. If someone else is holding trust property they should not be holding then trustee has duty to get that property back Duty to Inform and Account

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1. 736.0813 duty to qualify beneficiaries (living beneficiaries) to make and keep accountings with respect to the trust administration a. Show, in detail, the nature and amount of trust property 2. Irrevocable must give annual accounting 3. Revocable must give ONLY to settlor while still revocable xii. Discretionary Powers 1. 736.0814 trustee who is also beneficiary of a trust is prohibited from making discretionary distributions of trust property for himself UNLESS trust instrument expressly states that this statute will not apply xiii. Duty not to Commingle 1. 736.0810(2) trustee has a duty not to commingle trust assets a. Duty not to commingle trust assets with trustees personal assets b. Duty not to commingle trust assets with assets of other trusts 2. EXCEPTION: can commingle if trustee is trustee of two separate trusts so long as keep clear and accurate records e. Breach of Duties i. Liability to: 1. Beneficiaries a.k.a. internal liability a. 736.1012 trustee is not liable to a beneficiary for breach of fiduciary duty if the beneficiary: i. Consented to the conduct ii. Released trustee from liability for the breach iii. Ratified the transaction b. UNLESS (trustee still liable if) i. Consent, release, ratification was induced by improper conduct of trustee, OR ii. At the time of consent, release or ratification the beneficiary did not know of his rights or of the material facts relating to the breach c. If trustee breaches a fiduciary duties then courts allow many avenues of redress to beneficiaries i. Listed in 736.1001(2) 1. Remedies: Money damages, injunction, force accounting, appoint receivership, remove or suspend trustee 2. Damages: Beneficiary can receive the greater of the amount of restoration to trust property or the profit made by trustee of property sold a. 736.1002 2. Limitation on trustees personal liability; 3rd parties a.k.a. external liability a. 736.1013 i. Trustee not liable in tort if tort was not trustees fault ii. Trustee not liable in K in which trustee entered into with 3rd party on behalf of trust if: 1. Trustee disclosed fiduciary capacity, OR 2. K says otherwise ii. Successor Trustees 1. 736.08125 Successor trustees will not be personally liable to qualified beneficiaries and will not be required to initiate lawsuit against wrongdoing of previous trustee, IF:

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a. Settlor mismanaged b. Failure of previous trustee to do accounting if beneficiaries waived the accounting i. If beneficiaries let it happen prior then SOL stops them from bringing suit against successor trustee ii. No codified SOL, just court determination if COA is no longer ripe c. Is super-majority of beneficiaries releases the successor trustee d. If beneficiaries do not ask successor trustee to act, then not liable 18. Wills and Trusts Crossover Issues a. Mistake i. 732.5156 in wills ii. 736.0406 in trusts iii. Mistake in the execution 1. Voided in both iv. Mistake in the inducement 1. Will voided 2. Trust not voided, possibly reformed depending on court interpretation of the statute v. Mistake in drafting 1. Will not invalidated 2. Trust fixed by reformation a. 736.0415 Reformation i. Ct will modify a trust to correct a mistake, even if unambiguous, to confirm the trust to the settlors intent if proved by CCE 1. CANNOT fix errors in a will, but courts WILL ALLOW reformation in trusts to fix errors b. In re Estate of Robinson i. When applying reformation: 1. Look for settlors intent and follow it 2. trust with testamentary aspects may be reformed after the death of the settlor for a unilateral drafting mistake so long as reformation is not contrary to the interest of the settlor b. Undue Influence i. Wills 732.5165 1. See supra ii. Trusts 736.0406 1. If entire trust subject to UI then entirely invalidated, BUT if only portion of trust subject to UI then that portion invalidated c. Ambiguities i. Will court will ONLY interpret here 1. Interpret document based on decedents intent by looking at the document as a whole ii. Trusts courts interpret here and with mistakes 1. Interpret document based on settlors intent d. Lapse and Antilapse i. Wills 732.603 1. See supra ii. Trusts 736.1106

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1. Must survive to time trust is distributed a. Distribution: date in which beneficiary can enjoy interest b. If do not survive until date of distribution, interest is distributed to a substitute gift created for the beneficiarys surviving descendents 2. More extensive than wills because any beneficiary is subjected, not just blood of grandparents 3. Applies UNLESS trust shows a contrary intent e. Divorce i. Wills 732.507 1. See supra ii. Trusts 736.1105 1. Same as wills EXCEPT only applies to revocable trusts f. Murder i. Slayer Statute 1. Wills 732.802 a. Person who kills or have them killed (unlawfully or intentionally kill) cannot benefit from person killed b. Self defense allowed 2. Trust 736.1104 a. Same as wills EXCEPT cannot take if participate in the killing of: i. Settlor, OR ii. Another person on whose death such beneficiarys interest depends b. Can kill anyone else and still receive interest

19. Miscellaneous
a. In Terrorem Clauses: clause purporting to penalize any interested person for challenging the will i. Invalid in FL See Wills Class 732.517 For Will 736.1108 for a Trust

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