For a trust to be legally valid, it must have six elements. One of these required elements is that the settlor of the trust, or the person that creates the trust, must intend to create the trust. For a court to recognize this element, there must be a manifestation of intent by the settlor.
The manifestation of intent is important because it must be present for a court to hold a trust is valid. A ruling on validity would come into play if a beneficiary or another interested party challenged the validity of a trust. For a court to uphold a trust as valid, it would need to ensure that all of the elements are present.
The Elements of a Valid Trust in Florida
As stated above, there are six main elements of a valid trust created in Florida. These elements are:
- capacity of a settlor;
- present intent of the settlor;
- there is a trustee to manage the trust;
- there are ascertainable beneficiaries;
- trust property, and;
- there is a valid trust purpose.
All of the six elements of trust must be present for a judge to hold the trust is at least valid on its face. The first element requires the settlor to have the proper mental capacity to create a trust. In Florida, this is referred to as the settlor being of “sound mind.” Sound mind means the settlor can understand the nature and extent of the property he or she transfers to the trust.
Next, the settlor must have a present intent to create the trust. When a court looks to this element, it will look for evidence such as words spoken by the settlor herself, unless the statute of frauds or the statute of wills applies. Further, the settlor must intend for the trust to take effect immediately, and this person must give specific instructions regarding the construction of the trust. This element will be expanded upon more below.
Third, there must be an acceptance by the trustee. Acceptance can be shown when the trustee complies with the terms of the trust, accepts trust property, exercise the powers of a trustee, or performs any of the duties of a trustee.
Fourth, the trust needs to have ascertainable beneficiaries. A court will look to see if there are any actual individuals that will receive the trust property. There is an exception to this rule, and that occurs when a beneficiary is a charity. In these cases, Florida law favors helping a charity over the need for a trust to have an actual beneficiary, so this is a public policy exception.
Fifth, the trust must have actual property, which is also called trust res. The trust property does not have to be tangible property. The trust can hold a title of a vehicle or house, or in some cases can even hold a future interest.
Last, the trust must have a valid purpose. For instance, a valid trust purpose would be a living trust to bypass probate. An invalid trust purpose is when a trust is now illegal or against public policy. For instance, a charitable trust set up in the 1950’s to provide separate but equal water fountains in a nearby park would no longer be a valid trust purpose. Further, a trust purpose can be significantly frustrated to the point of being against public policy. An example of this might occur if a trust is created to fund local orphanages when there are no longer any orphanages in the area.
How the Court Finds Manifestation of Intent
The first place the court will look is the trust document itself. The terms of the trust should embody the settlor’s intent. The trust should be drafted in a manner that admits of its proof in judicial proceedings. Often the court will look to the evidence of written words in the trust, which would hopefully spell out the settlor’s intent. This could be something along the lines of “I, the settlor, have the intent to create the trust.”
The problem becomes what happens if the trust document doesn’t have any language that conveys intent? Next, the court could look to the extrinsic evidence, which is evidence outside of the trust document. Normally, courts do not like to consider extrinsic evidence. However, a court may do so to determine the intent of the settlor.
If a court does allow extrinsic evidence, then the court could look to the situation of the settlor and the beneficiaries such as their ages, legal competence, and personal and financial situations. The court can look to other writings to find intent, or other circumstances surrounding the trust.
For more information on how to determine if a trust is valid, and if the settlor intended to create the trust contact the estate planning attorneys at The Law Office of David Goldman PLLC today.