Florida Bar Topics > Trusts > Flashcards

Trusts Flashcards

Florida Bar Topics (73 cards)

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1
Q

The trustee owns ______ title.

A

Legal

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2
Q

The beneficiary owns ______ title.

A

Equitable

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3
Q

What is the “Principle”?

A

Original trust property and any increase in its value.

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4
Q

What is the “Income”?

A

Money invested by the trust.

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5
Q

Who creates the trust?

A

Settlor

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6
Q

What is a Revocable Trust?

A

A trust that can be revoked at any time during the
settlor’s life.

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7
Q

What is a Irrevocable Trust?

A

A trust that cannot be revoked by the settlor.

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8
Q

What is the default status of a trust in Florida?(Revocable or Irrevocable)

A

Revocable

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9
Q

What is a mandatory trust?

A

The trustee MUST make distributions in accordance to the trust instrument.

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10
Q

What is a discretionary trust?

A

Trustee may make distributions in her discretion.

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11
Q

What is a remedial trust?

A

A remedy created by operation of law.

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12
Q

Florida’s Rule Against Perpetuities

A

Wait and see if interest vests in the vesting period to determine its validity.
(Florida has a 1,000-year vesting period for trusts.)

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13
Q

Express Trusts

A

Owner expressly indicates the intent to create a trust.

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14
Q

Private Express Trust: Settlor’s Legal Capacity (Revocable Trusts)

A

18 years old and of sound mind (same as will).

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15
Q

Private Express Trust: Settlor’s Legal Capacity (Irrevocable Trusts)

A

Same capacity as needed to make an inter vivos gift.

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16
Q

Oral Trusts

A

ARE valid in the state of Florida

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17
Q

Exception: When must a trust be in writing? (2)

A

(1) Statute of Frauds OR
(2) Trust Created by Will

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18
Q

Empty Trusts

A

ARE NOT valid in the state of Florida.

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19
Q

Exception: When may a trust be empty? (2)

A

(1) Pour Over Trusts OR
(2) Life Insurance Trusts

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20
Q

Trust Purpose: Valid UNLESS… (2)

A

(1) Illegal OR
(2) Contrary to Public Policy

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21
Q

Can a trustee resign?

A

Yes.

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22
Q

Notice Requirement to Resign from the Trust.

A

30 days

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23
Q

How is a trustee replaced? (3 Ways)

A

(1) Trust Document name the successor;
(2) Beneficiaries unanimously agree on a successor; or
(3) Court appoints a successor.

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24
Q

Requirement to be a Trustee

A

Capacity to hold title and administer a trust.

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25
Who CANNOT administer a trust? (3)
(1) Kids; (2) Prisoners; OR (3) People without Legal Capacity
26
Standard for Beneficiaries
They must be ascertainable.
27
Exception to Ascertainable Beneficiaries (3)
(1) Unborn Children; (2) Class Gifts; AND (3) Charitable Trusts
28
Limit to Class Gifts
Class sizes must be definite.
29
Two Ways to Create a Trust
(1) Inter Vivos Transfer OR (2) Testamentary Transfer
30
Two Types of Inter Vivos Transfers
(1) Declaration of Trust OR (2) Deed of Trust
31
Who is the trustee when there is a declaration of trust?
The settlor.
32
Who is the trustee when there is a deed of trust?
Anyone but the trustee
33
Examples of Charitable Trusts (3)
(1) Relieve Poverty; (2) Advancement of Arts, Sciences, Education, or Religion; AND Promotion of Good Health, Governmental, or Municipal Purposes
34
Charitable Trusts: RAP
Not Applicable
35
Charitable Trusts: RAP (Exception)
If the initial gift was to a charity, but a subsequent gift-over clause makes a gift to a noncharity, RAP applies to the subsequent gift.
36
When does Cy pres apply?
Court can modify a trust if the trust’s charitable purpose is no longer possible.
37
What does Cy pres look like?
(1) General Charitable Purpose (2) Close to the Original Purpose
38
Who can enforce a charitable trust? (3)
(1) Settlor, (2) beneficiary, or (3) state attorney general’s office has standing to enforce the terms of a charitable trust
39
Two Types of Remedial Trusts
(1) Resulting Trusts AND (2) Constructive Trusts
40
When is a Resulting Trust Used?
Used when a trust fails. Trustee must return property to settlor or their estate.
41
Types of Resulting Trusts
(1) Purchase Money Resulting Trust
42
How to avoid resulting trusts?
Gift Over Clauses
43
When is a constructive trust used?
Wrongful conduct (e.g., fraud, undue influence) proved by clear and convincing evidence
44
Two Ways Beneficiaries Lose their Interest
(1) Slayer Rule OR (2) Divorce
45
Lapse
To take a future interest, a beneficiary must survive (i.e., be alive) at the distribution date.
46
Florida's Anti-Lapse Statute
Florida has an anti-lapse statute, which applies to trusts including gifts to (i) a grandparent of the settlor, or (ii) a lineal descendant of the grandparent of the settlor (e.g., a parent).
47
Exception: Florida's Anti-Lapse Statute
Anti-lapse does not apply if the words of the trust state a contrary intent.
48
Are beneficiary interests alienable?
A beneficiary’s equitable interest in trust property is freely alienable unless stated otherwise.
49
When are trusts not fully alienable?
(1) Spendthrift Trusts (2) Discretionary Trusts
50
Limited Beneficiaries and Creditors
A creditor cannot reach trust principal or income until such amounts become payable to the beneficiary, or if the beneficiary can demand it.
51
Spendthrift Provision
Trust expressly restricts the beneficiary’s power to transfer her interest. Thus: Creditors cannot reach trust property until the trustee makes a payment.
52
Exception to Spendthrift Provision (4)
(1) Spousal Support (2) Child Support (3) Claims by judgment creditor who provided services for the protection of a beneficiary’s trust interest; OR (4) Claims of the federal government or the State of Florida.
53
Automatically Terminating Trusts (3)
(1) Expiration (2) Satisfaction (3) Revocation
54
Two ways Revoke/Modify a Revocable Trusts
(1) Substantial Compliance with Terms in the Trust Instrument, OR (2) Any Method Manifesting Clear and Convincing Evidence
55
Multiple Settlors in a Revocable Trsts
If there is more than one settlor, then a single settlor’s revocation or amendment applies to that settlor’s portion of the trust.
56
Revoking an Irrevocable Trusts (3)
(1) Beneficiary and Settlors Agree (2) If the settlor is dead, the beneficiaries can agree to modify an irrevocable trust. If the trust is not serving that material purpose, and all the beneficiaries agree, the trust can be terminated or amended.
57
Judicial Modification (8)
(1) Fulfillment; (2) Illegal; (3) Impractical; (4) Impossible; (5) Best Interest if the Beneficiaries; (6) Correct Mistakes; (7) Tax; AND (8) Uneconomical
58
Two Types of Trustee Powers
(1) Mandatory (2) Discretionary
59
If there are multiple trustees decisions must be...
Unanimous
60
Fiduciary Duties (5)
(1) Loyalty (a) NO SELF DEALING EVER (No Further Inquiry) (b) NO CONFLICT OF INTEREST (2) Impartiality (between all stakeholders) (UPAIA) (3) Care and Prudence (Prudent Investor Rule) (4) Duty to Inform (5) Duty to Make Yearly Accounting
61
When trustee violates a duty owed to the beneficiary, court may: (4)
(1) Compel trustee to perform duties or correct breach; (2) Enjoin further action; (3) Order an accounting; or (4) Appoint a special fiduciary.
62
Trustee Owing Damages for Breach (2 Options)
The LARGER OF (1) Amount required to restore trust value that would have occurred without breach; or (2) Trustee’s profit because of the breach.
63
How long to bring a claim against a trustee?
4 years
64
Exception to Statute of Limitation Against Trustees
Fraud
65
Trustee Liability in Contract Law
A trustee is not personally liable on contracts entered into on behalf of the trust
66
Trustee Liability in Tort Law
A trustee is liable in tort only if personally liable.
67
Will Substitutes (6)
(1) Revocable Trusts (2) Pour Over Trust (3) Life Insurance Trusts (4) Uniform Transfer to Minors Accounts (5) Totten Trusts (6) POD Accounts
68
Uniform Transfer to Minors Account
NOT A TRUST. Terminates at 21
69
Totten Trust
NOT A TRUST. Bank account where depositor (called trustee) names the beneficiary of the account.
70
Power of Attorney
A grant of authority from principal to another person (i.e., the agent) to act on behalf of the principal.
71
Elements of Power of Attorney (2)
(1) In writing (2) with two witnesses
72
Durable Power of Attorney
Permits the agent to act on behalf of the principal even though the principal is unable to act on her own behalf.
73
Agent Requirements (2)
(1) 18 years old OR (2) Business in Florida
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