Is Your Florida Trust Valid? Know the Core Requirements

The three requirements of a trust, in brief

If you’re asking what are the three requirements of a trust, here’s the short answer. A Florida trust generally needs a settlor with capacity who intends to create it, a definite beneficiary or a charitable, animal-care, or noncharitable purpose, and trustee duties to perform, and the same person may not be both the sole trustee and the sole beneficiary.

Florida’s trust creation statute lists the conditions in more detail. Its list does not include property, which is covered in a separate section on how trusts are created.

Three roles appear in every trust question. The settlor is the person who creates the trust or puts property into it. The trustee holds and manages the trust property. The beneficiary has a present or future interest in the trust. Florida’s definitions section defines the settlor and the beneficiary.

These points answer one question: is this a trust the law recognizes? They are the first things to check when someone questions a trust document. For disputes over a trust, see the firm’s trust litigation attorney page.

Requirement one: the settlor’s capacity and intent

The settlor must have capacity to create the trust and must indicate an intent to create the trust.

Intent means the settlor shows a wish to set up a trust. That is different from making a gift, writing a will, or agreeing to an informal arrangement. Courts look at the wording and structure of the document to see whether that intent is there.

Capacity is the second half. For a revocable trust, Florida sets the capacity needed at the same level as the capacity needed to make a will. You can read Florida’s revocable trust capacity rule for the exact text. Capacity questions often arise when the creator was elderly or ill, or when someone else seems to have shaped the decision.

Pressure and deception matter too. If fraud, duress, mistake, or undue influence procured the trust, the trust or the part procured is void. The rest of the trust can still be valid if it is not invalid for other reasons. See Florida’s fraud and undue influence rule.

Heirs and beneficiaries who believe a document does not reflect the creator’s real wishes often raise these points. Each case turns on its own facts.

Identifying the trust property

Property can be transferred to a trustee during the settlor’s life, or by will or another disposition that takes effect at death. An owner can declare that he or she holds identifiable property as trustee. Or a power of appointment can be exercised in favor of a trustee. See Florida’s methods for creating a trust.

The statute defines property as anything that may be owned, real or personal, legal or equitable. That definition is in the definitions section again, and it is broad.

This is where funding comes in. Funding means moving assets into the trust, such as retitling a deed or an account in the trust’s name. If the assets are unclear, it is hard to say what the trust actually holds. Which assets went in, and which stayed in the creator’s name, often comes up. Assets never moved into a trust can raise different questions than assets that were, so keep that distinction clear.

See Florida’s trustee recordkeeping rule.

A definite beneficiary or a permitted exception

A trust needs either a definite beneficiary or must be a charitable trust, a trust for the care of an animal, or a trust for a noncharitable purpose, and it must give the trustee duties to perform.

Think of the beneficiary as the person the trust is for. Think of the purpose as the reason the trust exists. A beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities. That is the rule in Florida’s trust creation statute.

Charitable trusts follow their own rules. Charitable purposes include relief of poverty, advancement of arts, sciences, education, or religion, and promotion of health, governmental, or municipal purposes. See Florida’s charitable purposes statute.

Florida’s charitable purposes statute covers trusts created for charitable purposes; the rule allowing a noncharitable trust without a definite beneficiary is in Florida’s noncharitable trust rule. It may not be enforced for more than 1,000 years. See Florida’s noncharitable trust rule.

See Florida’s trust purposes statute.

Under Florida law, a trust’s purposes must be lawful, not contrary to public policy, and capable of being achieved (Fla. Stat. § 736.0404); the trustee’s duty to administer the trust in good faith is in Florida’s trustee duty statute. Upon acceptance of a trusteeship, the trustee must administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, as set out in Florida’s trustee duty statute. See Florida’s trustee duty statute.

How Florida law states these elements

Florida’s statute lists the requirements for creating a trust in more detail than the three-part summary above.

Florida’s trustee duty statute does not address settlors; it requires that, once a trustee accepts a trusteeship, the trustee administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries. A trust requires a definite beneficiary, or else must be a charitable trust, a trust for an animal, or a trust for a noncharitable purpose (Fla. Stat. § 736.0402(1)(c)). The wording uses “or” in several places, so each condition’s exact wording matters. The statute also says the same person cannot be both the sole trustee and the sole beneficiary. The full list is in Florida’s trust creation statute.

That last rule answers a common confusion. A trustee and a beneficiary are different roles, but the same person may not be the sole trustee and sole beneficiary of a trust.

Whether a trust is valid is one question. How the trustee runs it afterward is another. The trustee duties in Florida’s statute start only once the trustee accepts the role.

The document’s wording and the facts around its signing shape the answer.

Questions people ask about what makes a trust

When these requirements are questioned, and a next step

If you are questioning a trust after a parent or relative has died, these three points give you a starting checklist. Asking what are the three requirements of a trust is a sensible first step.

The question often comes up when a trust document surfaces that the family did not expect. The creator may have died or lost the ability to manage money. You may be unsure whether the trust is valid, whether assets were properly placed in it, or whether the trustee is acting properly.

Gathering the signed trust document and any records of which assets were moved into it are useful early steps.

Related issues include a court-appointed professional trustee, tortious interference in an inheritance, and elder financial exploitation claims.

If a trust document has you wondering whether it holds up, Trust Counsel, PL offers a free initial consultation. The consultation is confidential and carries no obligation to continue. Call (305) 707-7126 or use the contact page to schedule.

Responsible lawyer: Leslie V. Marenco, Trust Counsel, PL, Coral Gables, Florida.