Trusts - terminology

Question 1

Why use a trust?

Answer 1

Flexible nature

Separates legal from equitable title

Protect assets from creditors

Avoid probate

Save on taxes

Provide management for grantor if/when mentally incompetent

Question 2

Settlor

Answer 2

A.k.a. truster

Creates trust; transfers assets in or funds trust

CAN have multiple settlors

CAN be a beneficiary OR a trustee as well

Question 3

Trustee

Answer 3

Manages the trust; has legal title

CAN have multiple trustees

SOLE Trustee CANNOT also be SOLE beneficiary § 736.0402(1)(e)] – merger rule

Question 4

Beneficiary

Answer 4

Person(s) for whom trust is administered; has equitable title

CAN have multiple beneficiaries

Question 5

Doctrine of Merger:

Answer 5

IF SOLE Trustee is SOLE Beneficiary, titles will merge

i.e. IF one person holds both legal and equitable title, titles will merge and trust will cease to exist

Question 6

Trust

Answer 6

Fiduciary relationship with respect to property, with manifestation of intention to create that relationship and subjecting the person who holds title to the property to duties to deal with it for the benefit of charity or for one or more persons, at least one of whom is not the sole trustee

Question 7

Inter Vivos Trust

Answer 7

Takes effect during settlor’s lifetime

Question 8

Testamentary Trust

Answer 8

Takes effect only upon settlor’s death (created as part of a will)

Question 9

Transfer in trust

Answer 9

transfer property to trust in order to create trust

Question 10

Self Settled Trust

Answer 10

Settlor = Beneficiary

Question 11

Self Declared Trust

Answer 11

Settlor = Trustee → trust is made by declaration

Question 12

Pour over provisions

Answer 12

Names trustee of an inter vivos trust as the beneficiary of the will

Property “pours over” from the probate estate to the trust

Helps protect the identity of the beneficiaries

Question 13

Res

Answer 13

corpus; trust property

Question 14

Uniform Trust Code

Answer 14

NOT a federal statute

Model comprehensive codification of law of trusts

Does NOT repudiate common law (supposed to work in conjunction to the extent that provisions do not conflict)

Question 15

Florida Trust Code

Answer 15

Effective Date – July 1, 2007: ALL trusts created before, on, or after date – UNLESS other date specified

Does NOT abolish common law of trusts - Just codifies, brings up to date and modifies

§ 736.0106: “common law of trusts and principles of equity supplement this code, except to the extent modified by this code or another law of this state”

Primarily default rules – ONLY apply if trust doesn’t expressly address a particular issue