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Florida Trusts (complete)
Terms in this set (114)
Types of Trusts
Express (Private and Charitable); Implied (Resulting and Constructive)
Requisites of a trust: A _____________ delivers ______________ title of trust assets (a.k.a the __________), to __________, for the benefit of ________________, with the __________________to create the trust for a _____________ ________________
settlor; legal; res; trustee; beneficiaries; intent; valid purpose
A trust is an arrangement under which the "_____________" holds "___________________" title to the property for the benefit of the "_____________________"
Trustee; legal; beneficiaries
Trustee has the "______________" and beneficiaries have "____________" of property ownership.
"______________" "______________" legal title of trust assets, also known as the "___________" to "_____________" for the benefit of "______________" with "___________________" to create the trust for a valid "_________________"
Settlor; delivers; res; trustee; beneficiaries; intent; purpose
Delivery of the res (subject matter) is required for ____________________ ____________________ trusts with ______________ ________________ as trustee, but not to _______________ ______________ of trusts or _______________ trusts
intervivos; third party; self-declaration; testamentary
T's will creates a bequest of $100,000 "To A, to be used for the education of Pete and Repeat" Does A hold $100,000 in trust for T's two children? Who is trustee? Who is beneficiary?
Yes A is not using the assets for self; Trustee = A; Beneficiary = Pete and Repeat
"To A, it is my wish and desire that he look after X and Y" Trust? If not, why?
No trust; permissive language usually does not create a trust. A has no legal duty here.
"To A, it is my wish and desire that he use the income for the support of X and Y until both have attained the age of 18, at which time to distribute the principal of this gift to X and Y." Trust? Why?
Yes; A has the legal duty of overseeing the res until it is to be distributed to the beneficiaries. a Legal obligation has been created
T registers title to stock in the name of T as custodian for the benefit of T, Jr.
1. has T created a trust? what type of trust has been created?
2. what difference does it make?
1. No, T has created a custodianship under Uniform Transfer to Minors Act
2. Custodianship can only benefit one (1) person; this arrangement automatically terminates at the earlier of Jr's death or 21st birthday
T's will contains a bequest: "To bank, as trustee for the benefit of daughter, Jean, provided however that if Jean should ever marry, she shall forfeit her entire interest in the trust."
Validity of clauses that put a restraint on marriage?
VOID; This is an example of an unreasonable restraint on marriage. Such restraints are invalid. Forfeiture conditions restraining marriage are void as a matter of public policy.
In trust, "To pay the income to my husband Mark, until such time as he remarries; thereafter, principal to my daughter, Jean." Valid condition? why?
YES; The purpose of the trust language is not to put a restraint on marriage, but to provide income to the Mark UNTIL he remarries. Does not say BUT until he remarries...
Provisions in a trust which encourage divorce or the commission of crimes and provisions restraining the right to procreate or the free practice of religion
"I make no provision for my son Peter because I disapprove of his marriage outside of our religious faith." Valid? Why or why not?
Yes; Not a condition, motive
The "res" is the _________subject matter of the trust. What are other names for the res?
subject matter; also known as principal, corpus
The subject matter of the trust must be _______________ and _________________
A owes B $10,000. In writing, A states: "I hereby declare myself trustee of the debt which I owe to B." What is this? Is it a valid trust?
A self-declaration of trusts; no, A has not segregated out any specific intent in property and said "this is what I am holding in trust." A's duty to pay B is not a property interest
A owes B $10,000. In writing, B states, "I hereby declare myself trustee of the debt which A owes me, said trust to be for the benefit of C." Valid trust?
Here, yes. B 's side of the relationship is property sufficient to support the trust even if it is intangible -- legal system recognizes it as property. Other examples include copyright or patents
Grandfather tells Uncle that he is leaving Whiteacre (an apartment building) to Uncle in his will. Uncle thereupon records a Declaration of Trust: "I declare myself trustee of my interest in Whiteacre, income to Nephew for life, remainder to his issue." Valid Trust? If not, what do we have here?
No; Uncle's claim is NOT a recognized property interest. It is an expectancy. When Grandfather writes the will, Uncle has no claim or property right. Uncle's expectancy will ripen into a property interest only if: (i) Grandfather dies without changing his will and (ii) the will is admitted into probate. Until then, the law views Uncle's actions as a gratuitous promise to create that trust in the future.
Grandfather tells Uncle he is leaving Whiteacre to Uncle in his will. Grandfather dies and his executor deeds Whiteacre to Uncle, pursuant to the will's terms. Does a trust arise at this time?
No; unless sometime after the Uncle reaffirms his intent by word or conduct to create the trust
Where a promise to create a trust is gratuitous (i.e., NOT SUPPORTED BY CONSIDERATION), a trust arises when all elements of a valid trust have been met, if but only if, at that subsequent time the settlor manifests ___________then to create the trust
What express language or conduct is "indicia of trust", i.e. is necessary to reaffirm the trust?
Express language: "I really meant to put Whiteacre in trust for you."; Conduct: Uncle starts collecting rents from Whiteacre and deliver rent to nephew (began performing the trust)
No trust fails for want of _____________
If the intention to create a trust is clearly manifested but no trustee is named, or the named trustee dies or resigns with no provision for a successor trustee, ___________ __________________ will appoint a suitable trustee to execute the trust.
Ann is the residuary legatee under the valid will of her deceased aunt. Before the taxes and other charges against the estate are known, Ann in writing declares herself trustee of her interest as residuary legatee for the support of her husband and all such children as she should have by him. Thereafter, $1 million is distributed by the executor to Ann as residuary legatee. Valid trust?
Yes. Where the testator has died, although her estate has not been distributed a legatee has MORE THAN A MERE EXPECTANCY, she has an interest which may be the res of a trust or a gift. Even if the amount the legatee is entitled to has not been ascertained, such as where she is a legatee of the residuary estate, The mere expectancy became a present property interest when the Aunt died. Thus, it was certain and identifiable. The right to receive the proceeds must be present, not the date you receive them
F executes a trust instrument naming X as trustee and providing that during F's life, the income, if any, from trust property is to be distributed to F, and at F's death, the income is to go to Wife for life; remainder to F's children. F does not transfer any assets into the trust but instead names the trust (i.e. Trustee "trustee") as beneficiary under several of his INSURANCE POLICIES. Valid trust?
Yes; Statutes or case decisions in most states provide that an otherwise empty trust is valid if it is named the direct beneficiary of a life insurance policy or a pension plan death benefit.
An otherwise empty trust is _________ if it is named the direct beneficiary of a ____________ _________policy or a pension plan death benefit
A private (express) trust must have ____________________________ beneficiaries
A charitable (express) trust must have a _______________ purpose and must be for a __________________ ________________ and ______________________ segment of the _____________ at large
charitable; reasonably large; unidentifiable; public
T's will left $100,000 "to my friend Lemuel Mosley, in trust for my friends." Valid trust? Why or why not?
No. Attempting to create a private, express trust. "my friends" is not an ascertainable class of beneficiaries. We cannot use an objective standard like we can for "my children."
T's will left $100,000 "to my friend Lemuel Mosley, in trust for my friends." Valid power of appointment?
Traditional rule, no. But in Florida: valid as a POA. POA's do not need ascertainable beneficiaries.
What if an appointee does not exercise a POA in the allotted amount of time?
Reverts to appointers estate
T's will left $100,000 "to my friend Lemuel Mosley, in trust for "members of my high school football team." Valid private trust?
Yes because we have an ascertainable class of beneficiaries
T's will left $100,000 to my friend Lemuel Mosley, in trust for "members of my immediate family" Valid trust?
Courts have defined "immediate family" to include those that are potential takers of the settlor under Florida's intestacy statute. If you are not eligible to take under intestacy, you are not considered part of the settlor's "immediate family"
T's will creates a testamentary trust for the benefit of her descendants, with the shares of each left to the discretion of the trustee. Valid trust?
Yes. If the class of beneficiaries is described as "the descendants", the shares of each are left to the discretion of the trustee.
T's will left $250,000 to Bank as trustee, "to pay over the income and dividends to train spiritualistic mediums." What type of trust is T trying to create. Valid trust?
A charitable trust; The issue here is whether training spiritualistic mediums" is charitable. If yes, we have a valid trust as a charitable trust needs no ascertainable beneficiaries and must be for a reasonably large and unidentifiable segment of the public at large.
When Vera Rich learned that her nephew Tom was to be married, she was so pleased that she transferred $100,000 to the Reliable Trust Bank to be held in trust for "Tom's future children." Unfortunately, nephew Tom was jilted within the week by his fiancee, and Vera died shortly thereafter. The trust has no living beneficiaries. Is that a problem? Who enforces the trust? What happens if Tom never has any children
No; the law requires only that the beneficiaries be DESCRIBED, not alive; A guardian ad litem will enforce the trust -- when a person in a suit cannot adequately protect their own interests, a guardian will maybe be appointed to enforce.; If Tom never has any children, a RESULTING TRUST or valid reversion is created. The $ would be returned to Vera Rich's estate and flow through the estate to her successors at death. Tom's future children were beneficiaries. Remedy? A resulting trust. Wen an instrument is silent on a reversion, a resulting trust is created and the court implies the result.
Father devised $5,000 "in trust" to Daughter "as trustee" , to spend the principal and income for the care of Father's 3 dogs. The rest of Father's estate was devised to the Son. Valid trust?
Yes, a valid HONORARY trust
In Florida, honorary trusts for the care of animals are valid for how long?
The life of the animals
Who has standing to enforce an honorable trust?
A designated enforcer by choice or court selection
Who receives the $ when the honoree (the animals) all die off?
If the instrument is SILENT on the issue, a resulting trust is created (i.e. an implied reversion) and the $ therefore goes back to the father's estate
What type of trusts are valid will substitutes?
Revocable trust and bank account trusts
T placed her business realty in a revocable trust, naming herself and her son Charles as co-trustees and designating herself as the sole beneficiary of the income from the trust for her lifetime. The trust further provided that on T's death the trust property was to be held in further trust for Charles's daughter, Betty. T later executed a will devising her residuary estate " to the trust of which I am co-trustee with my son Charles." What do we have here?
A pour-over trust. The will pours over property at death into a previously created intervivos trust. You can have an empty intervivos trust if the trust is named as a beneficiary of a gift under the settlor's will (i.e. if there is a pour over clause)
Can a trustee act as both the trustee AND the beneficiary of a trust?
Yes, but only if the trustee is NOT the SOLE beneficiary of the trust. Nobody would be able to sue the trustee for breach of trust. You can have 2 and 1 or 1 and 2 (trustee and beneficiary) but never 1 and 1.
Are revocable trusts valid?
Yes, in Florida an intervivos trust is valid even though the settlor retains one or more of the following rights and powers: (1) income for life; (2) power to revoke, alter, amend, or terminate; power to designare new beneficiaries; power toremove trustee, or to control trustee in administration of the trust; power to add or withdraw property or cause insurance proceeds or employee benefits to be paid to the trust.
Where a Florida domiciliary creates a revocable intervivos trust, the provisions of the trust which control where the property is to go after the settlor's death are ____________ unless the trust (an any amendments) is executed in the manner required for a __________________
ineffective; will (i.e. signed by testator, witnesses, presence, presence, presence). Testamentary elements, must execute like a will
Is a gift by will to a revocable, amendable trust valid?
Yes, by statute. The trust however must be in existence before or executed concurrently with the will and the trust must comply with the special Florida statute above. The devised property is added to the trust as it exists at T's death, including any amendments after the will was executed.
T places $15,000 in savings account at the First Main Bank. The signature card and passbook bear the statement, "Tom Testator, trustee for Seth Testator." This is his only account at the bank. Over the years he draws out the interest on the account but leaves the principal amount intact. Some years later T dies, leavin a will (executed after the account was created)that provides: "I give all my property, including my bank account at First Main Bank, to my daughter, Dolly". What is this bank account called and who takes the $15,000
a totten trust; Dolly because of the majority rule. Under such rule, a totten trust can be revoked by a depositor's will.
A totten trust is ____________________during life by any manifestations of intent to revoke including withdrawals. The account is reachable by the depositor's creditors during life, and in Florida, may also be reached __________ _____________to the extent the depositor's probate assets are insufficient to pay his creditors.
revocable; after death
_________________ evidence is admissible to show a trust was not intended despite the designation on the signature card
What happens when the beneficiary of a totten trust predeceases the depositor?
Automatic revocation. At this point, the bank account is just a regular bank account.
Irrevocable _____________ trusts of ________________property are enforceable; trusts containing ______________ must be evidenced by a writing that satisfies the _______________ ____ _______________
oral; personal; real property; Statute of Frauds
S promised his widowed sister Marie that he would provide a home for her and her daughter Angie if Marie would keep house and serve as hostess in his home. Thereafter, in the presence of witnesses, S handed his brother Frank a deed naming Frank as grantee (with no mention of a trust) saying, "Hold this property in trust until Marie's death, then convey to Angie." This is in consideration of services rendered by Marie as agreed. Has a valid express trust been created? Why or why not?
No. S has attempted to create an oral trust with land. A trust involving land must be in writing. This is a violation of the statute of frauds.
What equitable remedy may be imposed by the court to force the trustee (Frank) in the above example to deed the property to Marie where there has been fraud in the inducement or there was a confidential relationship when forming the trust?
A constructive trust
Fraud in the inducement may occur where, if, at time land was deeded to T, he orally promised to serve as trustee and he had, at that time, no ______________-to perform his promise.
Grantee-trustee served in _______________ _______________ to the grantor-settlor (attorney-client; business associates; husband-wife; parent-child) and this is a problem because equity's concern that one would take advantage of the _________________ __________________ to enrich himself outweighs Statute of frauds. But grantee-trustee must have agreed to hold property in trust.
Even if the statute of frauds is violated, a ____________________ trust can be imposed as a remedy
T ORALLY agreed with her valet Sydney that she would devise her home to him if he would forgo any weekly salary and remain in T's employ as long as she lived. Sydney fulfilled his commitment, but T never inserted a provision in her will for his benefit. What are Sydney's rights in Florida? What is Sydney's only remedy? What if agreement had been written, signed, and properly witnessed?
In Florida, contracts to devise land or personal property must be manifested by a signed writing and 2 witnesses; Sydney's only remedy therefore would be a suit in quantum meirut for the value of services she rendered to T.; If the agreement had been written, signed, and properly witnessed, Sydney would have been able to get the home. Her remedy is a constructive trust, which is the remedy for a breach of an enforceable will contract
A __________ ___________ is a trust which arises when property is left to a person (the legatee) under a will on the understanding that they will hold the property as trustee for the benefit of beneficiaries who are not named in the will.
Example: Somebody dies with a will with a devise to a named beneficiary and there is no mention of the trust in the will itself. However, outside the will, there will be _____________ ________________ that the named beneficiary was supposed to be a trustee for someone else
Secret trust; extrinsic evidence
T dies leaving a will that devises Greenacre to Jones; the will makes no mention of any trust. T's secretary now alleges that T orally told Jones that Jones was to hold the land as trustee for the secretary's benefit, and that Jones agreed to service as trustee? Can the secretary enforce the promise? Is T's testimony admissible to show the existence of the promise?
Standard of proof in establishing a promise's existence when dealing with a secret trust, which results in a constructive trust being imposed?
clear, satisfactory, and convincing evidence
A constructive trust is imposed to prevent _______________ ______________
A _________________ __________________ trust arises where the will provides that the legatee is to hold the property on trusts, but does not specify the terms of the trust or the beneficiary.
Ts will devises land "to my good friend Sam Smith, as trustee, for purposes I have already communicated to him." Smith is willing to identify T's purposes and intended beneficiaries and is willing to serve as trustee. T's heirs object, saying no valid trust was created. What result under the majority rule?
Smith holds on a resulting trust for T's heirs. The semi-secret trust situation involves no element of wrongdoing so to impress the trust for benefit of intended beneficiaries would violate the requirement of the statute of wills that the beneficiaries be identifiable from language in the will. Smith may not even voluntarily comply.
What are the 4 distinctive rules which apply to charitable (express) trusts?
1. Not subject to RAP or RAA (Rule Against Accumulations -- can last and accumulate income perpetually)
2. MUST be for a charitable purpose
3. Must be in favor of a reasonably large number of unidentifiable beneficiaries
4. When a specific charitable purpose can no longer be accomplished, the trust may be reformed under the doctrine of cy pres ("as near as possible) to reform pursuant to settlor's intent/purpose
Man who lived across the street from Shenandoah Grammar school died leaving a will devising his estate in trust. Trustee to accumulate income for twenty-five years. Thereafter,on Monday before Easter and again on Monday before Christmas in each year, trustee to distribute the income to grammar school students in first and second grades, "the said income to be used by them for educational purposes." His nearest kin, a second cousin, challenges the trust. Valid charitable trust?
What if the instrument stated that the trustee shall expend the income for the educational needs of the grammar school students in the first and second grades." Valid charitable trust?
No and Probably. There's no method for policing the objective of the purpose and therefore, there can be no charitable trust. In the first example, if you gave the income to the 1st and 2nd graders, it is more likely than not they would not use the money for educational purposes -- we cannot trust them to do that because of their age (will probably buy toys or something). Therefore, there is no method for policing the objective of the purpose. How does the trust operate in fact is the real question to determine if valid charitable trust.
Trust providing scholarships at FSU for all residents of SW Tallahassee, Florida whose last name is Powell. Valid charitable trust?
No. This trust will not benefit enough people. You would have to take all the Powell's in SW tallahasee, which, being a rural area as it is will not have a dense population, more so an abundant number of Powells.
Trust created by Iris Smith to provide scholarships at the University of Chicago for all residents of Cook county whose last name is Smith with preference to be given to those person named Smith who are related to her. Valid charitable trust?
Yes. SMith is a very common name; Cook County is densely populated. The trust must affect enough people that society can see the advantage in having the trust exist in the first place. Heavily influenced by local standards. The preference clause does not make it unenforceable, the question again is: how does the trust operate in fact? If only the relatives of Smith are benefitting, it is not a charitable trust, it is a private trust. If random people benefit though it is a charitable trust
When the purpose of a charitable trust is accomplished, the trust should be ______________ and the ________________ and distributed to testamentary trustee's heirs. What are the heirs asking for here?
A resulting trust. The purpose has been accomplished so they want to "imply a reversion" back to them.
Residuary estate devised to testamentary trustee: "to distribute the income to agencies and organizations, as selected by the trustee actively engaged in research for the prevention of polio." In applying the cy pres doctrine and seeking to establish the primary intent of the settlor, ask: Why did the settlor create the trust? If solely to research polio, then the trust is over and should be _____________________. Had the purpose of the trust been to research general diseases, this intent is a "broader interpretation" than the specific direction of researching polio. The Court will then _____________the trust and reallocate the $ to a new use which is as near as possible to the original trusts' purpose.
A court will deviate under a primary intent-specific direction reasoning if continuing to adhere to the specific direction would ________________the primary purpose of the trust
In Florida, a court can apply the cy pres doctrine to modify either the _________________ and/or the _______________terms of the trust when __________________circumstances render them obsolete or inconsistent with the settlor's intent.
administrative; dispositive; unforeseen
T creates a trust with income required to be distributed to Sam for life; remainder to Sam's sons. Sam and the Trustee have a falling out and the Trustee stops distributing the income to Sam. What are Sam's rights? Sam wants to sell his income interest. Can he? Sam then runs up a large bill at Sears. What are Sear's rights to satisfy their claim out of the trust?
Sam can go to court and get a court order for the trustee to perform his duties as trustee. Yes; an income interest in a trust is just like any other security in property. Sam's RIGHT to receive the distributions is the res of the trust. Sears has no right to get the actual trust assets because Sears does not own the assets, Sam does. Sears can "garnish the income stream": Court order directing trustee to distribute income to Sears until the bill is paid, and then you may resume distribution to beneficiaries.
A _____________________ clause creates an _______________ trust preventing creditors from attaching the interest of a trust beneficiary in the trust before that interest is __________________to him or her
spendthrift; irrevocable; distributed
"no interest of any beneficiary herein shall be assignable by such beneficiary nor shall it be subject to the claims of the beneficiaries creditors." What type of clause is this?
In Florida, spendthrift clauses are ______________ and _______________ only if the provision restrains both voluntary and involuntary transfer of a beneficiary's interest. This subsection does not apply to any trust the terms of which are included in an instrument executed before the effective date of this code.
-- when the clause is in the trust, a creditor cannot force the assignment or garnish an income stream UNLESS the creditor is going after ___________________ obligations, _______________ ______________ obligations, or are a __________________ creditor, such as an attorney
valid; enforceable; alimony; child support; judgment
What if a spendthrift clause precludes involuntary alienation ONLY. Valid?
No, invalid and unenforceable. In Florida, we can disable ALL alienation but not pick and choose the types of alienation we want to prevent. All or nothing.
Involuntary alienation refers to what?
M's will devised Blackacre to Trustee "to apply the income for the support of my husband, Mr. M, during his lifetime to the extent necessary in the sole discretion of my trustee; remainder to my son." Trustee now holds Blackacre and accumulated income of $5,000. She has been notified of the following claims. Advise her as to the following claims: Mr. M, gainfully employed, demands distribution of the $5,000 income. Must the trustee distribute? if the trustee decides not to distribute, can M get a court to overrule the trustee's decision?
This is a discretionary support trust. Distributions are tied to support. The trustee may properly decide not to distribute if Mr. M cannot support himself. The trustee may take into account the resources available to the beneficiary support and decide not to distribute; Probably not, courts are reluctant to question a trustee's decision when the trustee has been given extended discretion.
A trustee has extended discretion if the instrument includes words such as "_____________" discretion, "_______________" discretion, and "_______________" discretion
sole; absolute; uncontrolled
"To accumulate or distribute income to my husband, Mr. M, inthe sole discretion of my trustee . . . " (i.e. no standard of support). What type of trust? If Mr. M demands payment of the $5,000 income, what is the result?
Pure discretionary trust; Out of luck. In a pure discretionary trust, the beneficiary has no right to compel distributions out of the trust, because he has no right to receive them. he has a right to an honest food faith, properly motivated trustee.
A trust created by an individual for his or her own benefit is sometimes called a ______________-_____________ trust, and may be a kind of asset-protection trust.
D transfers stock to an inter vivos trust, the terms of which provide that the income is to be distributed to D for his life, remainder at his death to his children. The trustee, BANK, has authority "to pay out of trust corpus such sums as BANK, in its sole discretion, deems advisable for D's comfort and support. [support trust]" The trust instrument also contains a spendthrift clause. D runs up some bills he in unable to pay. What are the creditor's rights?
In self settled trusts, _______________ ________________ are unenforcable so the creditor can reach any right to distributions in the trust. D's creditors may reach the actual trust property if D has the power to ______________the trust OR if the trustee has ___________________ authority to make distributions to settlor.
spendthrift clauses; revoke; discretionary
Regarding Trust Administration, what are the main duties of a Trustee?
(1) Duty of Loyalty (i.e. no self-dealing)
(2) Duty to invest prudently (prudent investor rule)
(3) Duty to preserve and protect trust property
(4) Duty of impartiality
(5) Duty to account and inform
Residuary estate devised to trustee includes 500 shares of Acme stock. Considering the stock to be an inappropriate holding for the trust, the trustee sells the stock to itself at its market price on the date of sale. (The stock is listed on the NYSE so there is no doubt about its value). The stock goes up in value; what are the trust beneficiaries rights?
The beneficiaries can trace and recover the stock for the benefit of the trust. Trustee cannot self-deal which includes no borrowing trust funds, no selling assets from one trust to another trust, a corporate trustee cannot purchase its own stock as an investment, a trustee who is also a trust beneficiary cannot make discretionary distributions directly or indirectly to herself. This limitation does not apply to the settlor of a revocable trust, to a trust where the settlor's spouse is the trustee, or to any distribution for the trustee/beneficiary health, support, maintenance, or education. Trustee can neither engage in any transaction where she seeks to secure a personal gain.
Prudent Investor Rule: Except as otherwise provided, a __________________ must ________________property as a ____________________ _______________ would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust and by pursuing an overall ________________ strategy reasonably suited to the trust. A trustee must adhere to a standard of _____________________ care, skill, and caution in making investment decisions
trustee; invest; prudent investor; investment; reasonable
Prudent investor rule elements:
1. Duty not to _______________ (segregate assets from other assets like personal assets)
2. Duty to balance _____________ with potential ______________ (the riskier an investment, the higher upside potential may be)
3. Duty to _______________ investments ******* (not all in one company)
4. Duty to keep trust _________________ (don't keep cash under bed in a box)
commingle; return; risk; diversify; productive
The portfolio view of the prudent investor rule says that the fact that one or more assets held by a trust are underperforming is not a problem as long as the _____________ ___________ of the portfolio is reasonable
total return (income and capital appreciation)
Green, Grey, and Gary are co-trustees appointed under the will of Jackson. A clause in the will provides that "my trustees shall have the power to lease, mortgage, and sell, any real property held by them in trust." May green enter into the lease alone or does he need other co-trustees signatures?
He needs 1 of 2 of the signatures, not both. In Florida, co-trustees may act by majority rule
In Florida, co-trustees may act by _________________ _______________
If one of two co-trustees resign, must the other trustees secure a replacement?
Only if required by the instrument
A trust instrument states there are to always be three trustees. Who has the authority to appoint a successor to serve in the former trustees place? In Florida, a vacancy can be filled by the __________________ agreement of the ___________________ (i.e. living) beneficiaries. If all agree, they can nominate a successor
Fiduciary duties of trustee?
No self-dealing, duty to act as prudent investor; overall investment strategy related to purpose of trust; etc.
A trustee may be liable for ________________ of ____________, liable in ______________, and/or liable in __________________- A breach of trust has occurred where the trustee has breached his _________________--duties
Breach; trust; tort; contract; fiduciary
Whenever a trustee breaches a fiduciary duty (self-dealing, improper investment etc.), he has committed what is known as a _____________ of _____________;the beneficiary may (1) ______________ the transaction and ______________the breach; (2) ___________ for the resulting loss (name of the action is ____________________; (3) in self-dealing cases, he can _____________ and recover the property for the trust (e.g. trustee borrows trust funds and invests proceeds, if value of purchased property goes up in value, beneficiary can claim the property for the trust)
Breach; trust; Ratify; sue; surcharge; trace
A third party may sue the trustee in his representative capacity for torts committed by the trustee; A trust may not be sued_______________________ unless he was ____________________at fault
Sam is trustee of a trust which specifically limits trust investments to certificates of deposit. Despite this, Sam invests half of the trust corpus in X stock and the other half in Y stock. In short order, the value of X stock triples, while the value of Y stock declines. Overall, Sam shows a much greater return than a bank C.D. could have earned. Any problem for sam?
Purchase of x stock = breach, but trustees will likely ratify and waive this decision because stock value went up; Purchase of y stock = went down in value so trustee's will likely surcharge for the loss in value
Under trust accounting principles, the ____________________ beneficiaries get the net _____________ while the __________________ are entitled to the trust _____________ at the termination of the trust. Thus, items of receipts and expenditures must be allocated to the correct account: either the income or corpus (principle) account
income; income; remaindermen; corpus
Interest, rents, dividends on stock paid in cash are all _______________ and go to the ____________________ account. __________________ from the sale of trust assets, stock splits, and dividens are put into the ___________ account
income; income; proceeds; corpus (principle)
Ordinary expenses are incurred in the production of ______________. Extraordinary items, capital improvements, and income taxes incurred on sale of property are charged to ______________-
In Florida, a trustee may adjust the normal classification rule if necessary to comply with the trusts duty of ______________-
A private trust may be _________________, _____________________, and ___________________
modified, terminated, and reformed
A settlor, acting alone, can ___________, _____________, or ________ a trust if the instrument (1) does not explicitly state the trust is _______________, and (2) the settlor substantially complies with all provisions in the trust instrument pertaining to the form that the proposed action must take (writing, delivered to trustee, etc.)
modify, terminate, revoke; irrevocable
A court can _____________ or ____________ a trust whether or not the trust contains a spendthrift clause if, at the request of any ______________the modification or termination would not be inconsistent with the settlor's ________________; or at the request of all ___________________ beneficiaries even if the modification or termination would interfere with the ___________ ____________of the settlor
modify; terminate; intent; qualified; material purpose
W comes to you for advice. She wants to create a trust for her twin children but she is concerned that after he death the children might try to get the court to modify the trust in a manner that is inconsistent with her intent. What advice would you give to her? You should tell her that a settlor can prevent modifications and terminations which would be inconsistent with the settlor's intent by: (1) Drafting the trust to comply with the common law ______________(or 90 year § substitute); AND (2)explicitly prohibiting ______________ ________________
RAP; judicial modification
In Florida, a trust instrument may be ________________by a court to remedy a _______________of law or fact or to effectuate the settlor's continuing tax objectives for the trust
A _______________ trust may arise (1) upon failure of express trust; or (2) when express trust ______________purposes accomplished and ________________not exhausted
Resulting; accomplishes; corpus (res)
Trust of ten million dollars to build hospital wing. The wing is built for 8 million leaving 2 million left over. Trust silent as to this contingency. The excess two million may be returned to settlor by ________________ ______________-
resulting trust (i.e. reversion)
A _____________ ______________ resulting trust is presumed to arise when consideration for purchase of property is paid by a person other than the person taking title. Defenses to this forming is that the consideration was a (1) _______________ or (2) _____________
purchase money; gift; loan
A _________, and not a trust, is presumed when the person providing consideration bears a ______________ _____________relationship to the title holder
gift; close familial
A loaned B $10,000. Just after obligations became due, A says to B, insrtead of paying me the money, I want you to acquire title to Blackacre and hold it for me. B orally agrees. B acquires Blackacre taking title in her own name. Later, while A is overseas, B trades Blackacre to C for Whiteacre. When A returns from overseas, Blackacre is worth $25,000 and Whiteacre is worth $12,000. B is insolvent. Can A impose a trust on Whiteacre? Can A impose a trust on Blackacre?
Yes; Maybe not because of the BFP rule. The rule cuts off beneficiaries rights to the transferred assets (here, Blackacre)
A _______________ ________________ is implied in a variety of circumstances where a person acquires title to property wrongfully. The trust is implied to remedy _____________ ________________-
constructive trust; unjust enrichment
Examples of situations where a person acquires title to property wrongfully: (1) title acquired by ____________, _______________, __________________, or ___________________; Oral trust of land; ___________ trust case
fraud, misrepresentation, duress, or mistake; secret
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