Wills & Trust Outline There is no true or absolute right to dispose of property at death.

Rule of property disposition at death are governed by the Florida Statutes. RE: 732.5165 Mistakes -- Coslett v. Hirsch. It is more important that the probate of the wills of dead people be effectively shielded from the attacks of a multitude of fictitious mistakes than that it be purged of wills containing a few real ones. The latter a testator may, by due care, avoid in his lifetime. Against the former he would be helpless. Florida has not fully adopted the UPC. Generally the federal government does not get involved in probate matters. Probate exception allows for the federal government to be involved in certain circumstances Military Testamentary document is a federal documented probated in the decedents state. When answering exam questions, analyze the question under both the UPC and Florida Statutes.

WILLS
731.201(37) F.S.Definition of a willWill means an instrument, including a codicil, executed by a person in the manner prescribed by this code, which disposes of the persons property on or after his or her death and includes an instrument which merely appoints a personal representative or revokes or revises another will. A will can do more than dispose of property, including Appoint a personal representative, who manages the estate, and collection of property. If the will does not name a personal representative, the court can appoint one. 731.201(25) F.S.Definition of a personal representativePersonal Representative means the fiduciary appointed by the court to administer the estate and refers to what has been known as an administrator, administrator cum testamento annexo, administrator de bonis non, ancillary administrator, ancillary executor, or executor. Today, all property distributed by a will is called a devise. Previously, specific terminology was used to describe the type of property distributed. Legacymoney Bequestother tangible or intangible property Deviseland Testator/Testatrixperson who makes a will Testatedying with a will Intestatedying without a will Heir receive through intestacy 1

It is possible for a testator to die partial intestate. This occurs when the testator without fully devising all of his property, or if certain devises fail. Probate is the court process of disposing of the assets of a decedent. The court process is the method by which the title of probate assets is re-titled in the name of the beneficiaries. What are probate assets? All assets solely owned by the decedent Cashas long as it belongs to the decedent o In an account, depends on how title is held Property held by Tenants in Common Stock is probated but the nature may change o Closely company with a shareholder agreement may prevent stock from getting to a beneficiary but the money paid for the stock will be probated Intangible property o Copyrights, promissory note, legal claim, lawsuit Real Estate if in Florida Beneficiary interest in a trust may be part of the probate estate, but generally is not Community PropertyFL is NOT a community property state Auto Insurance because the car would have been part of the estate Life insurance benefits, IF o No beneficiary is named, or o If the insurance policy does not include a clause allowing the insurance company to name a beneficiary Excludes homestead o Homestead property is NOT probated, but it still comes before the court Excludes non-Florida real estate o Must do an ancillary administration in the state in which the property is located Excludes joint tenancy with right of survivorship (JTWROS) Excludes tenancy by the entireties (TBE) Excludes pay on death account with a named beneficiary Excludes life insurance benefits payable to a named beneficiary Excludes property owned by the decedent as trustee The probate estate does not always equal the gross estate. Inventory is a sealed document that tells the court what assets the decedent had. Life Insurance may be probated depending on the design of the policy. Probated if no beneficiary is named or if the policy does not include a clause allowing the insurance company to name the beneficiary NOT probated if a beneficiary is named

INTESTACY 732.101(1)Any part of the estate of a decedent not effectively disposed of by will passes to the decedents heirs as prescribed in the following sections of this code. When can you take property as an heir? Answer732.101(2)The decedents death is the event that vests the heirs right to the decedents intestate property. The EASIEST way to declare/prove death is with a death certificate. 731.103 provides the methods for declaring death without a death certificate. 9/11 type event exception is found in subsection 3 Lineal Descendantschildren, grandchildren, etc.never ending Lineal Ascendantsparents, grandparents, great-grandparents (not in Florida) Collateral heirsside relativebrother, sister, aunt, uncle, niece, nephew, cousin, etc. Who gets what under intestacy? ALWAYS START WITH THE WIFE UPC Example: [H] + W H dies intestate with a $600K estate What does W get? 732.102(1)W takes all because H had no UPC 2-102entire intestate estate if H has no lineal descendants descendants and no parents Total: $600K Total: $600k Example: M [H] + W H dies intestate with a $600K estate What does W get? What does M get? 732.102(1)wife takes all because Florida UPC 2-102(2)wife gets first 200k plus of does not provide for parents any balance of the intestate estate, if no Total: $600K descendants of the decedents survive, but a parent of the decedent survives the decedent Here wife gets 200K + 300K Mom gets $100K Total: $500K to Wife, $100k to Mom Florida Law

Florida Law Example:

UPC

[H] + W \/ C1 H dies intestate with a $600K estate What does W get? What does C1 get? 732.102(2)If there are LDs of decedent, all 2-102(1)(ii)Intestate share to surviving of whom are also LDs of the spouse, 1st $60K + spouse is the entire estate of all the decedents the balance to the spouse LDs are also LDs of the surviving spouse and there is no other descendent of the surviving Here, $60K + $270K = $330K spouse who survives the decedent. Total: Wife gets $330K and C1 gets $270K Total: Wife gets $600K and C1 nothing Example: C2 [H] + W \/ C1 H dies intestate with a $600K estate What does W get? What does C1 get? What does C2 get? 732.102(3)If there are surviving LDs, 1 or 2-102(4) surviving spouse gets the 1st $100K + more of whom are not LDs of the surviving of any balance of the intestate estate, if one or spouse, of intestate estate to surviving spouse more of the decedents surviving LDs are not LDs of surviving spouse Total: Wife get $300K C1 gets $150 K Here, 100K + 250K = 350K C2 gets $150 K Total: Wife gets $350K C1 gets $125,000 C2 gets $125,00 Example: [H] + W C2 \/ C1 H dies intestate with a $600K estate What does W get? What does C1 get? What does C2 get? 732.102(2)If there are LDs of decedent, all 2-102(3)the first $150K + pf any balance st of whom are also LDs of the spouse, 1 $60K + of the intestate estate, if all the decedents LDs the balance to the spouse are also LDs of surviving spouse, and the surviving spouse has one or more surviving LDs Here, $60K + $270K = $330K who are not LDs of decedent Total: Wife gets $330K C1 gets $270K Here, $150K + 225K = 375K C2 gets $0 b/c not an LD of H Total: Wife get $375K & C1 gets $225K

UPC looks at children outside of the spousal relationship. Florida does not consider a child outside of the marital relationship. Step-children are never counted, unless adopted. 732.103Share of other heirs Order of distribution: 1. Lineal Descendants of D, if none, then to next taker; Surviving Spouse & then children, grandchildren, etc. 2. If no LDs, then to Ds parents equally or to the survivor of them If both alive, 50-50 each If only ONE surviving, he/she gets total share due to the parents If NONE, then to next taker 3. Ds siblings and descendants of Ds siblings, if none, then to next taker (732.203(3)) 4. Grandparents50% to Ms side & 50% to Fs sideif none, then to next taker To maternal grandmother and grandfather & to paternal grandmother and grandfather M side gets 50% o Maternal grandmother 25% o Maternal grandfather 25% P side gets 50% o Paternal grandmother 25% o Paternal grandfather 25% IF no grandfather or grandmother, then to the descendants (Ds uncles, aunts) and descendants off deceased uncles & aunts (cousins) If no kindred on Paternal/Maternal side, then all goes to remaining side 5. Kindred of the deceased spouse If death ended marriage the spouses family can inherit If divorce ended the marriage then skip 5 6. If no spouse and no family, property escheats to the state because the state cannot find heirs. Intestacy Schemes Vary by jurisdiction Florida does NOT follow the majority. Florida follows a pure per stirpes system Majority follows per capita with representation Others follow 1990 UPC or pre-1990 UPC Three Types of Intestacy Distribution Schemes: 1. Per stirpes 2. 1990 UPC per capita at each generation 3. Per capita with representation Per capita means per head. RuleA descendant of decedent who has a living ancestor who is also the decedents descendant is NOT an eligible taker. Ex: [GM] MotherChildGrandchild 5

Mother could take from GM, but child and grandchild could not because person closer to decedent in line takes. RuleDisregard lineal descendants that predeceased the decedent, and who predeceased without any lineal descendants. Ex:
[Mother]

[C1]

[C2]

[C3]

GC1

GC2

GC3

GC4

Here, when trying to distribute Mothers estate, C1s & C2s descendants would get property. C3 has no descendants and therefore has no one to represent him, therefore, he is ignored. Comparison of distribution schemes Example: Isabelle dies in testate with a $600K estate. Who gets what?
[Isabelle]

[Albert]

[Ed]

[Bob]

Carol

Diane

Ellen

Barbara

Debra

Emma

Bill

Per Capita with Representation Divide the estate at the nearest generation with at least on living member Located the level and distribute Split into as many shares as there are living members or dead members with living descendants in the level.

FloridaPure Per Stirpes Start at the nearest generational level with live people or dead people with living descendants

Here, of the etsate to Carol, Diane and Ellen, 1/8 of the estate to Barbara & Bill, who are representatives of Bob Example: Isabelle dies in testate with a $600K estate. Who gets what?

Here, start with Albert & Ed. to Alberts line and to Eds line. Eds lineshare goes to Ellen, nothing to Emma Alberts line share is divided by Carole, Diane and Bobs descendants, 1/6 to each group. Bill and Barbara get 1/12 each

[Isabelle]

[Albert]

[Ed]

[Bob]

Carol

Diane

[Ellen]

Barbara

Debra

Emma

Bill

Per Capita with Representation Split at B,C,D,E level. to each. Barbara and Bill will split Bobs because Bob is dead. Barbara and Bill each get 1/8 of the estate. Carol gets the estate Diane gets the estate Emma get the estate because Ellen is dead.

FloridaPure Per Stirpes Start at Albert and Ed level. to Alberts line, to Eds line. Bob get 1/6 of the estate, which because he is dead is divided by Barbara and Bill for 1/12 each. Carol gets 1/6 of the estate. Diane gets 1/6 of the estate. Emma gets the estate because Ed and Emma are dead.

1990 UPC Per Cap at each Generation Starts the same as per capita with representation. Find the level with at least 1 living member Divide among the level Pool money at generational level. Give excess to next generational level Here, begin at B,C,D,E level. Each would get the estate. But because B and E are dead, their shares go to the next generational level. Barbara, Bill, and Emma each get 1/6 of the estate Debra gets nothing because her mom took her share.

Example: Isabelle dies in testate with a $600K estate. Who gets what?
[Isabelle]

[Albert]

[Ed]

[Bob]

[Carol]

Diane

[Ellen]

Barbara

Debra

Emma

Bill

Per Capita with Representation Split at B,C,D,E level. 1/3 to each. Because C is dead without descendants Barbara and Bill will split Bobs 1/3 because Bob is dead. Barbara and Bill each get 1/6 of the estate. Diane gets 1/3 the estate Emma get 1/3 the estate because Ellen is dead.

FloridaPure Per Stirpes Start at Albert and Ed level. to Alberts line, to Eds line. Bob get 1/4 of the estate, which because he is dead is divided by Barbara and Bill for 1/8 each. Carol gets nothing because she is dead without descendants. Diane gets 1/4 of the estate. Emma gets the estate because Ed and Emma are dead.

1990 UPC Per Cap at each Generation Begin at B, C, D, E level. Each would get the estate. But C died without descendants so she is ignored. Therefore B, D, and E would be entitled to 1/3 the estate. But because B, and E are dead, their shares go to the next generational level. Diane gets 1/3 the estate. Barbara, Bill, and Emma each get 1/3 of 2/3 of the estate. Debra gets nothing because her mom took her share.

If you under Florida Law with a will that is silent about distribution, then distribution will be done per stirpes. If you want it to be something else, then say so. People with special issues Adoptions Half-bloods Nonmarital children Afterborns Adoption Adoption is a legally recognized parent-child relationship. Generally the adoption cuts off the relationship between the adoptive family and the natural family. o After adoption, though, legally the child is treated as if he was born into the adoptive family, and as if he had never been born in the natural family. 732.108 addresses the ability of an adopted child to inherit.

o Generally adopted child can inherit from the adoptive family and adoptive family can inherit from the adopted child. But the adopted child can no long inherit from natural family and natural family cannot inherit from adopted child. o 732.108(1) provides exceptions allowing adopted children to inherit from the adoptive and natural families. If natural parent married someone who is not the natural parent of the child. Who can the child inherit from? 732.108(1)(a) F.S. H2 M + F \ \ / \------C1 If H2 adopts C1, C1 is cut off from F and Fs family. C1 can still inherit from M and H2. Widow or Widower remarries, who can the child inherit from? 732.108(1)(b) F.S. H2 M + [F] \ \ / \------C1 Adoption by H2 after the death of F does not prevent C1 from inheriting from F or Fs family. If both parents are dead and the child is adopted by the grandparents, a sibling or an aunt/uncle, then the child is considered the child of the adopting party and deceased parents (the natural line). See 732.108(1)(c) F. S.

Step Children Step children have no legal relationship with the step parent, so they cannot inherit. Can only inherit under equitable/virtual adoption. Foster Children Child in someone elses home and they are taking care of you. Cannot inherit from foster parent unless that parent was taking steps to virtually adopting the child Equitable/Virtual Adoptionpage 48 Created by case law Elements o Intended to adopt but adoption never happened (new parent dies before adoption occurs); o Agreement to adopt the child; o Performance of biological parents (giving up custody); o Child lives with people who intended to adopt; and

o Custodial adults (new parents) treat the child as their own. Only for minors Adults cannot be virtually adopted Child can still inherit from biological parents because the tie was never severed. Need to have clear and convincing proof of the elements above for this to apply.

Non-marital Children Formerly called illegitimate children Children born out of wedlock Paternity is at issue, not maternity Who is the father? o 3 ways to determineWill Be Deemed To Be The Child Of The Father If 732.108(2)(a)Childs parents enter into a marriage ceremony even if eventually void or annulled; 732.108(2)(b)Win a paternity action Very high standard Statute of limitations is approximately 4 years after age majority; 732.108(2)(c)Father acknowledges paternity in writing Facts and circumstances analysis Examples: o Letter o Life insurance o Birth certificate Afterborn Children 732.106Heirs of the decedent conceived before his or her death, but born thereafter, inherit intestate property as if they had been born in the decedents lifetime. Example: page 53, question 9 o Frank and his wife, Mary, conceive a child on Jan 1. One month later, frank died intestate. One month after that, Franks father, Gerald, died intestate. The child, Cathy, was born in September. Can Cathy inherit from Franks estate? Yes, pursuant to 732.106, because Cathy was conceived prior to Franks death, by law she is treated as though she was born prior to his death. Can Cather inherit from Geralds estate? Yes, pursuant to 732.106, because Cathy was conceived prior to Franks death, by law she is treated as though she was born prior to his death. During pregnancy, the estate is not fully distributed until after the pregnancy to determine distribution. Florida has no minimum on length of lifethe person can take one breath and die, he or she still would be allowed to inherit.

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Halfbloods A relative that share one common blood line with a collateral heir Only applies to collateral heirs o Siblings, cousins, aunt, uncle UPC treats half-bloods the same as whole bloods In Florida, half-bloods get half as much as whole bloods o 732.105 Mathematical way to determine share o Treat the whole bloods as 2 and the half bloods as 1. Add the numbers and then divide. Diagram method for determining share o Count number of parents in common Example: page 53, problem 10 o Dan died intestate with a probate estate worth $60K. He was survived only by his 3 siblings, Adam, Betty, and Carol. Explain how Dans estate will be distributed if: Adam, Betty and Carole are all whole blood siblings of Dan Each would get 1/3 of the probate estate. (20K each) Adam, Betty, and Carol are all half blood siblings of Dan Each would get 1/3 of the probate estate. (20K each) Adam and Betty are whole blood siblings of Dan, and Carol is a half blood sibling Mathematical way: A=2, B=2, C=1, 5 shares total. 60K/5=12K per share. o Adam gets 24 K o Betty gets 24K o Carol gets 12K Adam is a whole blood sibling of Dan, and both Betty and Carol are half Blood siblings. Mathematical way: A=2, B=1, C=1, 4 total shares. 60K/4=15k per share o Adam gets 30K o Betty gets 15K o Carol gets 15K Will Formalities Requirements o Intentmental elements o Formalities Rituals designed to remind the testate of the importance of the document Provide Evidence Protect against fraud Provide consistency in the system Personal representatives and order of preference in appointment (733.301) 11

o If the decedent dies testate: (1) The personal representative named in the will; (2) The person selected by a majority in interest of persons entitled to the estate; then (3) A devisee under the will. If more than one applies, the court may select the one best qualified. o If the decedent died intestate: (1) The surviving spouse; (2) The person selected by a majority in interest of the heirs; (3) The heir nearest in degree. If more than one applies, the court may select the one best qualified. o Certain people may not be a personal representative: A person who works for or holds public office under the court and anyone who is employed by or holds office under any judge exercising probate jurisdiction; If the person has been convicted of a felony; If the person is mentally or physically unable to perform the duties; If the person is under 18 years of age. o A person must be mentally competent to be qualified as a personal representative. o A person who is not a resident of the state of Florida cant be a personal representative unless they are: A legally adopted child or adoptive parent of the decedent; Related by lineal consanguinity (ancestor ascendant/descendent) to the decedent; or A spouse, brother, sister, uncle, aunt, nephew, or niece of the decedent, or someone related by lineal consanguinity to any such person. Will Formalities are found in 732.501 and 732.502 o The will must comply with the statutes for the will to be valid Florida is a strict compliance state. Every will MUST be: o Written Can sign with a mark (a signature is really a mark) Allowed because the person has adopted the mark as his signature Witnesses are present to prevent potential fraud from use of a mark Proxy must be asked by testator and sign in the presence of testator and by the testators direction Proxy signs testators name Make sure the proxys name is in the will as a proxy Proxys signature must be witnessed o Must be signed by Testator and 2 witnesses

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Testator must sign at the end of all the dispositive sections that are disposing of property; in practice, the best place to get the testator to sign is until the end of the will (last page). Witnesses can sign anywhere, but generally sign below the Testators signature. The statute is silent on location of witnesss signatures, but in practice witnesses should sign after the testator. o Attestation is not required, but is worth having States that signatories were present for the will signing Placed after the dispositive sections and signatures in that section o 732.502(1)(b)Testator/proxy must sign in the presence of 2 witnesses or acknowledge to the witnesses that the testator/proxy signed the will, even if the acknowledgement and witness signatures arent done at the time the testator signs the will as long as he acknowledges that he signed it to the witnesses, then it is valid. Presence Tests Line of Visionmust be capable of seeing the persons sign the will o Exceptions are made for blind persons if they are conscious of what is going on around them and attestation is made within their range of touch and hearing. Conscious Presencemust be aware of what is going on Florida has not defined which presence test it uses. By analogy, the court has allowed line of vision, but this is not concrete. To be safe, follow the line of vision test. Florida Statutes do not define line of vision. A witness can be any competent person 732.504 MUST be competent as determined by 90.601 & 90.603 Includes minors and beneficiaries and felons o It is generally not a good idea to have a minor or beneficiary witness the will, but it is allowed. o Self Proof Affidavit--732.503 Must be signed by the testator, witnessed by two witnesses and then sworn by a notary or clerk of courts. Can be done at the time is originally signed or at a later date. Can be part of the will or can be a separate document. The best practice is to do it at the same time and incorporate it into the will. Handwritten Wills Allowed in Florida, but they must be signed and witnessed by 2 witnesses Holographic Wills Not allowed in Florida Only signed by Testator (non-attested will) Usually handwritten or with a form

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Nuncupative Wills Oral wills Not allowed in Florida Often called death bed wills 732.502(2)Allows for the validity of a nonresidents will if the will was valid in the jurisdiction in which it was created. o Cannot be holographic or nuncupative, however. Military Testamentary document--732.502(3)valid in Florida A person who is eligible for military assistance may execute this instrument. Valid execution requires that the testator sign the instrument in the presence of military legal assistance counsel (JAG Officer for example) and two attesting witnesses. Testamentary Capacity 732.501 addresses testamentary capacity o 2 parts: Age18 or older Must be of sound mind (derived from case law) o The testator must understand, in a general way, the nature and extent of the property to be disposed of. o It is only critical that the testator possess testamentary capacity at the time of execution of the will. 743.01 & 743.015two ways by which a minor can be emancipated o Marriage o Judicial determination (must be at least 16 years old) Common Lawcapacity is presumed 733.107(1)proponent of the will must show by prima facie evidence that the will was executed when the testator had capacity. Once evidence of capacity has been shown, the will contestant has the burden of proving the testator was not of sound mind. Test for Capacity o Testator generally understands: The natural objects of his bounty People who would normally inherit The nature and extent of his bounty What is owned The value of his property The practical effect of the will If you dont want to leave to your heirs or to specific heirs, it may be helpful to include the reason for leaving someone out. o Not required, but helpful to CYA Ways to show lack of capacity o Doctors

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o o o o o

Judicial findings Testimony of witnesses Testimony as to relationships Ability/Inability of testator to live alone Ability/Inability of testator to handle finances

Attorneys Feesattorney can charge 3% of estate or can charge by the hour Guardianship Types o Guardian of the person Make medical decisions, etc o Guardian of the property Make business decisions o Plenary guardian Control over person and property 744.331(6)(d)once a person has been adjudicated incompetent, the person is presumed to be incompetent until the court determines the person is again competent After a court order of incompetency, the will proponent must show that the person had a lucid moment and therefore was competent at the time the will was executed. If the contestant is successful in proving the testator was incompetent, the will is invalidated. Lucid moment evidence is not limited to the time during execution of the will. Evidence can be brought showing lucidity the occurred before, during, or after the will execution. Insane delusionbelief that has no foundation in fact. Person has belief, but no reason for the belief. If only part of a will is caused/impacted by the insane delusion, then only that part of the will is invalidated If the entire will is impacted by an insane delusion, then the entire will will be invalidated How to protect a client when you think that capacity may be challenged? Videotape the proceeding Medical exam Witness affidavits Undue Influence Person is substituting the testators wishes with their own When you want to prove undue influence, direct evidence is best, but it is hard to show. Law allows a challenge to raise a presumption of undue influence o Easier for contestant than proving direct evidence o Cannot be raised against a spouse o Person influencing does not have to be a beneficiary 15

Can be a 3rd party Method of raising a presumption of undue influence o Must show all of the following Person was in a confidential relationship with the decedent Trust relationship (Family member, physician, attorney, religious advisor, etc.) Person was active in procuring testators will or portion of the will 7 factors from Carpenter v. Carpenter: o Presence of the beneficiary at the execution of the will; o Presence of the beneficiary on those occasions when the testator expressed a desire to make a will; o Recommendation by the beneficiary of an attorney to draw the will; o Knowledge of the contents of the will by the beneficiary prior to execution; o Giving of instructions on preparation of the will by the beneficiary to the attorney drawing the will; o Securing of witnesses to the will by the beneficiary; o Safekeeping of the will by the beneficiary subsequent to execution. Person is a substantial beneficiary Case by case determination Facts and circumstances analysis Receiving more than others in the same degree of relationship to the testator. Receiving more than you would get via intestacy or in prior wills. In 2003, 733.107(2) became effective. This changed the burden of proof for undue influence to greater weight of the evidence. It also shifted the burden to the will proponent. o Now, if a will proponent attempts to have a will probated, and a contestant opposes administration and raises undue influence, then the will proponent will have to show by the greater weight of the evidence that no undue influence occurred.

Challenges for lack of capacity and undue influence go hand in hand because many of the elements are the same. Exampletestator my have capacity, albeit diminished, but the testator my be susceptible to undue influence Lack of testamentary capacity will invalidate an entire will. Other grounds for challenging a will Fraud o Fraud in the execution Exampleswitching or altering pages

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It could also occur when the testator is misled as to the type of document he is signing. This will void a will. o Fraud in the inducement Lied to the testator about something that induced the testator to change their intent. o If the entire will was created by fraud, then the entire will is invalidated o If only a portion of the will was created or influenced by fraud, then only that portion will be invalidated. Duress o Requires a showing of physical harm or coercion. o If the entire will was created by duress, then the entire will is invalidated o If only a portion of the will was created or influenced by duress, then only that portion will be invalidated. Mistake--732.5165 o Mistake in the execution will render a will VOID Mistakenly signing a document that you did not intend to sign Court will invalidate the entire or portions of a will created by mistake in the execution o Mistake in the expression Drafting error Court will NOT invalidate or alter a will with this type of mistake o Mistake in the inducement Mistaken belief very similar to an insane delusion Must be some basis for the belief Court will NOT invalidate or alter a will for this type of mistake o Coslett v. Hirsch: It is more important that the probate of the wills of dead people be effectively shielded from the attacks of a multitude of fictitious mistakes than that it be purged of wills containing a few real ones. The latter a testator may, by due care, avoid in his lifetime. Against the former he would be helpless. In Terrorem Clauses o Clauses that disinherit a beneficiary who contests a will these are unenforceable in the State of Florida. Spoliation o Post-execution change in the will made by an unauthorized 3rd party. o To keep this from happening, an attorney could do any of the following: Have the testator initial each page; Number each page (page 1 of 4, etc.); Bind the pages together; Use paper that has a watermark on it. Malicious (Tortious) Interference with Inheritance 17

o Civil tort action Sue the interferer directly Must exhaust all probate remedies before filing a civil action o ElementsTo prevail, a plaintiff must show, with reasonable certainty, that: Absent defendants actions, plaintiff would have received a portion or greater portion of the estate; Intentional tortdefendant intentionally engaged in wrongful conduct; Defendants actions were the proximate cause of the loss. o Intentional Interference with an expectancy Elements it must be shown that there was: (1) The existence of an expectancy; (2) Intentional interference with an expectancy through tortious conduct; (3) Causation; and (4) Damages. What can someone do to avoid this situation? [Claveloux v. Bacotti] Be named the Guardian by the court; File for criminal charges for abuse of the elderly (financially). In Florida, you cannot have an in terrorem clause. This is an anti-contest clause. In Florida, these are unenforceable. See 732.517 F.S Challenges in Probate are brought against the estate. Malicious interference with inheritance is brought against the person accused of interfering. Tartaglia v. Hatten: Cause of action: When a decedent who has made a will dies, and the will cannot be found among the decedents personal papers, a presumption arises that the decedent herself destroyed the will, intending to revoke. This presumption is rebuttable. The hearsay rule does not bar the testimony of the plaintiffs regarding (1) the fact that the decedent had executed a will and (2) the contents of the will. Deadmans statute is only appropriate to suits against parties in their representative capacities Not where D is being sued personally for damages. Amendment and Revocation of Wills Testator must have testamentary capacity at the time to amend/revoke a will or codicil How to amend/revoke a will or codicil? o 732.505 revocation by writing A will or codicil, or any part of either, is revoked: (1) by a subsequent writing, even though the subsequent writing does not expressly revoke all previous wills or codicil.

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o The revocation extends only so far as the documents are inconsistent. o If both wills are valid but have inconsistent terms, the later will revokes the prior inconsistent terms, unless stated otherwise. (2) by a subsequent writing that expressly states the revocation of the prior will or codicil. Amendments/subsequent writings must be executed according to the same formalities required for a will. 732.502 Allows for the revocation/amendment of all or part of a will or codicil. To amend a will you must have the intent for the subsequent effect of the amendment. o 732.506 revocation by act Destruction, burning, defacing, canceling, obliterating, tearing, etc, the will. Physical acts can only be used to revoke an entire will. Must have the intent to revoke the entire will or codicil. The testator may direct that another person act on the testators behalf when physically revoking a will. The proxy must perform the act in the testators presence and under the testators instructions for the revocation to be valid. Strict compliance with the statutes governing amendment/revocation is required for the amendment/revocation to be accepted by the court o Flushing will down a toilet by family member at the request of the testator. Court rejected the act because testator could have done it himself and the destruction occurred outside of his line of vision. In re Estate of Bancker o Attempt to amend by marking through devises and signing at each change. Court rejected because he did not follow the formalities. Would have been fine if he had signed at the end and had the signature witnessed. Court took original will. Jones v. Shifflet If testator dies and no one can find a will or they find a torn will, then there is a presumption that the testator intended to revoke the will. o Presumption can be rebutted Florida is an anti-revival state. 732.508 o (1) Revocation of a will or codicil that revoked a prior will does not revive the previous will or codicil. To revive the previous will, it must be re-executed by resigning, and must follow the formalities of a will. 732.511 It is possible under 732.5105, to execute a codicil that refers to a previous will and has the effect of republishing the will as modified by the codicil. Can also revive by adding a codicil. 732.511 o (2) When there is a revocation of a codicil to a will it shall be presumed that in revoking the codicil the testator intended to reinstate the provisions of a will or codicil that were changed or revoked by the revoked codicil, as if the revoke codicil had never been executed. 732.508(2)

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The presumption can be rebutted by proving the testator had a contrary intent. o 732.509destroying a will revokes all codicils to the will. o Examples: Testator creates a will, and then a codicil. What happens if the will is revoked or destroyed? Pursuant to the 732.509, the will and codicil are revoked. Testator creates a will, and then a codicil that amended, but did not revoke the prior will. If the codicil is revoked, what happens? Pursuant to 732.508(2), a presumption exists that the testator intended to return to the prior will as drafted before the codicil. o The presumption can be rebutted if you can show the testator had a contrary intent. If the testator destroys a Xerox copy of a will or codicil which he believed was the original will has he effectively destroyed the will? No, revocation by act must be done to the original will. In re Estate of Tolin Things that can affect dispositions in a will o 732.512incorporation by reference (1) Include a reference to a separate writing into the will itself Include the terms Example: shareholders agreement, trust, pre-nuptial agreement Requirements: o The document must already be in existence before the execution of the will or codicil o The testator must manifest intent to include the terms in the will the will must clearly indicate the testators intent to incorporate the document. o Must be able to sufficiently describe the document in the language of the will to permit identification of the document to be included. (2) Can include language relating to the property and independent acts or events. Ex: a car o Can leave car to A. At the time the will is executed, T may have owned a Honda, but at death owned a BMW. A would get the BMW T owned at death. o 732.515separate writing identifying devises of tangible property Allows a separate writing or list referred to in the will to dispose of tangible personal property not used in business or trade. Tangible personal property does not include money, stocks, royalties, or real estate.

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This is accomplished by having a writing before or after the will has been executedthe will must mention the list. The list must include a sufficient description of the item, a sufficient description of the devisee, and must be signed by the testator. This method works unless the item has already been devised to another person in the will. THE WILL CONTROLS WHEN THE WILL AND LIST ARE IN CONFLICT. List wont stand by itself; the will has to be valid. I may have a separate piece of writing which devises my tangible property. If you cannot find the list by X amount of time, you may assume that I did not create the list.

732.6005(1) provides that the intention of the testator as expressed in the will controls the legal effect of the testators dispositions. o Ascertaining testators intent is CRITICAL. If the court cannot determine and interested parties cannot agree, the devise may fail. The property may go to the residuary takers or pass by intestacy if the intent is not determined. Dependent Relative Revocation o The doctrine of dependent relative revocation requires finding not only that the testator preferred to die testate, but also that the provisions of the invalid will are not materially different from the prior will. Note 1 page 164. o Aside: revoking requires action and intent cant have revocation where intent is conditional and that condition fails. o The goal of this doctrine is to prevent the decedent from dying intestate o Requires a finding that the decedent preferred a revoked will to intestacy o Requirements for application: Must bring evidence that the decedent intended to die testate (did the testator have a testamentary scheme?); Must show that decedent wanted to die with a will to be probated; Show intent by proving that the will were substantially similar o If someone destroys a will with the conditional intent that the subsequent will is valid, but the subsequent will is invalid, then the intent element for revocation has NOT been met. o The court will probate the last validly executed will. o Examples: Page 164 1. Tom executed Will #1. He later executes Will #2, which included a clause revoking Will #1. The only change in Will #2 was that Tom added a provision devising a watch to a friend. Will #2 was witnessed by only one witness. Did Tom die testate? o Yes, because Will #2 was not properly executed and therefore never existed. Is dependent relative revocation applicable to this case? o No, because Will #1 still exists 21

Who receives the watch? o Whoever would receive it in Will#1

2. Tom executed Will #1. He later executes Will #2, which included a clause revoking Will #1. The only change in Will #2 was that Tom added a provision devising a watch to a friend. Will #2 was witnessed by only one witness. When Tom executed Will #2 he tore up Will #1. Is dependent relative revocation applicable to this case? o Yes, because Tom destroyed Will #1 on the condition that Will #2 would be valid. Who receives the watch? o Whoever gets it in Will #1

Lost or Destroyed Wills o 733.207establishment and probate of lost or destroyed wills Delivery of a correct copy (does not have to be executed) and have 1 disinterested witness testify to the copy; or 2 disinterested witnesses must testify to the specific contents of the will. Disinterested witnesses cannot be beneficiaries or potential beneficiaries. Does not have to be the witness to the will, could be a paralegal that worked on the will. A correct copy is an identical copy such as a photostatic or carbon copy, not just an accurate copy. o If a will is found prior to the completion of intestacy proceedings, then the will can be probated instead of using intestacy. But, if the court has concluded the intestacy proceedings, then the distribution will not be changed. 733.208 An interested party might be able to bring a civil action, such as for tortious interference with inheritance, if the will was intentionally withheld from probate.

Ambiguities and Rules of Construction Types of ambiguities o Latentnot necessarily ascertainable by reading the will (Ex: Leaving something to 2 people with the same name) Can use extrinsic evidence to support claim Extrinsic evidenceevidence outside the will o Patentobvious from the face of the will (Ex: 2 conflicting statements in a Will) Can only determine/use evidence from the four corners of the will AKAintrinsic evidence 3rd DCA allows extrinsic evidence in this instance. If an ambiguity exists the court must try to ascertain the testators intent.

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If a particular ambiguity involves two beneficiaries, only one of whom is arguably the correct beneficiary, the potential beneficiaries may agree to share the devise rather than risk losing it entirely. 733.815

Types of devises Specific o A devise of property which is particularly designated and which is to be satisfied only by the receipt of the particular property described ExA devise of my property, Greenacre, located at 321 Main Street. ExA devise of all of the jewelry that I own when I die. Demonstrative o A devise of a fixed amount payable from a particular fund or from the proceeds of the sale of an item. I.E. where the money should come from, even if the item isnt there, you still get the money. o AVOID WHEN DRAFTING ExI devise $100,000 to Ed, payable first from my account at the First National Bank. ExI devise 100 shares off ABC Corp stock to Sue, payable first from my account at Investors Brokerage. $1000 from the sale of my piano. General o A devise that is neither specific nor demonstrative, but which indicate a particular amount to be received. o Most typical general devise is MONEY, but can be a fraction or percentage. ExI devise $50,000 to Jim ExI devise 100 shares of ABC Corp stock to my granddaughter Sue, which my personal representative shall purchase with estate assets. 1/3 of my estate. o Payable from any estate asset or fund other than one required to pay specific or demonstrative devises. Residuary o The balance of the estate after specific, demonstrative and general devises. ExI devise all the rest, residue and remainder of my estate in equal share to A, B, and C. Abatement Reduction of devises because of a need to pay other devises, fees, etc. 733.805Order of abatement o Start with property passing through intestacy, then o Property devised to residuary devisee(s), then o General deviseseach devise will be reduced by a pro rata share o Specific or demonstrative deviseseach devise will be reduced by a pro rata share

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Follow the order of abatement in statute, unless the will states an alternate abatement scheme. If the will is silent, the statute controls. Be careful about unintentionally disinheriting the residuary devisee(s). Rules o Certain people are given preference if they fall within the same category Examplespouse v. friendmight take from friend before spouse A devise to a person who has given consideration will likely be given preference. Consideration has some real value. Examples o Demonstrative Devises $1000 to A from sale of piano. The piano only sold for $800. The $800 is still considered as a demonstrative devise for abatement purposes, but the balance of $200 is reclassified as a general devise o $6500 estate My Cartier watch to A, $1000 My gold pen to B, $500 $3000 to C Rest/remainder to D, $2000 Costs=$5500 expenses of the estate Take first from D because he received through the residuary clause. D gets nothing (5500-2000=3500) Take from C because it is a general devise. (3500-3000=500) Take pro rata from A & B because both devises are specific. o Find the total value of the specific devises (1000 + 500) o Then determine the pro rata share (A=2/3, B=1/3) A or B must either sell the item and contribute the amount to the estate, or can pay the amount due to the estate directly and keep the property If the devisee cannot come up with the case, then the property must be sold. o In re Estate of PotterT left daughter a home in Pompano and all property therein. T also left the son the cash equivalent of the daughters devise. Cash was to come from a trust. Costs were also to come from the trust. The trust did not have enough money to cover the costs. Son claimed that the testators intention was for each child to get an equal devise. ProblemDaughter received a specific devise and son received a general devise. Based on the rule of abatement, the sons devise abates first. Fixthis problem could have been avoided by adding language to the will providing that in the event of abatement, sell the house and treat both children equally.

Ademption by Extinction Only applies to testate estates, because it only applies to specific devises.

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Florida allows extrinsic evidence of the testators intent. Devisee has to see if a devise changed in form; if it did, and the testator intended the devisee to inherit the changed item, then the devisee can show evidence proving this and receive the changed item devise. (Florida does not follow the pure identity theory, as evidenced in this example pure identity theory states that if something is devised and it is not in existence at the time, then the devisee cannot inherit the devise) 732.605change in securities, accessions. Non-ademption applies to specific devises of securities (stocks, bond, etc.) ONLY APPLIES TO SPECIFIC DEVISES o (1) If T wants the devisee to get stock, the devisee gets: (a) As much as is a part of the estate at the time of Ts death. Open to partial or complete ademption (b) If T dies with more share than # of stock articulated in the will, devisee gets all shares in the same entity if the increase was initiated by the entity (company), not including exercise of purchase options. E.g. stock split. (c) Mergers and reorganizations. XM taken over by Sirius, T had XM stock but now owns Sirius stock. D gets Sirius stock. (d) Securities of the same entity acquired as a result of a plan of reinvestment. E.g. taking dividends as extra shares. D gets extra shares. o (2) Exclusion clause, every instance not covered under (1), D doesnt take. 732.606rules that may save a specific devise from adeeming: o (1) Here, the testator had a guardian and was therefore unable to amend the will. The specific devisee is entitled to the net proceeds from the sale during Ts life. In a guardianship situation, the devisee is entitled to the pre-death net profits from the sale of real property, proceeds from insurance, condemnation, etc. Becomes a general devise, and is owed in whole to the devisee, subject to abatement. If a previously incompetent T is ever adjudged to be competent for more than one year and the devise is not amended to repair the adeemed devise, the devise has no protection under 732.606(1) o (2) Applies where the item is sold and T is still owed money A specific devisee has the right to the remaining specifically devised property and: (a) Any balance of the purchase price owing from the purchaser to the testator at death because of sale of the property plus any security interest. o Example: If T has a house that they sell to a purchaser and the purchaser still owes T money at the time of Ts death, then the devisee can collect that money as if they were T. (b) Any amount of a condemnation award for the taking of the property unpaid at death. Only pending funds. o Example: T leaves beach condo to A. Govt. comes in and takes the condo by eminent domain. If the Govt. pays $50,000 to T before their death and still owes T $50,000 at the time of their death, the specific devisee can recover the $50,000 owed by the Govt. If the total amount is paid 25

before T dies, then the devisee cannot recover any of that money. (c) Any proceeds unpaid at death on fire or casualty insurance on the property. o Example: If Ts condo burns down with T in it (T dies), then the devisee is entitled to recover the proceeds paid by the insurance company as a result of the insurance policy. (d) Property owned by the testator at death as a result of foreclosure, or obtained instead of foreclosure of the security for the specifically devised obligation. o Example: T lent money to X. When T gave the loan to X, he asked X to give him a mortgage. T says that the mortgage is left to A upon Ts death. X stops paying T, so T starts a foreclosure action on X and either forecloses completely or gets the deed to the property (or is in the process). At Ts death, he now owns the property, not the mortgage anymore. Under the statute, even though the mortgage is not there anymore, A gets the property that T received through foreclosure. It gives A the change in form of the property/mortgage. If the property is in the middle of a foreclosure, A steps into Ts shoes with respects to the foreclosure action since A has the mortgage interest. Applies ONLY to specific devises 2 theories o Majorityidentity theoryobjective theoryif the item is not there at the time of death, then no devise If the devised item is present after death, devisee gets it, if not devisee is out of luck o MinorityFlorida TheoryIntent theory Allows the devisee to prove testators intent and allow the estate to replace the missing item with another item of similar value Can bring evidence to show The missing item is traceable to a new item If traceable, and the devisee can show intent for the devisee to get item traced If you can prove that the testator disposed of an item and the item took on a new form, and the testator intended the devisee to have the item/value of the item in the present form, then the devisee can still take the new item. Examples o My beach houseworth $500K. Sold by T before death & received $500K cash To get the 500K, the devisee must show: Must trace the asseti.e., where the money was placed in a separate account 26

Show the T intended for the devisee to get the money received from the sale of the beach house o Can do this by using testimony of 3rd parties, etc If devisee cannot prove testators intent, devisee gets nothing.

o My beach houseworth $500K. Sold by T before death. Buyer couldnt pay cash & couldnt get financed. Instead buyer asks T for a purchase money mortgage. T becomes mortgator. Buyer paid $100K and T has 400K mortgage note. Buyer pays $1000 in January, $1000 in February and T dies in March. What if anything does devisee get? Pursuant to 732.606(2)(a), devisee can get an interest in the mortgage note or monies still owed at closing, but cannot get the prior payments. Only receives the outstanding money No proof of Ts intent because devisees interest was saved by statute o Unpaid purchase price or closing costs o My beach houseworth $500K. Government begins condemnation proceedings. Government must pay just compensation through eminent domain. Government pays $250K. What of anything does devisee get? If T dies after condemnation, devisee gets nothing because there is no house to get. If government pays money to T before T dies, devisee will have to prove intent theory If government condemns but T dies before the government pays, devisee gets the $250K because of 732.606(2)(b). o My beach houseworth $500K. Hurricane and fire destroy the house. T dies. It would appear that the house adeemed. 732.606(2)(c) allows the devisee to get anything paid after the death of T. If the insurance claims are paid before Ts death, devisee must prove the intent theory Same with foreclosure, per 732.606(2)(d)

o My beach houseworth $500K. Pre-incapacity, T leaves the beach house to A. But, during Ts incapacity, the guardian must sell the house to provide for T. Net proceeds from the sale = 480K. What if anything does A get? T left a specific devise, but it no longer exists 732.606(1) protects specific devises. It gives devisees the rights to the net proceeds from the sale of the specifically devised item, less the amount from the net proceeds needed by the guardian to care for T. o My 100 shares of IBM stock to A. T dies with 300 share of IBM stock because she bought an additional 200 shares. What does A get?

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100 shares. The remaining 200 shares would go to the residuary absent other language devising the 200 shares.

o My 100 shares of IBM stock to A. T dies with 300 shares of IBM stock because the stock split. What does A get? A gets all 300 shares because the company/entity was the initiator of the stock split, not T. o My 100 shares of IBM stock to A. T dies with 100 shares of IBM stock because she sold IBM and bought XYZ. What does A get? A gets nothing o My 100 shares of IBM stock to A. T dies with 100 share of XYZ stock because IBM merged with XYZ. What does A get? A gets 100 shares of XYZ stock because of 732.605(1)(c). Action must initiated by the company/entity in order to get the 100 shares.

Exoneration 733.803 Common law if A gets the devise of a condo from T, then A gets the condo free and clear of the mortgage/encumbrance on the condo. Florida law if T gives A their beach condo, then A gets the condo with the mortgage/encumbrance unless the will states otherwise. A gift of property is work more to the beneficiary of it is unencumbered than if it is burdened by a mortgage or other debt. At common law, debts encumbering specifically devised real property were exonerated. The devisee takes the property free and clear of the debt. That meant that the debt would be paid out of the property that would go to the residuary. Florida and the UPC have rejected the common law rule. Florida Statute 733.803 provides that the debt is to be paid from the residue only of the will shows that was the testators intent. A will provision to pay debts, without more, does not establish the requisite intent. Pretermitted Spouses and Children 732.301Pretermitted Spouses o When a person marries after making a will and the spouse survives the testator, the surviving spouse shall receive a share (through abatement) in the estate of the testator equal in value to that which the surviving spouse would have received if the testator had died intestate (intestacy 732.102), unless: Waived by pre-nup or post-nup Must waive rights in event of death. Make sure it was executed correctly. Spouse is provided for in the will Has to be in contemplation of marriage. 28

The will discloses the intent not to make provisions for the spouse. Express or implied. o Provide for spouse in the willcan be in any amount Examples o D married H, D executed Will devising all property to a prior child; D divorced H; D remarried H, D died. H is pretermitted because of the second marriage, but H cant take because there is implied intent that D intended H to not receive anything because she gave her property to the child while she was married to H the first time. o Ed created a will in 2000, while to married Ruth. He divorced Ruth in 2002. He and Ruth had a child, Bill. Ed married Dora in 2005. Ed died with the 2000 will. The estate is worth 800K. He is survived by Ruth, Bill and Dora. Who gets what? Ruth gets nothing because she is considered to have predeceased because of the divorce. Dora is a pretermitted spouse and as such can get the equivalent share as she would under intestacy. Pursuant to 732.102(3), because Bill is not her child and they had not child together, her share is the entire estate or $400K. Create Doras portion through abatement. Start at the residuary clause and work your way up. o Ed created a will in 2000, while to married Ruth. He included a devise of $6000 to Dora, his secretary. At this time he had no contemplation of marriage toward Dora. He divorced Ruth in 2002. He and Ruth had a child, Bill. Ed married Dora in 2005. Ed died with the 2000 will. The estate is worth 800K. He is survived by Ruth, Bill and Dora. Who gets what? Same as above because she is still a pretermitted spouse because at the time the will was drafted there was no contemplation of marriage between Ed and Dora. Ed could not contemplate marriage at the time because he was already legally married. Dora does NOT get the $6000. No double dippingmust select one, devise or pretermitted spouse Legally no contemplation of marriage if T was married at the time the will was created.

Pretermitted Children 732.302When a testator omits to provide by will for any of his or her children born or adopted after making the will and the child has not received a part of the testators property equivalent to a childs part by way of advancement (early inheritance) (first exception), the child shall receive a share of the estate (through abatement) equal in value to that which the child would have received if the testator had died intestate, UNLESS: o (1) It appears from the will that the omission was intentional (second exception); or o (2) The testator had at least one other child when the will was executed and devised substantially all of the estate to the other parent of the pretermitted child and that other parent survived the testator and is entitled to take under the will (third exception).

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Example T and W have C1, get divorced. T Devises substantially all of the estate to X (may or may not be his wife). T and X have C2. D dies. X is the parent of the pretermitted child and that parent got substantially all of the estate. C2 cannot get pretermitted childs share. Calculate pretermitted shares before debts of the testator. Example Ed created a will in 2000, while to married Ruth. He divorced Ruth in 2002. He and Ruth had a child, Bill. Ed married Dora in 2005. Ed died with the 2000 will. The estate is worth 800K. He is survived by Ruth, Bill and Dora. Who gets what? o Dora gets pursuant to 732.102. o Ruth gets nothing o Bill is a pretermitted child and gets pursuant to 732.103(1). Example H & W married in 2000. It was each their second marriage. H had a son from a previous marriage, Charles. In 2001, H executed will leaving one-half of his estate to W, and the other half to Charles. In 2005, H & W adopted Sam, a 10 year-old child. H died unexpectedly in 2006. Is Sam a pretermitted child? o Sam is a pretermitted child because he was adopted after the will was executed and he does fall within an exception under the statute. o How much would Sam receive if H died with a $300k estate? To make sure that Sam gets something, you have to treat H as if he died intestate. So, Sam would get $75k as a pretermitted child. The remaining $225k would fall under the original terms of the will and be distributed under that will, not through intestacy. Divorce or Annulment 732.507(2)divorce or annulment voids devises in a will to a former spouse. Former spouse is considered to have predeceased the testator o Would not void gifts to step-children or in-laws. Exceptions: o If a devise explicitly states that the gift survives the divorce or annulment. o Divorce or annulment decree states that the devise in a will remain valid. Remarriage of the spouses to each other does not revalidate the will provisions, but may entitle the surviving spouse to an elective share. Antilapse Statutes 732.603look at statutes effective July 1, 2007 General rulegenerally when a devisee is not available to take because the devisee is dead or treated as deceased, then neither the devisee nor the heirs of the devisee can take the devise. Antilapse attempts to prevent lapsing of devises 732.603(1) unless a contrary intent appears in the will, if a devisee who is a grandparent of T or a descendant of Ts grandparent, has o predeceased T, dead at the time of the execution of the will, or is considered to be predeceased a substitute gift is created in the surviving descendants who will take per stirpes the property to which the devisee would have been entitled had the devisee survived the testator 732.603(3)(a)Applies unless contrary intent is shown within the will 30

ExAlternate takerif she survives me language that requires the devisee to survive the testator

Examples o Devise to Aunt Betty. Aunt Betty predeceased T. Aunt Betty is a descendant of Ts grandparents, therefore look to see if the gift fails. If the gift does not fail by abatement, Aunt Bettys descendants take the devise

Class Giftsgifts to people described by a group name o i.e.children, siblings, aunts, etc o Individual devisee are listed by name Whether it is a class gift or an individual group to more than one person is a decision for the court. Depends on how the gift is worded. Better to give only a group name or individual names, or make sure its specific enough for a court to tell that it is a class plus individuals. The importance of a class gift: o Class can grow or shrink o Antilapse applies to class gifts Example o To my band, ABCD[E]. What happens to Es share? If E is not a grandparent or a descendant of Ts grandparent, then Es share is divided among the remaining class members If E is Ts cousin, then Es share would go to Es descendants per stirpes If is a descendant of Ts grandparents but E has not descendants, then Es share is divided among the other class members Failure of a devise 732.604(1)except as provided in the antilapse statute, if a devise other than a residuary devise fails for any reason, it becomes part of the residue (specific, demonstrative, or general) o if residuary, then through intestacy. 732.604(2)except as provided in the antilapse statute, if the residue is devised to 2 or more people, the share of the residuary devisee that fails for any reason passes to the other residuary devisee, or to the other residuary devisees in proportion to the interests of each in the remaining part of the residue If the residue fails completely, then it is distributed by intestacy Exempt Property & Family Exemption 732.402Exempt Property o MUST PETITION FOR THE EXEMPTION o (1) If a decedent was domiciled in Florida at the time of death, the surviving spouse, or, if there is no surviving spouse, the children of the decedent shall have the right to a share of the estate of the decedent as provided in this section to be exempt property. o (2)Types of property included as exempt property(personal property) 31

(a) Home furnishings, furniture, and appliances up to $20,000 as of the date of death. (b) 2 automobiles held under the decedents name and used by the household. Unless used for business (Ex: taxicab) Includes only automobiles for personal use (c) All prepaid/college tuition college program contracts qualified under the Internal Revenue Code. (d) All benefits paid pursuant to 112.1915 Barry Grunnow Act o Creditors cannot take this property unless they have a security interest in that particular piece of property. Otherwise, this property can be taken by the surviving spouse or the children under 732.402(1). o If the decedent gives the property to a friend, then the spouse/children cannot get that property. 732.402(5) o (6) Property IS NOT protected, when: Spouse waived right via a pre or post nuptial agreement A petition for the property is not made within the specific time period Specifically devised property to the person other than the spouse or child Specific or demonstrative devise 732.403Family Allowance o Function: Provides money for the family between the decedents death and the completion of probate. o Only applies when decedent is a Florida domiciliary o Up to $18,000 o Given to spouse, dependent children and dependent parents (lineal heirs dependent on decedent) o Generally given to spouse to distribute to the children and parents o The court decides the amount, how often payment is made and method of distribution: Lump sum or periodic payments o If the spouse receiving family support dies before all of the support is received, the family support is terminated. o If the spouse is being given family support for the CHILDREN and the spouse dies, the support can continue from the 1st dead parent and also from the other spouse. The child can also petition for the allowance from the 2nd dead parents estate as well. o Can get the family allowance from various estates. o Abatement is used to get the money for the family allowance o Family allowance CAN be WAIVED by: Pre or post nuptial agreement Failure to petition in a timely matter

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o Must petition for family allowance support. Petition earlyif you wait too long, the court may decide that the support is not needed even though there is no time limit in 732.403 to petition the court for the allowance. Homestead Exemption In addition to exempt property and family allowance Found in Art X, Sec 4 of FL Constitution and 732.4015 & 732.405 F.S. Elements of Homestead property: Art. X 4(a) o (1) Must be real propertyincludes mobile homes and condominiums o (2) Must be owned by a natural person Cannot be a corporation Might be able to be transferred to a trust if the owner still maintains a degree of control over the property o (3) Must comply with the size restrictions 160 acres of contiguous land and improvements in an unincorporated area acre within an incorporated area o (4) Must be decedents primary residence Shown by intent to return, drivers license, receipt of mail at the address, voter registration, etc. When the property is in a municipality, only the home is covered, not other nonattached structures Cooperativebuilding owned by multiple peoplegray area in flux in Florida; not many of these anyways in Florida. At death, the estate owns the home and therefore not owned by a natural person. This is where the constitutional protection begins. Art X, 4(b) o Transfers the protection to the spouse or heirs that take the homestead automatically under the Constitution. If this happens, creditors cannot touch the homestead if its devised to the spouse or heirs. Art X 4 o (a)certain creditors cannot force a sale of homestead property & provided the physical limits of the property: 160 acres of contiguous land and improvements in an unincorporated area acre within an incorporated area o (b)protects surviving spouse and heirs o (c)limits on devises 732.4015copies limitation on devises found in the constitution 732.401provides a result for situations when homestead property is devised in a manner that contradicts the constitution (732.4015) or if not devised at all (intestate). o If T dies with Spouse and lineal decedents Spouse gets life estate and decedents get a vested remainder, per stirpes. Which creditors can force a sale?

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o TaxesIRS, county & state governments, property taxes, condo assessments o Liensmechanics liens, contractors liens, construction liens, mortgages Which creditors cannot force a sale? o Credit card companies o Student loan companies o Judgment creditors o All other creditors Who are the heirs? o Defined in 732.103anyone that would could have taken under this statute is considered an heir. o Applies even if it is devised property Ways to alienate property: o Sell it o Give it away o Give mortgage Limitations on alienation under Constitutional Homestead protection: o If married, need spousal consent Even if owned before marriage o Dont need spousal consent when: Spouse is incompetent Adding spouse to the title o If testator has a minor child he cannot devise the homestead to anyone Devise will be voided If voided, wife gets a life estate and children (minors and adults) get a remainder. Testator can alienate the homestead during his lifetime, however. Ways a spouse can waive their Homestead exemption: o Pre or post-nuptial agreement o Agreement to waive with other beneficiaries The spouse must PETITION to receive the Homestead. If the spouse does not petition, then they waive their rights. Questions to ask in homestead situations: o 1) After Ds death, does the exemption inure (transfer) to anyone or is the home subject to claims of Ds creditors? Art. X 4(b) spouse or heirs o 2) Did D improperly alienate the property during his lifetime? Art X 4(c) spouse o 3) Did D properly devise the homestead? Art X 4(c) & 732.4015 minor child or spouse. T cant devise if there is a minor childto anyone! If there are no minor children, then the only valid devise is to the spouse.

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o 4) If D died intestate (or if the attempted devise was ineffective), who gets the homestead? 732.401; 732.4015 732.401if the decedent is survived by spouse and one or more descendants, the surviving spouse shall take a life estate in the homestead, with a vested remainder to the descendants in being at the time of the decedents death per stirpes. If not devised as permitted by law and the Florida Constitution, the homestead shall descend in the same manner as other intestate property ( 732.102 & 732.103) 732.4015The homestead shall not be subject to devise if the owner is survived by a spouse or a minor child or minor children, except that the homestead may be devised to the owners spouse if there is no minor child or minor children. Examples o (1) John owns a homestead and lives with Janet. They are not married. He owes ABC Credit Card Co. $10,000. During his lifetime, can ABC force a sale of the home to collect on his debt? No (a) John dies and leaves the homestead to Janet. Can ABC force a sale of the homestead? Yes, because Janet is only a friend, not a spouse or heir. To keep the home, Janet could come up with the $10,000 to pay ABC and keep them from forcing a sale of the home. o (2) John and Janet were married before John died. During his lifetime, could ABC force a sale of the house? No After John dies, Janet gets the home under the will. Can ABC force a sale? No, because Janet is a spouse. o (3) Harry (H) owns a home but does not have many assets. He owes a judgment debt to ABC Credit Card of $100,000. Assume that the size restrictions and Florida primary residency requirements for homestead are met. (a) Can ABC force a sale during Harrys life if he is single and has no children? No, because they are not one of the three types of creditors that can force a sale of the home. See textbook, p. 251 for the rest of the answers Elective Share 732.201Definition: o Elective share is what a spouse can take if a surviving spouse is unhappy with the devise left to the spouse in the decedents will. Elective estate is an augmented estate Spouse must demand elective shareNOT automatic o If demanded by spouse, spouse is entitled to it o 732.2135Must demand within a certain period of time, the earlier of: 35

Within 6 months of service of notice of administration [notification that probate has started]; or Within 2 years of decedents death o Can get an extension for good cause, but there is no definition of the extension CAUTION: If the spouse petitions for an elective share and then petitions for an extension and withdraws, that spouse can be assessed court costs and attorneys fees for doing so. Only a surviving spouse of the decedent that was a Florida domiciliary can take an elective share 732.2065 sets the elective share at 30% of the elective estate: o Formerly 30% of the probate estate o Now more in line with the UPC o Elective estate includes assets not included in the probate estate o Became effective October 1, 1999 o Applies to decedents that die on or after Oct. 1, 2001 ( 732.2155) o Very little case law on the new statutes 732.2105Spouse can take elective share in addition to the homestead and family allowance and exempt property. Provides lots of protection for the surviving spouse Who can petition for the elective share? 732.2125 o Surviving spouse o An attorney in fact on behalf of the surviving spouse Via power of attorney o Guardian of the property of a surviving spouse Via incompetency proceeding Attorney in factRod-Dod believes the Legislature actually meant an attorney with a durable power of attorney If an attorney or guardian petitions for the elective share, there will be a hearing to allow the court to approve or deny the elective share o Approval will be based on the surviving spouses probable lifetime needs o Determination of whether or not the spouse really needs it 732.2315, Petition time periods.. What comprises the elective estate? o Calculations based on value, no money taken away from anyone. o Probate estate 732.2035(1) Value of the probate estate Defined in 732.2025(7)all property wherever located that is subject to estate administration in any state of the United States or in the District of Columbia. o Pay on death accounts and survivorship accounts 732.2034(2) I.e. In Trust For accounts and any account or securities in which decedent had a survivorship interest. 36

Value of pay on death accounts is what the decedent could have withdrawn up to the time of his death. Only the decedents fractional interestnot what they would have received had they survived. Other jointly owned property 732.2035(3) Include the value of the decedents fractional share of property held in a tenancy by the entirety or by joint tenancy 50% in TBE May be smaller in JTWRSFor purposes of the elective estate, decedents fraction is included in the elective estate even though the property goes to the other owner. If it is a tenancy in common, the decedents fractional share gets added to the elective estate. Revocable trusts 732.2035(4) Value of revocable trusts created by decedent gets included in the elective estate. Only trusts where decedent is fully in control of the trust assets up to the time of his death. Transfers where decedent retained an interest 732.2035(5) Irrevocable transfers made by decedent with retained interest 732.2035(5)(a)(1) When interest retained in the property is 100%, then the full value is used. When less interest retained, that fraction of the interest is used. E.g. Trust: Income to D for life, then principal to X. Trust is worth $100K. Because D enjoyed the full use of the proceeds from the $100K, the full $100K value is used for the elective share. E.g. Decedent creates an irrevocable trust of an office building. Trustee is to pay income to D for life then upon Ds death, principal to X. o Irrevocable transfer but D has a retained interest because D has the right to the entire value of the building because he retained interest in all of the trust income. If the income was to be paid to D and to X during Ds life, value of Ds interest would be of the trust assets. Not included when the spouse is trustee732.2035(5)(a)(2) Because the spouse as trustee would have had power over the distribution of the money. Transfers with discretion in favor of the decedent732.2035(5)(a)(2) ExampleD creates an irrevocable trust in an office building. Trustee has discretion to distribute income (rent) to D or Ds children, upon Ds death principal to Ds children. Trust is setup so that the trustee can choose not to pay rent to D or Ds children, but instead put it back into the building. 37

But because the trustee could have paid all rents to D, the total value of the building is included in the elective share estate. Fractional interest with discretion in favor of D. If the spouse is the trustee, then it cannot be included in the elective estate because he/she is the trustee because the spouse would have consented in the distribution to the decedent. Cash surrender value of life insurance policy at the time of the decedents death 732.2035(6) Insurance on decedents lifevested insurance. Elective estate includes what the investment value of the vested insurance policy would have been if the D had sold it on the day before his death. ExampleFeb. 10cash surrender value is $20,000. Feb. 11 D dies with a policy benefit of $100,000. Beneficiary will receive $100,000. However, only $20,000 will be used for calculation of the elective estate. Retirement plans 732.2035(7) Value of plan Includes IRAs Transfers and assignments made within 1 year of decedents death 732.2035(8) Value of the transferred interest is included in calculation of the elective estate. (8)(a)termination of a right or interest ExampleD creates a revocable trust. D says income to X for life, and principal to B. One month before Ds death, he changes the trust to an irrevocable trust, thereby terminating his right to the trust and his discretionary interest. The value of the trust is included in the calculation of the value of the elective share estate. (8)(b)includes value of any gift given away within a year before decedents death Exceptions: o Value of gifts if it qualifies under IRC 2503(e), which covers transfers made for medical and education expenses; NO LIMIT o Value of gifts if it qualifies under IRC 2503(b) or (c) which exclude transfers that are, or are treated as, gifts of present interests. $12,000 annual limit per person. Transfers in satisfaction of elective share 732.2035(9) 732.2025(10)definitionan irrevocable transfer by the decedent to an elective share trust. 732.2025(2)definition of an elective share trust Elements: o (1) Surviving spouse must be entitled to the use of the property or received income at least annually for the life of the surviving spouse; E.g., D transfers property into a trust. If the spouse is a beneficiary to that trust and can either use it or 38

collect the rent during their lifetime, it satisfies the first element. o (2) Surviving spouse must have the right to make the trustee make the property productive or force the trustee to convert it within a reasonable time; and E.g., Spouse has the right to tell the trustee to rent the property out or can direct the trustee to convert (or sell) it. o (3) While the spouse is alive, only the spouse has the power to distribute the income or principal to someone other than the spouse. Many attorneys have begun to advise their clients to take out large life insurance policies that would satisfy the elective share to protect the rest of the devises in the will. 732.2045exclusion of property from calculation of the elective share estate o Property given away before October 1, 1999732.2045(1)(a) o Property given away before marriage732.2045(1)(a) o Transfers for adequate monetary consideration732.2045(1)(b) Any property given away with adequate monetary considerationdoes NOT have to be cash; can be value (this will be calculated in the probate assets) Selling property o Transfers with spousal consent in writing732.2045(1)(c) o Life insurance proceeds exceeding cash surrender value732.2045(1)(d) Rod-Dod thinks this is superfluous o Life insurance maintained pursuant to a court order732.2045(1)(e) Why would this be necessary? Alimony or child support o Community property732.2045(1)(f) Real estate owned by decedent in a community property jurisdiction o Qualifying special needs trust732.2045(1)(g) 732.2025(8)definition of a qualifying special needs trustmeans a trust established for an ill or disabled surviving spouse with court approval before or after the decedents death, if, commencing on the decedents death o Property held by general power of appointment732.2045(1)(h) Allows person to move property from a personal estate to a trust. o Homestead732.2045(1)(i) Value of homestead not included in the elective estate. How do you determine value of property in an elective share estate? o 732.2055describes valuation process for property Most property is valued (fair market value) at the moment of decedents death. How do you satisfy the elective share? o 732.2075give order for paying off spouse 732.2075(1)1st look to the benefits that the spouse is already receiving Example$700,000 elective estate, $210k is the elective share (30%),

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Spouse beneficiary of life insurance $100K, owed $110k from elective estate. Spouse receives $10K from retirement plan; still owed $100K from elective estate. If money is still owed under the elective estate, then you need to satisfy what is owed using 732.2075(2)provides for abatement of property Start with probate estate and revocable trusts Then, items included in 732.2035(2), (3), or (6) o 732.2035(3) includes jointly owned property Life insurance beneficiaries Anyone else Charities Waiver of Elective Share o Can waive the right by pre- or post-nuptial Read the document carefully to see what the spouse actually waived o Failure to petition Complete failure to petition Fail to petition before the deadline o 739disclaim right Filing of disclaimer Cannot disclaim to avoid creditors o Reach agreement with other beneficiaries o Actions that estop the spouse from claiming the elective share rights Knowing entry into bigamous marriage

Simultaneous Death Statutes 732.601addresses the situation when it is unclear which person died first o (1)When property devise depends on the order of death, each person will be deemed to have predeceased the other. The property owner will be deemed to have survived the recipient that died simultaneously with him. Presumption. o (2)Talks about successive beneficiaries If successive beneficiaries die simultaneously, the property is divided into equal parts based on the number of successive beneficiaries. Each part is distributed to the person who would have taken the property of the particular beneficiary had been the survivor. o (3)addresses JTWRS and TBEs In simultaneous death situations the JTWRS & TBE property is divided by the total tenants to each in TBE o H has a $200k estate, and W has a $500k estate. H & W have a TBE worth $200k. When devising Hs estate, in total, it is $300k ($100k from TBE). H & W have 2 children, C1 & C2 and W has a child, C3. When devising Hs estate, C1

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& C2 gets $150k each. When distributing Ws $600k estate, C1, C2, & C3 each get $200k from Ws estate since H & W died simultaneously. # of tenants in JTWRS o ExampleA, B, and C die simultaneously and no evidence exists to show that they did not die simultaneously. Divide total property by the 3 joint tenants. o (4)Insurance policies Insured and beneficiary die at the same time. The beneficiary will be deemed to have predeceased the insured Why?efficiency, try to avoid double probate o These rules apply unless contrary intent is expressed in the will or insurance policy Under the UPC, a survivor must survive for 120 days after decedents death, otherwise considered to have predeceased. In Florida, only consider to have predeceased if death was simultaneous. Living for one minute longer counts in terms of the survivor outliving decedent. Can bring evidence to show simultaneous death or that one survived the other. o Eyewitness accounts, phone calls, etc., that show that one person survived the other.

Slayer Statute 732.802(1)a person who unlawfully and intentionally causes the death or participates in the cause of the death of the decedent, may not receive benefits from the will or insurance policy. o Rationalewrong doer should not benefit from his crimes o Resultkiller treated as if the killer predeceased the decedent 732.802(2)If B kills A and they are JTWRS, the share gets severed and As share goes to As heirs instead of B since B killed A. 732.802(5)if a person is convicted of murder in any degree, the conviction bars the receipt of devises through probate. o Acquittal or conviction for a lesser crime does not necessarily allow for inheritance. o Probate court can hear evidence to determine if by the GREATER WEIGHT OF THE EVIDENCE, the person was responsible for the decedents death. If so, then the probate judge can bar inheritance. o Also applies to TBE and JTWRS ExampleA & B are JTWRS. A kills B. Bs heirs receive his You do not pay for your fathers sins o Killer is treated as having predeceased the decedent. It is still possible for descendants of A inherit. Waivers, Disclaimers, & Agreements Concerning Succession Disclaimersgoverned by 739.101-739.701 o Generally executed after the gift is complete. T has died. A is getting a gift in the will. A wants to refuse gift.

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 Refusal usually occurs right before a gift is to be received o 739.201 Treated as predeceased when disclaimed. Cannot disclaim the gift to avoid creditors or federal taxes. Waivers-- 732.702 o Generally executed in advance of decedents death Waive right to receive gift Often done in pre or post-nuptial agreements o To be effective must be written and signed in the presence of 2 witnesses o 732.702(1)provides that use of language stating that I waive all rights, will in fact waive ALL rights including homestead and elective share, among others. o Waiver is often used in a second marriage to protect children from a prior marriage o Pre-nuptial agreementfiance does not have to fully disclose o Post-nuptial agreementrequires full disclosure of decedents financial assets. Can use Waiver and Disclaimer for probate and non-probate property Why reject a gift? o Tax reasonsrecipient does not want the additional tax burden 739.402(2)(c)-(d)Can reject a gift, but cannot disclaim the property to avoid creditors. Agreements Concerning Succession o 732.701 o Discourage clients from creating these agreements o Agreement to make a will, not make a will or not to revoke a will o Usually in a pre or post-nuptial agreement o Need all of the elements of contract law, however, these are agreements based on estate law and therefore probate code under 732.702 controls. Cannot be oral must be in writing must be signed in the presence of 2 witnesses o can be breached and often are breach occurs during the decedents life the interest if remaining vest upon the decedents death, therefore interested party would not know if decedent breached the agreement or nor until the decedent dies. Joint and Mutual Willnot the same as succession agreements o Rod-Dod dislikes Advancements o 733.806 42

Applies only to intestate estates Occurs when the decedent gives property to an heir during the decedents lifetime against the heirs share of the future estate Must be declared in a contemporaneous writing by the decedent that the gift was an advancement; OR Contemporaneous with receiving the transfer the recipient must sign a written acknowledgement stating that he knows that the transfer of property is an advancement on his future inheritance When the intestate estate is distributed the amount received by advancement will be reduced from the amount the heir will receive. o How do you compute shares when advancement has occurred? Add the value of the advance to the pot to get the total value of the estate An advancement will not effect 3rd parties If person receiving the advancement predeceases the decedent, then it is as though the advancement never took place and the descendents of the predeceased beneficiary will still get their shares per stirpes o Unless the writing showed a contrary intent If person who received the advancement predeceases, kids of that person will receive full share no subtraction for advancement.. 200K, 20K advancement to son. Son predeceases. GC1 and GC2 get of 180K. Ademption by Satisfaction o 732.609similar to advancement Applies to testate estates T gives devise to the devise or part of the devise during Ts lifetime Applies to any type of devise o How to prove: By writing at the time of transferwriting by testator contemporaneous with the transfer declaring that the gift is to deducted from the devise or is in satisfaction of the devise, or The devisee acknowledges in writing that the gift is given in satisfaction Can also make a reference in the will to the transfer Loans to Beneficiaries o Loans can be given to an heir during decedents lifetime o 732.109loans to heirs during decedents life but has not been repaid at the time of decedents death The personal representative can charge the heir with the loan amount. The personal representative withdraws from the heirs share the amount of money that was owed by the heir to the decedent at the time of the decedents death. If the debtor heir is the only heir, debt does not matter Debts become important only when there are multiple heirs

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If the debtor heir predeceases the decedent the debt is wiped out.

Non-resident and Ancillary Administration Ancillary administration is the administration of a decedents estate in a state or country other than where the decedent was domiciled. Probated in the county where property is located o State boundaries When you do ancillary administration, the probate court in the jurisdiction where the property is located handles the procedural aspects of that property. o In Florida, you apply the law for jurisdiction where the rest of the decedents estate is being probated Distribution is applied based in the law of the decedents domicile Unless, decedent has specified that he wants Florida law applied 731.106(2) o In the will, the testator can choose to apply the law of the location of the ancillary property o Example Saunders v. Saunders Decedent was a Colorado resident with property in Florida. Florida property probated in Florida. The Florida court used Colorado law because decedent did not provide in his will that he wanted the Florida property probated using Florida law. Fajardo v. Domingo Decedent was domiciled in the Philippines. Property in Florida was probated using Philippine law. Nonresident Wills o Will be valid under 732.502 if they are valid in the jurisdiction where the will was executed. EXCEPTholographic and nuncupative wills o 733.204(2)wills in a foreign language can be probated if an official translation is included. Inheritance by nonresidents o 732.1101regardless of where a beneficiary lives, he or she has the right to inherit ExceptionCubans living in Cuba Held in frozen US accounts Community Propertytext page 325 o 732.216 - 732.228 Florida Uniform Disposition of Community Property Rights at Death Act o Florida presumes that property purchased during marriage while a spouse was domiciled in a community property state remains community property.

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Presumption is rebuttable Applies to: Any personal property that was community in another jurisdiction Was purchased with income or proceeds from or in exchange for community property, OR Is traceable to the community property, AND Florida real property, except property held by TBE, that was purchased with income or proceeds from or in exchange for community property, or is traceable to the community property If a Florida domiciliary owned community property at death, of such property is deemed to be part of the decedents estate. Will be distributed pursuant to the decedents will or the laws of intestacy The other is deemed to be the property of the surviving spouse o This not included on the calculation of the elective estate o 732.225 provides instances in which property loses its community property status Lost when funds that are invested in Florida homestead Lost if the spouses sever or alter their interests in the property

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TRUSTS
Trustwhen someone holds something for the benefit of someone else o Can be created in writing or orally o Settler wants dead hand control Legal title holdertrustee Dont always need a 3rd party Constructive Trustnot generally part of wills and trusts, instead the are judicially created remedies Reasons for trusts: o Tax avoidance Death tax Spread tax burden to other people o Probate avoidance If properly designed, beneficiary gets property from the trust without going through probate Avoid publicity of details o Protecting assets Avoiding creditors (only happens in irrevocable trusts) o Dead hand control Attorneys generally charge more to create trusts Way to avoid creditors o Irrevocable most effective o Some avoidance with revocable trusts Law of trusts is not well settled in Florida Uniform Trust Codeadopted by many states, including Florida (called the Florida Trust Code) o Effective July 1, 2007 and retroactive in more situations o It is retroactive unless a provision states otherwise Beneficiary 736.0103(4)means a person who o (a) has a present or future beneficial interest in a trust, vested or contingent; or o (b) holds a power of appointment over trust property in a capacity other than that of trustee Settlor (or Grantor/Testator) 736.0103(16)means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settler of the portion of the trust property attributable to that persons contribution except to the extent another person has the power to revoke or withdraw that portion. o Can be settler, trustee or beneficiary But cannot have a settler that is the only trustee and beneficiary Trustee 736.0103(21)means the original trustee and includes any additional trustee, any successor trustee, and any co-trustee. This is the person who is managing the funds/assets for the beneficiary. For property to get into a trust, it must be placed in the trust 46

It is beneficial to have a will even when the testator has a trust because not everything may be in the trust. Ways to create a trust 736.0401 o Created by transferSettlor transfers funds/assets to a 3rd party who serves as trustee Title needs to be changed to the name of the trustee Testamentary trustsettlor is the testator and the transfer to the trustee is made by a devise o Self-declared trustsSettlor declares himself the trustee of the trust assets for the benefit of the beneficiaries o Holder of a power of appointment can create a trust by exercising power o No need to change title Inter Vivos Trustcreated during settlors lifetime o Effective upon creation o Avoid probate because the title has already been transferred from the testator Testamentary Trusteffective upon settlers death (because its created in a will). o Executed during a testators lifetime, but effective upon death. o Must go through probate Legal title holdertrustee Beneficiary has equitable interest

Revocable v. Irrevocable Trust Revocable Trustsettlor retains the right to revoke or amend the trust o Creditors have access to the whole trust because settlor has retained the right to revoke. Irrevocable Trustsettlor has NO right to revoke or amend the trust o Creditor can only reach the settlors interest, if he retained any. Under common lawunless a trust expressly stated that it was revocable, it was deemed to be irrevocable (presumption of irrevocability). 736.0602 (1)trusts are deemed to be revocable unless the trust instrument declares it to be irrevocable (presumption of revocability unless it states otherwise). o Effective July 1, 2007, this does not apply retroactively Inter vivos trusts are the only trusts that avoid probate. Pour-over Provisions 732.513(1) o Where an inter vivos trust is the beneficiary of a gift in a will. o Not the creation of a testamentary trust o The assets devised to the inter vivos trust will pour-over to the trust during probate o Does not avoid probate

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Elements of a Trustmust have all elements to be valid Res o The thing; the property; the asset (can be any amount) o Brainard v. CommissionerLeading Case Stock trading caseBrainard tried to circumvent tax law by placing proceeds from stock trading into trusts for his kids, wife and mom. Issuewas there a res at the time the trust was created The trust res was supposed to be the profits not the actual stocks. Therefore the trust was not actually created when he thought because stock was not in the name of the trust. No trust existed. Even though the money eventually ended up in the trust, the stocks were not in the trust, so the money passed through him and it was taxable income. In order to create trust, you have to keep something in the trust. o Herskowitz v. Smith Testamentary trustThere is no question that a valid trust with an identifiable corpus has been established upon the death of the testator (not distribution) where the estate is liquid and sufficient to pay all costs of administration, creditors, and taxes. o Sometime an expectancy can be the resonly in certain circumstances because of statute allowing it to occur 733.808(1)death benefit expectancy (such as a life insurance policy) can be the res. 732.513(2)(c)allows an inter vivos trust to be created by the expectancy of receiving a devise under a will Settlor Intent and Capacity o 736.0402(1)(a)settlor must have capacity to create a trust o 736.0402(1)(b)settlor must have intent to create a trust o 3 elements of settlors intent and capacity: Settlor had actual intent to create a trust Settlor had capacity at the time the trust instrument is executed Present intent to make a trustnow! o Express intent is important to prevent confusion after the settlors death o The term trust does not need to be included in the trust document (but be careful) Only need to show desire for someone to hold something for the benefit of another o Precatory Language Terms such as I wish, I strongly desire, I fervently hope, and I request. Often create confusion as to the settlors intent

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May be construed as either (1) manifesting an intent to create a trust with its attendant enforceable legal obligations on the trustee or (2) as merely indicating a desire on the part of the transferor to impose a moral obligation, which is legally unenforceable Be careful when using precatory language because the settlor may not be creating a trust by using this language.Make intentions clear o 736.0402(1)(a)settlor must have capacity to create a trust o 736.0601the capacity required to create, amend, revoke or add property to a revocable trust, or to direct the actions of the trustee of a revocable trust is the same as that required to make a will. Only applies to revocable trusts because revocable trusts are considered to be a will substitute. o Testamentary trust requires the same capacity of a will because the trust is created in the will. o Irrevocable trustlook at common lawpage 351 (text) Same capacity as required to make an inter vivos gift Restatement 3rd of Trusts 11Capacity of a Settlor to Create a Trust (3)A person has capacity to create an irrevocable inter vivos trust by transfer to another or by declaration to the same extent that the person has capacity to transfer the property inter vivos free of trust in similar circumstances Basically the same capacity you would need to have in order to give a gift. Identifiable Beneficiary o Has an equitable interest in the trust o Often private express trusts have successor beneficiaries Exampletrust for spouse for life, then child for life, then principal to grandchild o 736.0402(1)(c)trust must have at least one beneficiary o 736.0402(2)beneficiary needs to be somewhat identifiable. Beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities. o Unborn childat times can be a trust beneficiarydepends on the facts Unborn child can have a Guardian Ad Litem to protect his interest. This will not violate the Rule Against Perpetuities o ** Need for an ascertainable beneficiary is based on the need for the trustee to be accountable for fulfillment of duties. o 736.0402(3)can include an indefinite class and give a trustee the power to select a beneficiary but this power must be executed within a reasonable time. (under new FTC). The trustee can make this indefinite class a definable class by selection. o The sole trustee cannot also be the sole beneficiary in a trust (it is no longer a trust and becomes a fee simple- equitable and legal estate are the same and owned by the same person)

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Trustee with duties o If the trust has more than one trustee, the trustees must make decisions together 736.0703(1)co-trustees who are unable to reach a unanimous decision may act by majority decision o Who can be a trustee? Settlor 3rd party Beneficiary cannot be a trustee where there is only 1 beneficiary. Where there are multiple beneficiaries, 1 beneficiary can be the trustee. One appointed by the court per 736.0201(4)(b) o Trustee must have duties 736.0402(1)(d) o Trust will not fail because it does not have a trusteea trustee will be appointed if so. o The trust will fail if the trustee is both the trustee and the only beneficiary 736.0402(1)(e) Contrast two cases on pgs. 362-65 (Grant & Contella) o Since Contella didnt have authority or power over the real property of the trust, the doctrine of merger could not be applied to terminate the trust. Valid trust purpose o 736.0404trust purpose cannot be illegal or contravene public policy o Restatement (Third) Trust 29an intended trust or trust provision is invalid if: (a) its purpose is unlawful or its performance calls for the commission of a crime or tortious act; (b) it violates rules relating to perpetuities; or (c) it is contrary to public policy o Would a trust meet the purpose element if it provides to my son as long as he never marries? Probably o What about to my son as long as he divorces his wife? This would most likely not meet the valid purpose requirement under the statute.

Trust Formalities look to chart on 373 Testamentary Trust Formalities o Formalities are the same as the same as that of a will 732.502 Settlor/testator must sign the will at the end Settlor/testator must sign (or acknowledge his signature) in the presence of at least two attesting witnesses At least two witnesses must attest to the settlor/testators signature; and The attesting witnesses must sign in the presents of the settlor/testator and each other Inter Vivos Trust Formalities

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o Required formalities depend on whether the trusts res is personal property or real property Dependent Factors Is res real property Is the trust a revocable trust with testamentary aspects o Trust with Real Property as the res: 736.0403(2)(a)Must comply with the statute of frauds in 689.05 The trust instrument must be in writing and must be signed by the settlor (NOTE: Witnesses are not required) 689.06property is placed into a trust using a deed Need 2 witnesses and the settlors signature. What happens if the Statute of Frauds is violated because the trust is not in writing? The beneficiary or settlor can sue for constructive trust (see p. 613) because the trustee should not be able to keep the property o Constructive trust is an equitable remedy designed to prevent unjust enrichment Remedy by operation of law Court ordered Does not create a new trust Imposed for wrong doings, not for mistakes o Transfer due to: Fraud, undue influence, or duress; or The transferee at the time of the transfer was in a confidential relation to the transferor and that relationship was breached by the trustee. o Trustee becomes a constructive trustee Trustee must convey the trust assets to original intended beneficiary or to the settlori.e. compelled to perform the intended express trust. o Constructive trusts cannot be imposed because of a mistake on the part of the settlor, such as forgetting to sign the will or trust. A deed without a trust writing will not meet the requirements of the statutes of frauds. Therefore, it is not a valid trust. o Revocable Trust with Testamentary Aspects Testamentary aspects are provisions of the trust instrument that dispose of the trust property on or after the death of the settlor other than the settlors estate ExampleIncome to settlor for life, then to Ss children 736.0403(2)(b)testamentary aspects of a revocable trust must be executed in compliance with will formalities:

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Applies to settlors who were domiciled in FL when the trust was created/executed; Applies only to revocable trusts; Where the res is real or personal property; Applies only where the revocable trust has testamentary aspects; and Applies only to those particular testamentary aspects What happens if a revocable trust with testamentary aspects is not compliant with will formalities? (for irrevocable trusts, dont need same formalities as a will) The testamentary aspect is void o Examples Income to S for Life, then to Ss Children If the trust is revocable and the testamentary aspects are not executed in compliance with will formalities then to Ss Children is VOID and stricken. If the trust is IRREVOCABLE, then it does not need to follow the will formalities. Revocable trustIncome to S for life, then to Ss estatebecause upon Ss death, his estate becomes the trust beneficiary, it is not considered a testamentary aspect under 736.0403(2)(b). Therefore, the will formalities do not have to be followed. Revocable trustTo Ss children for life, then to Ss grandchildren. Argument 1no testamentary aspect because the benefit is not on or after the settlors life and is not to the estate. Argument 2would be testamentary aspect because it could be changed by settlor. Could be interpreted that every revocable trust has a testamentary aspectnot decide by a court case yet, but Rod-Dod thinks the interpretation is possible. No formalities for other trusts o 736.0407allows for oral trusts Invites litigation Must prove trusts terms by clear and convincing evidence o Always better to put trust in writing Revocable Trust/Properly Funding Trusts o 736.0103(15)definition of revocable trust revocable as applied to a trust, means revocable by the settlor without the consent of the trustee or a person holding an adverse interest 52

o o

o o o o o

o o o o

A trust that is revocable without the permission of a trustee or party holding and adverse interest Person holding an adverse interest o Beneficiary o Trustee Beneficiary in a revocable trust gets his interest in the trust at the time the trust is created What formalities are required? When real estate is part of the rescompliance with statutes of fraud When the trust has a testamentary aspectscompliance with will formalities Always a good idea to follow will formalities even when not required. Generally avoid probate, unless the esate is a beneficiary AKAWill Substitute Trust assets are titled in the trustees name and therefore not part of the probate estate The trust owns the trust assets Trusteelegal title holder Beneficiaryequitable title holder Revocable trust is when settlor transfers assets in a writing to a trustee (self or 3rd party) and the settlor retains a right to revoke As of July 1, do not need to state revocability in the trust document Generally settlor retains something for himself during life and at death the trust assets are either given to beneficiaries or other trusts Revocable Trusts generally contain distribution provisions at 2 separate times During settlors life After settlors death Examples o To S for life, then to Ss wife o To S for life, then to Ss wife for life, then to Ss kids Review Appendix Epage 833Form for unmarried settlor revocable trust See article firstdisposition of trust assets during settlors life

Modification/Termination of Revocable Trusts 736.0602(1)all trusts deemed revocable unless the trusts explicitly declares that the trust is irrevocable How do you revoke or modify a trust o 736.0602(3)(a)can amend/revoke a trust pursuant to the method provided in the trust By oral provisions, letter to trustee, amended trust, etc. o If no provision for amendment or revocation the look at 736.0602(3)(b). 736.0602(3)(b)(1)can modify or revoke by a later will or codicil that expressly refers to the trust A will or codicil can be used to revoke an existing will or trust 53

If the trust and will are in conflict about specifically devised property in the will, the will controls 736.0602(3)(b)(2)can modify or revoke by another method manifesting the settlors clear intent Must prove by clear and convincing evidence

Funding a Trust Must have a res in the trust 736.0401provides method of creation o (1) by transfer of property to another person as trustee during the settlor;s lifetime or by will or other distribution taking effect on the settlors death o (2) by declaration by the owner of property that the owner hold identifiable property as trustee, or o (3) exercise of a power of appointment in favor of a trustee. How does an assets become part of a trust o Testamentary Trustscreated in a will Becomes effective upon death of the settlor/testator Some of probate estate must be placed in the estate. The res is transferred into the trust at the time the devise to the testamentary trust is distributed. No funding during settlors lifetime o Inter Vivos Trustsrevocable and irrevocable trusts Must place res in the trust at the time the trust is created Some assets are not truly transferred 733.808(1)expectancy death benefits 732.513(2)(c)an expectancy of a devise in a will Only available because of statute The trust document must refer to the expectancy Can be tangible or intangible property, real or personal o Real Property In order to fund a trust with real property, a deed needs to be executed to effectuate the transfer or you can convey the property w/in the trust if it is witnessed, has an adequate legal description, and contains an expression which purports to convey, grant, or transfer the real estate. --- usually done in a separate document to prevent the trust from becoming public record. 689.06need to execute with the formalities provided in this section Grantor/settlor or settlors agent must execute the deed in the presence of 2 witnesses 695.03grantor/settlors signature on the deed must be notarized before it can be recorded. Deed must be recorded

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689.07if all you do is transfer real estate to John Smith as trustee with nothing more, the John Smith has just received the property in fee simple. (1) must show evidence of the trust o Need more information in the deed to show the existence of the trust i.e.trust purpose or beneficiaries o Many practitioners do not do this because many trust are created for privacy o To protect privacy and the trust, dont give the deed to John Smith as trustee, give the deed to John Smith, Trustee of the Eloisa Rod-Dod revocable trust, dated 3/21/07, thereby showing a contrary intent to a fee simple transfer. Sometime practitioners will record a memorandum of the trust that says a trust exists and states the power of the trustee o The reason for doing this is because in the future there may be a successor trustee or the trustee may have to sell the property. If this occurs, the information about the trust is already recorded. If you include the name of the trust when titling the deed, no need to reveal the names of the beneficiaries or the trust purpose

o Intangible Personal Property Cashwrite a check payable to the trust Trust needs to have a bank account in the name of the trust Stocks & Securitiespurchased in the name of the trust or have the certificates retitled in the name of the trust o Tangible Personal Property Ownership proved by titlecars, boats, etc Transfer to trust by having the item retitled in the name of the trust Items without titlesjewelry, art, etc. Simply mention the item in the trust instrument, so that there is written evidence that you as settlor have given the item to the trustee for the benefit off the trust Life Insurance & Retirement Plansdesignate the trust as the beneficiary o Homestead Propertymake sure you know what the client is trying to achieve, why placing homestead into trust 732.4015(2)(a)owner can be the grantor of a trust described in 733.707(3) that is evidenced by a written instrument which is in existence at the time of the grantors death as if the interest held in trust was owned by the grantor (i.e. where grantor was a beneficiary of the trust). o Bankruptcy Cases in which the homestead is transferred into a revocable trust

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Whether homestead transferred into a revocable trust maintains protections against bankruptcy creditors Sometimes creditors can get to the trust property Be careful, it is risky, some case law says creditors can get at property in trust, some says its still protected by the homestead.

Mistake under Trusts Mistake in content, execution, and inducement. 732.5165Mistakes in execution for wills. Any part of the will is void if so procured, but the remainder of the will not so procured shall be valid if it is not invalid for other reasons. Scriveners errors will not void the will. 736.0406Court can void a trust or part of a trust for a mistake 736.0415Court may reform (fix) the terms of a trust, even if they are unambiguous, to conform the terms to the settlors intent. o Must be able to show settlors intent by clear and convincing evidence o If not the trust will fail and result back to the settlor (called a resulting trust) Revocation or Amendment of Revocable Trusts 736.0602Revocation or amendment of revocable trust must be carried out in the dictates of the trust o (2)(b)a revocable trust created or funded by more than one settlor; each settlor may revoke or amend equivalent to the amount contributed by that settlor. Co-settlorseach can revoke the res contributed by each individually. What if the property contributed is tenancy by the entirety? Probably cannot revoke or amend it individually. o (3)(a)terms for revocation can be listed in the trust Undue Influence in Trusts 736.0406If the entire trust is obtained by undue influence, the entire trust is voided. If a portion of the trust was obtained by undue influence, then that portion trust will be voided. 3 elements needed to prove undue influence: (1) confidential relationship; (2) active procurement; and (3) substantial beneficiary. Argue similarities with wills ( 732.5165) Lapse and Anti-lapse 736.1106applies to inter vivos trusts and testamentary trusts o (1)(b)(must survive the date of distribution) Definition of distribution date: With respect to future interests, means the time when the future interest is to take effect in possession or enjoyment. o (2)Future interest under trust is contingent on the beneficiary surviving the distribution date, unless a contrary intent appears in the trust instrument. Until the distribution date the interest is contingent

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If the beneficiary does not survive the distribution date, then the beneficiarys descendants get the benefit per stirpes unless the trust instrument shows a contrary intent Applies to any descendant, unless shown to be a contrary intent within the trust document o (3)another method for showing contrary intent is to include survivorship language o (4)if the beneficiary has no descendants, then the property passes in the order listed in this sub-section o Exampleto Mary for life, then to John Under 736.1106, the distribution date is when Mary dies If John predeceases the distribution date, his descendants can get his interest. The interest does not pass through his will. But, what if the trust saidto Mary for life, then to John if he survives me and John predeceases Mary, what happens to Johns interest? Antilapse does not apply because the survivorship language shows a contrary intent. Divorce 736.1105same as will provision, except it only applies to revocable trusts o If a revocable trust created before divorceany provision of the trust that affects the settlors spouse will become void upon annulment of the marriage or entry of the judgment of divorce. Any such trust will be administered as if the settlors spouse had died as of the date of annulment/dissolution/divorce o ONLY APPLIES TO REVOCABLE TRUSTS o Irrevocable trusts will not automatically become void. A separate agreement or a clause w/in the trust is required. Slayer Statute 736.1104killer statute for trusts o If you kill someone you dont get the benefit of the trust Includes the settlor or a person on which your interest depends Killers descendant(s) can still take the benefit o Applies to all trusts o Exampleto Mary for life, then to John If John kills Mary he cannot get the benefit, but his descendants can

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Creditor Access to Trusts & Protection of Trusts Against Creditors Depending on the provisions included in the trust, the beneficiary may receive protection from creditors taking beneficial interest in the trust. 4 types of provisions that may impact creditor access o (1) Mandatorygives a directive to the trustee requiring disbursement to the beneficiary pursuant to the settlors directive Example, page 438Trustee shall distribute all trust income quarterly to A. = must o (2) Discretionarytrustee is given the right to decide when if, if ever, the benefit is given to the beneficiary Which beneficiaries will receive the benefit When/how often How much May pay out money or may add income to principal Example, page 438Trustee may in his sole, absolute and unfettered discretion distribute some, all or no income to A or instead distribute such income to other trust beneficiaries o (3) Supportpays for educational, medical, lifestylewhen settlor places assets in trust for care, comfort, maintenance of a beneficiary or group of beneficiaries Hybrid between a mandatory and discretionary provision Can have multiple beneficiaries, but only one may be support provision Often created for minors ExampleTrustee shall distribute such income as necessary for As support, health, and education Thought of as discretionary because the trustee has lots of discretion, but also has mandatory provisions o (4) Spendthriftperson that squanders, wastes money quickly These provisions are protectionist. The settlor is trying to protect the beneficiary from his/her own spending habits Prevents assignment, transfer, bankruptcybecause without the provision, the beneficiary could use the trust to pay debt of otherwise support poor financial habits Can restrict the right of beneficiary from alienating the property Also can restrict a creditors right to place a lien on the property Examples No interest of any beneficiary in the income or principal of this trust shall be assignable in anticipation of payment or be liable in any way for the beneficiarys debts or obligations and shall not be subject to attachment. (Examples continued on next page)

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No beneficiary of this trust shall alienate, encumber or hypothecate his or her interest in the principal or income of this trust in any manner; and to the fullest extent of the law, the interests of any beneficiary shall not be subject to the claims of his or her creditors or be liable to attachment, execution, garnishment, sequestration, or other process of law. No beneficiary shall have any power to dispose of or change 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.

Provisions that protect a trust or beneficiary from creditor access are not exclusive of each otherFor example a trust can be a mandatory spendthrift trust Provisions against creditors & creditor access o Under general rules of creditor access, a creditor can reach a beneficiarys equitable interest. Why?because a beneficiary generally can alienate or transfer his interest unless there is a spendthrift clause IF you can transfer the interest, the creditors can reach the interest. o Spendthrift provisionsgenerally valid as a protection against creditors Waterbury v. MunnFlorida Supreme Court recognized the validity of spendthrift provisions To be effective, the provision must be properly drafted 736.0502(1)in order to have a valid spendthrift provision, it must prevent voluntary and involuntary transfers of the beneficiaries interest 736.0502(2)use of the term spendthrift or words of similar import is sufficient to restrain both voluntary and involuntary transfer of the beneficiarys interest Which creditors can reach a beneficiarys interest in a spendthrift trust? Bacardi v. Whiteex-husband not paying alimony, wife is suing for alimony, she wants to attach his trust. She is a judgment creditor. He is getting monthly allotment from the trust. Florida Supreme Court said she could access the spendthrift trust because the greater public policy to enforce alimony payments and attorneys fees. o In dictaalso applies to child support o Common law said had to make alimony and attorney fee payments o Court also said she could reach the trust because it was a mandatory spendthrift therefore the trustee was obligated to make monthly payments. Because the payments are steady, creditors can attach the trust payments o Going after the trust MUST BE A LAST RESORT

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3 types of creditors that can invade a spendthrift trust--736.0503(2) (a)-(c) o (1) Child support or spousal support o (2) Beneficiarys attorney fees o (3) State and federal governmentwhere laws provide How to invade spendthrift trustsprocess and limits o 736.0503 Need a court order Dont need an order every month Court can limit the award in amount or duration depending on the circumstances Codifies the fact that it must be a last resort remedy Doesnt have to be a last resort for the government Everyone but governmentit must be last resort o 736.0504 (2) a creditor of a beneficiary may not compel a distribution that is subject to the trustees discretion, regardless of any spendthrift provision (1)(a)-(b)also applies to discretionary support trusts Standard of distribution=standard of support If the trust provision is purely discretionary, creditors cannot compel payment from the trust (3) But beneficiary can compel payment from the trustee ExampleB is expecting his educational expenses to be paid by the support trust, but trustee refuses, B can sue the trustee Examples SE Bank of Sarasota v. StateFather owed child support. Father was the beneficiary of a spendthrift trust. Court did not require payment from the trust because it was a discretionary spendthrift trust. Once payments are made to a beneficiary, creditors can go after the money. Mason v. MasonHusband and kids are beneficiaries of a support trust. Husband is refusing to pay kids medical costs. Husband is the trustee and a beneficiary of the trust which includes support provisions for the kids, but the provision is discretionary. Husband did not have to pay. Bottom Line Special creditors can only reach funds from mandatory trusts whether or not they have spendthrift provisions! Creditors cannot force payment from discretionary trusts Only special creditors can reach a spendthrift trust 736.0503 o Child support, spousal support, government, people who provided services for the protection of the beneficiarys interest in the trust Purely mandatory trusts may be reached by creditors--736.0501

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Creditors can always attempt to reach the assets once the distribution has been made the beneficiary Questionspage 446 8. Two years ago, Sam set up a validly executed irrevocable inter vivos trust with T Bank as trustee. At the time, Sam was a widower and had just become a grandfather. The trust had a res of $2million. The trust document provides the following with regard to distributions: (1) Trustee shall pay all income from the trust on equal parts to, or on behalf of, the settlors two children, his daughter, Doris, and his son. James, in monthly installments. (2) Upon the death of the survivor of the settlors, Trustee shall distribute the trust corpus fee of trust to the sttlors grandchild, James daughter, Jennifer. In addition to administrative and distributive provisions, the trust document contains the following clause: No beneficial interest in the income or principal of this trust shall be voluntarily or involuntarily assigned or alienated or be in any way liable to claims of creditors. (a) This year, Doris a medical doctor, was sued for medical malpractice and a judgment was entered against her. The creditor has been unsuccessful in trying to collect against Doris personal assets and wants to attach her interest in the trust created by Sam. Under current Florida law, can the creditor attach the half of trust income designated for Doris? AnswerNo, the creditors cannot reach Doris interest because of the spendthrift clause. 736.0503 (b) This year, James was sued for non-payment of delinquent child support for his only child, Jennifer, now age 3. A judgment for child support was entered against James. The child support creditor is unsuccessful in attempting to collect against James personal assets and want to attach James interest in the trust created by Sam. Under current Florida law, can the creditor attach the half of the trust income designated for James? AnswerYes, because child support orders are considered special creditors and therefore avoid the spendthrift protection, and the trust was mandatory. In addition, they exhausted all other resources. Self-Settled Trustswhen the settlor is also a beneficiary Different from self-declared trust, in which the settlor and trustee are the same person Settlor CANNOT deposit her property in a self-settled trust in order to avoid her creditors. Menotte v. Brownself-settled trust not protected up to the amount of interest the settor/beneficiary retained. Here, she retained a 7% annual income payment with spendthrift, often called a mandatory spendthrift. With self-settled irrevocable trusts, creditors can get the settlor/beneficiarys interest up to the amount of interest retained by the settlor/beneficiary Self-settled revocable trustcreditors can take all because settlor/beneficiary could revoke the trust at anytime. Settlor/beneficiary retains an interest in the entire trust. 736.0505(1)(a)codifies common law for revocable trusts 736.0505(1)(b)codifies common law for irrevocable trusts

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Special Needs Trustspage 453, note 5 Generally created for people with special needs o Support trust o Way for having money available as a last resort for care and still be able to apply for government benefits Elective Share Trusts (See also Ch. 13) 732.2025(2)Elective share trust means a trust where: (3 elements) o (a) The surviving spouse is entitled for life to the use of the property or to all of the income payable at least as often as annually o (b) The trust is subject to the provisions of former 738.12 or the surviving spouse has the right under the terms of the trust or state law to require the trustee either to make the property productive or to convert it within a reasonable time; and o (c) During the spouses life, no person other than the spouse has the power to distribute income or principal to anyone other than the spouse. 732.2035Except as provided in 732.2045, the elective share estate consists of the sum of the values as determined under 732.2055 of the following property interests: o (9) Property transferred in satisfaction of the elective share 732.2025(10)Transfer in satisfaction of the elective share means an irrevocable transfer by the decedent to an elective share trust. Can include the elective share trust in calculation of the elective share How to pay the elective share to the spouseabatement o Follow 732.2075(1)(e) (1)Unless otherwise provided in the decedents will or, in the absence of a provision in the decedents will, in a trust referred to in the decedents will, the following are applied first to satisfy the elective share: (e) Property interests included in the elective share estate that pass or have passed to or for the benefit of the surviving spouse, including interests that are contingent upon making the election, but only to the extent that such contingent interest do not diminish other property interests that would be applied to satisfy the elective share in the absence of contingent interests. Elective share trusts are used in calculating satisfaction of the elective share and satisfying the elective share. How much of the elective share trust will be used to calculate satisfaction of the elective share? o It depends on 2 things Does the elective share trust have a qualifying invasion power and/or Does the elective share trust have a qualifying power of appointment 732.2095(1)(c)Qualifying invasion power means a power held by the surviving spouse or the trustee of an elective share trust to invade the principal for the health, support, and maintenance of the spouse. The power may be, but need not, provide that the other resources of the spouse are to be taken into account in any exercise of the power.

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732.2095(1)(b)Qualifying power of appointment means a general power of appointment allowing the spouse to decide the future of the trust act her death through her will. She gets to decide who gets her interest in the trust when she dies. If guardian or holder of power of attorney, court will review need of the spouse before allowing the elective share. If the elective share trust includes both qualifying invasion power and qualifying power of appointment, how much of the elective share estate will be calculated as satisfying the elective share? o 100% , pursuant to 732.2095(2)(b)(1) If the elective share trusts includes qualifying invasion power but no qualifying power of appointment, how much if the elective share will be calculated as satisfying the elective share? o 80% pursuant to 732.2095(2)(b)(2) All other situations are 50% pursuant to 732.2095(2)(b)(3) If the spouse does not take the elective share, the spouse is still entitled to the elective share trust. See examples on p. 458 as well

Life Insurance Trusts Can put a life insurance policy as the res for a trust 733.808you can create an inter vivos trust using a life insurance expectancy as the res Non-tax reasons for creating a revocable life insurance trust: o To provide a trust for minor children o To create dead hand control Trusts for Animals 736.0408 permits pet trusts o Amount is unlimited o Terminates at the death of the animal o Needs to be set up while the animal is alive o At the time the trust is created, if the animal is pregnant, the unborn animals can be included o Can favor a particular animal o Can be enforced by a person appointed in the terms of the trust or, if no person is appointed, by a person appointed by the court o If there are excessive funds or funds left over after the death of the animal, then it goes back to the settlors estate unless the court says otherwise o Property in trust must be used for its intended purpose, unless there are excessive funds in the trust for the pet(s). Someone must petition the court to make this determination. 736.0409can create trust for future animals, but only up to 21 years Examples on page 466 & 467

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Termination and Modification of Irrevocable Trusts Common lawimportant because statute works in addition not in derogation to common law First look at the statute, then the common law Common law discussion is divided by judicial and non-judicial modification or termination Non-judicial modification under common law: o Rulean irrevocable trust may be terminated/modified with consent of all beneficiaries as long as the trust has no material purpose that would be violated by early termination. What does consent by all beneficiaries mean? Decision to modify/terminate must be unanimous Dont need trustees consent Dont need settlors consent unless settlor is also a beneficiary Guardians can give consent for minors, incompetents and unborns o Guardian ad litem can be appointed to rep interests. o Dont really need consent of minor if it benefits them. (Bieley) White vs. Bourne (p. 473): o Under common law, if all beneficiaries want to terminate, trustee cannot stop it. Goldentrester v. Richard o Where its possible (soviet union blockage?) trustee has to terminate by the consent of all the beneficiaries. Cannot modify/terminate if a material purpose would be violated (exception to first part of the rule) Material purposesupport trusts are material purpose trust, also discretionary trust, spendthrift trust and postponement of enjoyment trusts Claflin v. Claflinleading case on material purpose. Court said that could not modify/terminate the trust because the material purpose was postponement of enjoyment If you ever have a material purpose trust and the material purpose is unfulfilled, and all beneficiaries agree, can the beneficiaries terminate/modify the trust? Yes, if you can get the settlors consent o Because the settlor created the material purpose, settlor can waive material purpose. If the settlor refuses or is dead, then nothing can be done. o Note 2, page 481Preston v. City National BankCourt stated that if the beneficiaries can require termination of the trust, they can also require modification of it as well. Judicial Modification under common law

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o Mills v. Ball (DuPont Trust)DuPont Trust. Initially for 4 trustees. Trust grew a lot. Dead trustees were replaced and 2 more were added, now 6 trustees. Trust had grown so much that the trustees needed help to administer the trust. One trustee opposed expansion of the trustee member. The trustee argued modified the terms of the trust. Trial court said the trust gives the trustees the power to administer the trust, including the number of trustees. The appellate court said the trial court was wrong on the rationale, but correct on the result. Appellate court said common law allows for deviation from the terms of the trust if there has been a change in unanticipated circumstances that the settlor could not have anticipated Restatement 3d 66 o RuleRestatement 3d 66 (p. 481)under common law the court can permit deviation from the terms of the trust if there has been a change because of unanticipated change in circumstances. Can change both administrative and distributed provisions. 736.0412permits non-judicial modification of a trust if the following 3 requirements are met: o 1) Must be after settlors death If settlor is alive, then common law must be used! Otherwise, refer to the statute ^^ o 2) Need consent of all trustees o 3) Need unanimous consent of all qualified beneficiaries 736.0103(14)Qualified beneficiary means a living beneficiary (no unborn children) who, on the date the beneficiarys qualification is determined: (a) is a distribute or permissible distribute of trust income or principal; (b) would be a distribute or permissible distribute of trust income or principal if the interests of the distributes described in paragraph (a) terminated on that date without causing the trust to terminate; or (c) would be a distributee or permissible distribute of trust income or principal if the trust terminated in accordance with its terms on that date Still need consent of minors and incompetent 736.0410(2)any beneficiary can contest statutory non-judicial modification, therefore guardian of minor? Unborn? Can contest o 736.0412(4)Does not apply to trusts in 3 circumstances: 1) Trust created before 1/1/2001 2) Where trust uses a shorter rule against perpetuities: 3 rules against perpetuities o Life in being plus 21 years (common law rule & 689.225(2)(a)(1)) o 90 year rule 689.225(2)(a)(2) o 360 year rule 689.225(2)(f)

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Unless a trust specifically allows for non-judicial modification, then you may resort to 736.0412 to modify the trust. 3) Charitable trusts until the trust naturally terminates all charitable interests.

Differences between non-judicial modification under common law and statute o Under common lawan irrevocable trust can be modified or terminated with unanimous consent of the beneficiaries so long as the modification/termination does not violate a material purpose of the settlor. Material purpose needs consent of settlor. Under statute, need consent of all qualified beneficiaries and settlor. o Under common law, the trustees wishes are irrelevant, but Florida law requires trustee consent. o Under common law a trust that has a material purpose can be modified or terminated with the unanimous consent of the beneficiaries and the settlor; under Florida law unanimous consent of the beneficiaries only applies after the settlors death.

Statutory Judicial Modification/Termination2 ways (1) 736.04113when modification is not inconsistent with the settlors purpose o Court can modify an irrevocable trust when any of the trustees or any (only need one) qualified beneficiaries petition under this statute when: (1) The purpose of the trust has been fulfilled, become illegal, wasteful, impossible, impracticable, OR (2) Because of unknown or unanticipated circumstances that would defeat or impair the material purpose of the trust. Example: Loans for law school dry up, and you have no money left to pay tuition. (3) If a material purpose of the trust no longer exists o Ways the court can modify under 736.04113(2): Can amend or change terms including distribution and administration of the trust Can approve early termination in whole or in part Court can give more powers to trustee that may be prohibited or not authorized by the trust Take some powers from trustee that are given to them in the trust (2) 736.04115when modification is in the best interests of the beneficiaries o (1) Court is not limited by reasons or circumstances given under 732.04113 if compliance with the terms of the trust are not in the best interest of the beneficiaries Upon the application of a trustee or any qualified beneficiary, court may at anytime modify a trust that is not then revocable as provided in 736.04113(2) o (2) Court still needs to try to conform with the settlors original purpose while keeping the beneficiaries best interests and current circumstances in mind. 66

(c) Even if there is a spendthrift provision a court can still modify o (3) Limitationsdoes not apply to all trusts Not applicable to trusts before 1/1/01 Not applicable where trust uses one of the two shorter rules against perpetuitieslife in being plus 21 years or the 90 year rule and the trust expressly prohibits judicial modifications. What next in that instance? Check other statutes and see if the common law helps you. What other ways are there to terminate or modify a trust? o 736.0410(1)trusts also terminate naturally: Trusts can terminate by revocation, passage of time and exhausting of principal o 736.0414Uneconomical or Small trustsAmount of assets less than cost of the holding cost. Early termination of trust because its not economically feasible. Permits termination/modification for economic reasons. Trust with a value of less than $50k, trustee can non-judicially (w/o court order) terminate, trustee needs to give notice to qualified beneficiaries Over 50kneeds court order. No limit, but allows judicial modificationany trustee or qualified beneficiary can ask court to terminate for economic reasons o 736. 04117if a trustee has absolute power to invade the principal, then the trustee can effectively modify distributive provisions of the trust. Only if the power to invade the principal is not for a specific purpose (i.e. health, education, ) Can get that principle and put it in another trust Can make more money by doing so! Limitations in creating this new trust: Must contain the same beneficiaries. Cannot reduce any income or annuity interest to original beneficiaries Cannot reduce or disqualify certain tax benefits. If the trust instrument specifically states otherwise, you cannot do it Trustee needs to file a signed statement giving 60 days notice. o 736.0415modification for mistakes Mistake in the execution can void trust Mistake in the expression or inducementtrust can be modified o 736.0416permits modification to meet the settlors tax objectives

Charitable Trusts Assets can be given by outright gift or by charitable trust o Make sure that the language states expressly whether or not it is a gift or a charitable trust. Differences between private express trusts and charitable trust 67

o Trust purpose In private express trustcan create for any valid purpose In a charitable trustmust have a charitable purposei.e. benefits the community (public) generally. 736.0405(1)provides non-exclusive list of charitable purposes Including, but not limited to, the following: Relief of poverty, advancement of arts, sciences, education, or religion, and the promotion of health, governmental, or municipal purposes. If the beneficiary is a charitable organization, then a presumption arises that the purpose is charitable. See if theyre received the IRS exemption. o Beneficiaries In private express trust beneficiaries must be ascertainable In charitable trustsbeneficiaries either have to be ascertainable charitable beneficiaries or indefinite beneficiaries. Cannot be so limiting as to be illusory 2 classes of beneficiaries: o Ascertainable charity o Indefinite charitable beneficiary Be careful not to limit it in such a way as to make the beneficiary definite. Example: John Doe sets up a trust to pay for 3 scholarships a year for students to attend law school. Is this a good charitable trust? o Yes; promotes education, helps community at large (potentially), helps schools give more money for other students, etc. o Even one scholarship would be deemed charitable because it still has a charitable purpose. What if the trusts were for certain individuals? o No, because this would turn it into a private express trust. This would be too narrow to be a charitable trust. o Standing to enforce the trust term Private express trustonly beneficiaries have standing Charitable trusts 736.0140only charitable organization has to sue as beneficiary 736.0110(3)Attorney General of the state has standing (See Delaware, p. 507) 736.0405(3)settlor has standing o Rule against perpetuities Private express trusts must have an endrule applies Charitable trustscan last in perpetuityexception to rule against perpetuities. Can last forever.

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Charity to Charity exceptionwhere only beneficiaries are charities can last forever. Mixed Beneficiariescould be vulnerable to common law rule against perpetuities o If NOT charity to charity, and a private express trust is included, then you need to consider rule against perpetuities i.e. to charity for 10 years then to son; to son for 10 years/life then to charity; to charity for its existence, then to heirs (if you have a charity first with an indefinite time limit, it is automatically invalid). o See example on p. 511 (would be violative of RAP). o Cy Pres doctrine 736.0413only applies to charities Court can modify charitable trust in some instances To do so, the court asks 2 questions: o (1) Has it become impossible, impracticable, wasteful or unlawful to fulfill the purpose? 736.0413 o (2) And, Did the settlor have a general charitable intent rather than specific intent? Purpose is to give as near as possible to another organization or beneficiaries to what the settlors intent was. o Not in statute, but is Florida law. Under common law, courts allow modification of the terms of a charitable trust using cy pres if two conditions are met: (1) It has become impossible, impracticable, or illegal to carry out the particular purpose; and (2) The settlor manifested a more general charitable intent with regard to the trust. If no such general intent can be imputed to the settlor, then the trust fails. If a court modifies using Cy Pres it must attempt to conform the trust to as near to the settlors intent as possible so as not to fail. Court does not want the charity to fail If the trust provides for another beneficiary in the event that charity A cannot take it, then it goes that alternative beneficiary since charity A cannot fulfill the terms of the trust. If an alternative taker in the trust is not a charity, then cy pres does not apply. As long as the alternative taker is a charity then cy pres is available to the last charity. Court must determine if the charitable intent was general or specific Look at last taker to determine if it is a charity or individual Alternate taker waiver allows cy pres to be applied to prior taker if elements are met (See Jewish Guild case, p. 512-13).

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Example: Settlor gives to American cancer society, American cancer society has to close its doors, it has, thus, become impossible because they have closed their doors, you then have to determine whether settlor had a general intent (i.e. for cancer research) or a specific intent to fund that particular charity. Does not apply where settlor has specified an alternate taker. C1 to build new building w/in 5 years; C2 takes if they cant do it. C1 couldnt afford new building on the money in trust, only a new floor in an existing building. C1 tries to invoke the Cy Pres doctrine. Court says no, first, trust specifies an alternate taker. Second, 5 years isnt up, money is still available and they could still find more money. C2 conceeded that the intent of the trust was to provide for C1 organization. Court said wait 5 years, C2 could renounce its claim, then Cy Pres would be available (no alternate taker). 736.0409 allows for the creation of non-charitable purpose trustsvalid for 21 years o For the vague area that isnt quite charitable or definite, but you still want to have control of the money. Only valid for 21 years. These trusts have a very short time period.

Rule Against Perpetuities Dont want settlor to be able to manage a trust from the grave 3 rules in Floridacodified in 689.225 o (2)(a)(1)life in being plus 21 years (same as common law) Applies to all types of property o (2)(a)(2)90 year wait and see rule Applies to all types of property o (2)(f)360 year wait and see rule Applies only to trusts Trusts created after 12/31/2000 can use this rule. Settlor can decide which rule to use The rule tries to determine whether the interest will definitely fail or not and whether the interest will vest or not. o Who are the measuring lives in being? o When does the interest created vest? o In whom does it vest? When an interest violates the rule that particular interest will be voided Rule stated another wayno interest is good unless it must vest, if at all, not later than 21 years after some life in being at the time of the creation of the interest When is the interest created and life in being calculated? o Irrevocable trustwhen the trust is created o Revocable trustwhen the revocable trust becomes irrevocablewhen settlor dies or becomes permanently incapacitated o Testamentary trustwhen the testator dies Rule only applicable to:

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o Contingent remaindercondition vesting upon the happening a not happening of an event o Executory interestswhen interest vest is also when you get interest o Vested remainder subject to open Lives in beingsettlor or beneficiaries or someone related to the beneficiaries Examplepage 564, #1 o Testator leaves a valid will that contains the following devise: $1,000,000 to Trust bank in trust to pay income quarterly to my daughter Anne for life, remainder to Annes children who survive to age 21. Are any of the interests invalid because of the Rule against Perpetuities? Assume for purposes of this question, that the common law Rule Against Perpetuities is in effect and that no reform measures have been adopted in the jurisdiction Cannot use T because T is dead. Cannot use As children because it is an open class. Therefore A is the measuring life. Anne validates the interest for her children because when Anne dies the class closes and all of her children will definitely reach the age of 21 or not reach 21 because death therefore it does not violated rule 90 year and 360 year rules simply wait until time period is up and then evaluate Estate planners use perpetuities savings clauses to prevent violations of the rule against perpetuities (p. 559-60) o It basically says that if the devise or trust violates the common law rule against perpetuities, the interest is void and the clause states who will get the interest o 689.225(4)petition court to reform the trust o Savings clause prevents the court from reforming--by determining the alternate taker if the interest violate the Rule. o Remember when the interest was created when drafting the savings clause.

Resulting Trusts What is it? o Where a person attempted to make a trust, but that trust has failed; or, a person created a valid trust which subsequently failed. Could fail, for example, where only one witness signed the trust document. o This is where the resulting trust comes in does not allow the trustee to keep the property simply because the trust failed. 2 types of resulting trusts: o (1) Remedy by operation of law For failure of a trust For violation of statute of frauds Unintentional consequences can create situations causing resulting trust-not always Property in the trust reverts back to the settlor or their estate. o (2) Purchase-money resulting trust (See Note 3, p. 631)

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ExampleA has lots of money. A gives money to B to buy land in Bs name, to hold for A. Purpose was for B to buy land on As behalf. B is a purchase money resulting trustee, and essentially a straw man. Therefore, B should not be able to keep the property. B can rebut this presumption by proving that the property was a gift, etc. However, if A and B have a familial relationship, the presumption is that the property was a gift. Then, its up to A to prove that it was not a gift. A public figure may want to purchase real property without purchase being of public record. The public figure may pay for the property but have it titled in anothers name as trustee for reasons, with the understanding that the purchaser will convey title when requested to do so. If the public figure does not sign a written trust agreement that complies with 689.05, the parties have created a purchase money resulting trust between them. As far as the rest of the world is concerned, if the deed does not disclose the beneficiary, the purchaser will be treated as holding feed simple title. 689.07(1).

Documents related to Wills and Trusts General power of attorney allows someone to act on your behalfperson acting as your attorney in fact. o Ends when grantor revokes, dies, or becomes incapacitated Durable power of attorney survives the persons incapacity o To be a durable power of attorney, it needs magic words found in 709.08(1): This durable power of attorney is not affected by subsequent incapacity of the principal except as provided in 709.08; or similar words that show the principals intent that the authority conferred is exercisable notwithstanding the principals subsequent incapacity, except as otherwise provided in this section. o Can be dangerous because it is valid immediately o Terminates only upon revocation or the grantors death. o Last line of 709.08(1) can make the durable power of attorney springing upon the grantors incapacity to manage his/her property. Need to prove incapacity with affidavits. Deployment-contingent power of attorney 709.11 o Can be signed ahead of time and when that person is deployed, then the power of attorney will take effect. Living Will 765.303provides a directive to friends and family regarding end of life care. Can add additional instructions. o Where someone states that they do not want to be maintained by artificial means, etc. o See definitions of terminal conditions, end-stage conditions, persistent vegetative state, etc. at 765.101. o Additional instructions can include that a person wants pain medication and no nutrition or vice versa. Can include anything that a person can think of to cover them in the instance that that situation comes about. 72

o Has to be signed and witnessed by two witnesses. One witness should not be a spouse or blood relative. Health care surrogate 765.203giving power to particular people to make decisions on you behalf when you cannot make the decisions. Without a living will, the health care surrogate will likely make the end of life decisions. The living will must be followed by the health care surrogate. o Think of as a durable power of attorney for medical decisions. o Designate who can make medical decisions for you in the event that you cannot make them for yourself. o Make sure you have an alternate surrogate in the event that the designated surrogate is out of town, deceased, etc. o Good practice is to add a line about your living will and attaching a copy of the living will to the health care surrogate so that everyone knows your wishes. o Has to be signed and witnessed by two witnesses. One witness should not be a spouse or blood relative. Do Not Resuscitate OrderAdmin. Code 64E-24301 o For those people with heart diseases, etc., who are at a point where they do not feel that they will have a decent quality of life if they are resuscitated. o Doctor must sign off that you are a person eligible to have a DNR Order. 765.514Organ donationcan also designate organ donation in will, but generally designating in the will it will be too late. o It is much better to do it in a card (Uniform donor card or drivers license) to take the hassle out of determining if a person had this clause in their will.

Fiduciary Powers & Duties Personal representatives are also fiduciaries Trust will not fail for want of a trustee Some trustees will refuse to be a trustee to be a trustee because of the fiduciary duties and time commitment involved. 736.0701(2)accepting and declining trusteeship Powers are things a trustee can do under the duties provided by the trust 736.0815(2)general powers of the trustee o May not exercise a power that is in violation of a duty o Powers are derived from: (1) Trust instrumentpowers and limits on powers from the settlor. (2) State statutes (3) Common law or implied powers (given mainly by case law) (4) Court order 736.0816specific powers of a trustee gives extensive grant of administrative powers to trustees (granted by statute) o These powers apply unless they are limited by the trust document 736.0815(1)(b)(3)settlor can limit powers of the trustee given under the trust code o Dont need court authorization o Can exercise powers given by code unless limited by the trust document

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o Unless limited by the trust document, trustee has any powers a person would have if a person owned the property (equitable ownership) and any other powers appropriate to achieve the proper investment, management and distribution of the property 736.0816(2)power to buy or sell property 736.0816(10)power to lease property. o Existence of a power does not mean it is proper to use that power. Trustee cannot breach duties. Look to 736.0801-736.0817. o If a trust is silent, then use the powers listed in the code o Trust document can expand or limit the powers in the code o Just because a trustee has a power does not mean a trustee can execute the power o Powers are dependent on duties 736.0801-736.0817statutory duties 736.0801General umbrella duty o Duty to administer the trust in good faith, in accordance with the terms and purposes, and in the interest of the beneficiaries o Anton v. Anton (#1)2 brothers were co-trustees. One brother relied on the other brother to handle the trustee duties. The brother handling the trust duties steals from the trust. Court said both brothers were at fault. Because co-trustees have a duty to administer the trust diligently. You cannot pass off your responsibilities on your co-trustees. o Old code says diligently. New code says good faith. Rod-Dod thinks new code is more lenient. 736.0802Duty of Loyalty o (1)duty of loyalty owed to the beneficiaries o Prohibits self-dealing Aside: Under common law there was an outright prohibition against selfdealingno further inquiry rule basically strict liability.. o (2)makes self-dealing transactions voidable unless the beneficiaries consent to the transaction or the beneficiaries dont sue in time If the beneficiaries snooze, they lose. o (3) & (4)Self-dealing includes people other than the trustee Family Entities with which the trustee is related o (5)exceptiontrustee can enter into a transaction with himself if the trustee is legally authorized to enter into trust business Get the beneficiarys consent or the trustee risks being sued. Keye v. Gautiertrustee made mortgage to himself but mortgage did not list the trust as a creditor. The mortgage was only in the trustees name. Therefore if the trustee defaulted, the trust would lose money. Court considered this self-dealing. 736.0803Duty of Impartiality o Most trusts are set up as Income for life to A, then income for life to B, then principal to C

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The people with life interests are hoping for a lot of money and are willing to invest in high-risk high return investments, but the remainder beneficiaries are hoping to get something of value and want to invest in safe, low-risk investments. Cannot favor any beneficiary Trustee must strike a balance between beneficiaries, creating good income for present beneficiaries and value for remaindermen Need to be VERY careful when the trustee is also a beneficiary 736.0804Duty to administer the trust prudently o Trustee must manage trust as a prudent person would Taking into account trust purposes, terms, and distribution requirements o 518.11Investments by fiduciary; prudent investor rule (1)(a) applies to trustees and all fiduciaries Addresses the management of investments of a trust Must be managed as a prudent investor would o Under the old common lawrule was the prudent man rulelooked at each investment individually o Prudent investor rule looks at the portfolio as a whole looking at the total return, not each individual return o Modern portfolio theory Encourages diversification allowing for high-risk and low-risk investments. 736.0805Duty to incur only reasonable expenses o Dont waste trust assets on expenses o Be reasonable o Expend costs based on what is reasonable o Expenses should be in relation to trusts purposes and duties 736.0806Duty to Use Special Skills o Generally held to standard to that of a prudent ordinary person, but if the trustee has special skills he must use them, particularly if you were hired for those special skills o 518.11(1)(a)if the fiduciary has special skills or is named fiduciary on the basis of representation of special skills or expertise, the fiduciary is under a duty to use those skills 736.0807Duty to delegate duties and powers prudently o In some situations should delegate based on needed skills Delegate duties to a proper person (real estate attorney to handle a closing on property, for example). o Need to recognize when you should delegate o Delegation includes supervision of delegated duties As long as the personal representative is prudent about their duties, they may not be held liable for the acts of the delegated person. o 518.112(1)Fiduciary may delegate investment duties to someone with capacity to handle the investment 736.0809Duty to Control and Protect trust Property

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o Need to have power to effectuate duty 736.0816(9)trustee has power to make repairs that are necessary 736.0816(12)trustee has power to obtain insurance 736.0811Trustee has a duty to enforce or defend claims 736.0812a trustee has to take steps to get trust property from former/prior trustee o Change title from 3rd parties or past trustees o Need to place title in current trustees name 736.0813Duty to inform and account o Has a duty to notify qualified beneficiaries of trust assets, their value and if there are any debits and credits (accounting) o (1)(d)irrevocable trustannually must do an accounting and on the termination of the trust o (4) If a revocable trustaccounting due to the settlor only on an annual basis 736.0814trustee cant disburse money to himself o (1) & (2)(a)Could have a trustee who is a beneficiary o Trustees can be given discretionary powers to control distribution of a trust to beneficiaries. Concern is that a trustee may give themselves all or a large part of the money. o Under (2)(a), a trustee who is also a beneficiary will be prohibited from making discretionary distributions if they are a beneficiary. Can only work if the trust specifically states that this section does not apply. 736.0810(2)Duty not to commingle o Must keep trust property separate from trustees own property o Trustee may be trustee for many trusts Old law only allowed trust companies to commingle assets of the trust with assets of other trusts 736.0810(4)allows any trustee to commingle money from multiple trusts, but the trustee must keep a careful accounting 660.432Trust companies o Allowed to commingle assets into one common, trust fund.

Trustee Liabilities Trustees can be liable to beneficiaries and 3rd persons 736.1001-736.1018 Things to know: o Remedies are extensive o 736.1001(2)list of remedies Includes ordering an accounting, injunction, etc. Court can fashion remedies not on the list (2)(j)court can order any other appropriate remedy o 736.1002damages Can force trustee to return property Can force trustee to pay back profits 76

Can force trustee to pay for losses Damages depend on what occurred 736.08125liabilities of successor trustees o (1) not personally liable to qualified beneficiaries and dont have to sue prior trustee if certain things have occurred, such as: (1) If prior trustee was settlor of the revocable trust (2) If beneficiaries waived accounting in the pastno liability (3) If beneficiaries dont sue in time (4) If a super majority of the beneficiaries release the successor trustee from liability for things he did or failed to do 736.1013limitations on personal liability of trustee o (2)not personally liable for a tort action if trustee is not personally at fault Office building is asset of trust and a person slips on some water in the building. Person can sue the trust, not the trustee, unless the trustee is personally at fault. o (1)breach of contractnot personally liable if he disclosed his fiduciary capacity to the other party at the time of the contract or the contract states otherwise.

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