FL TRUSTS
Terms
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- Charitable Trust Lifetime
- Charitable trusts can be perpetual and are not subject to the rule against perpetutities (360 years in Florida).
- Terminating an irrevocable trust?
- Trust beneficiaries can terminate an irrevocable trust prior to the time fixed for its termination if 1. all beneficiaries, all of whom must have capacity, must give consent 2. there is no further trust purpose of the settlor to be served
- Valid Express Trust Requirements?
- 1. settlor with capacity to convey 2. clear and unequivocal present intent to create a present trust relationship 3. competent trustee with duties 4. definite benefiaries 5. same person may not be the sole trustee and sole beneficiary
- Prudent Investor Rule - Generally
- Absent a contrary provision, a trustee has a duty to invest trust assets as a prudent investor would, taking into account both probable income and the safety and preservation of principal Applied in determining the propriety of investments made by a trustee
- 3 Duties of Trustee
- 1) Duty of loyalty (2) Duty to separate and earmark property (3) Duty to perform personally
- Duty to Perform Personally
- EXCEPTION: A trustee in FL may delegate investment and management functions that a prudent trustee of comparable skills could delegate under the circumstances as long as the trustee uses reasonable care, skill, and caution in: (1) selecting an agent (2) establishing the scope and terms of the delegation, and (3) periodically reviewing the agent's actions to monitor the agent's performance and compliance with the terms of the delegation
- Rule Against Perpetuities
- A nonvested property interest in a trust is INVALID UNLESS: (1) when the interest is created it is certain to vest or terminate within 21 years after the death of an individual then living, OR (2) it actually vests or terminates within 360 years after its creation DOES NOT APPLY TO CHARITABLE TRUSTS
- Removal of Trustee - Generally
- A court may remove a trustee if his continuation would be detrimental to the interest of the beneficiaries LOOK FOR: --commission of a serious breach of trust --the existence of a significant conflict of interest --extreme hostility or friction between the trustee and beneficiaries (where such hostility is likely to interfere with the proper administration of the trust)
- Spendthrift Trust - Generally
- A spendthrift turst precludes the beneficiary from voluntarily or involuntarily transferring his interest in the trust, and his creditors are precluded from reaching it to satisfy their claims The purpose is to protect the beneficiary from his own improvidence
- Charitable Trusts - Comparison with Private Trusts
- The rules governing charitable trusts differ from those applicable to private trusts in 3 important ways: (1) a charitable trust must have indefinite beneficiaries, (2) it may be perpetual, and (3) the cy pres doctrine applies
- Charitable Trusts - Purpose
- A charitable trust must benefit the public Examples: relief of poverty, the advancement of education and religion, the promotion of health, and teh accomplishment of governmental purposes, such as parks and museums
- Charitable Trusts - Cy Pres Doctrine
- When a charitable purpose selected by the settler is impractical, if the court finds that the settlor had a general charitable purpose rather than a specific purpose to help only the named charity, it will select an alternative charity to be the beneficiary under the cy pres doctrine, which means "as near as possible"
- Settlor as trustee
- Florida, an otherwise valid inter vivos trust does not become invalid because the settlor retains any one or more of the following powers 1. power to revoke 2. alter, amend, or modify trust instrument 3. power to appoint the income or principle by will or deed 4. power to add or to withdraw from trust 5. power to remove trustees and appoint new ones 6. to act as or to become the sole trustee either at time of execution or thereafter
- Self-dealing transactions voidable unless
- 1. transaction was authorized by terms of trust or approved by court 2. beneficiary failed to bring suit within prescribed time 3. B's consented to T's conduct, ratified the transaction or released T 4. transaction involves a contract entered into or claim acquired before T became T 5. consented to in writing by S while the trust was revocable 6. transaction was one by corporate T that involves a money market mutual fund, mutual fund or common trust fund