PBCBA BAR BULLETINS PBCBA Bulletin - February 2020 | Page 15

PROBATE CORNER
Oral Trusts Of Personal Property
(Part I/Definition & Prerequisites)
DAVID M. GARTEN
Neither the Florida Trust Code nor case
law requires a writing to create a trust of
personal property. See §§736.0403(2)(b) and
736.0407, F.S. However, the testamentary
aspects of a revocable trust of personal
property must be executed by the settlor
with the formalities required for the
execution of a will [§736.0403(2)(b)]. The
creation of an oral trust and its terms may
be established only by clear and convincing
evidence. [§736.0407; Calderόn v. Vazquez ,
251 So. 3d 303(Fla. 3rd DCA 2018)].
Relevant Statutes:
• A failure to comply with the requirements
of section 736.0403(2)(b) does not result in
the initial invalidity of a revocable trust.
Rather, only the testamentary aspects of the
trust are void.
• The formalities required are those for a will
in Florida. Complying with the formalities
for a will in some other state is not enough.
• Section 736.0403(2(b) has no applicability to
trusts created by non-Florida domiciliaries
whether or not the trust was executed in
Florida.
• Conversely, section 736.0403(2)(b) does not
contain an "out" for trusts executed in other
states. The section applies to revocable
trusts created by Florida domiciliaries
regardless of the place of execution and
regardless of the location of the property
held in the trust.
§736.0407: “Except as required by s. 736.0403
or a law other than this code, a trust need not
be evidenced by a trust instrument but the
creation of an oral trust and its terms may
be established only by clear and convincing
evidence.”
Prerequisite: In order to constitute a valid
oral trust in personalty, three circumstances
§736.0403(2)(b): “The testamentary aspects must occur: sufficient words to raise it; a
of a revocable trust, executed by a settlor definite subject matter; and a certain and
who is a domiciliary of this state at the time ascertained object. See In re Estate of Craft ,
of execution, are invalid unless the trust 320 So. 2d 874 (Fla. 4th DCA 1975); Bay
instrument is executed by the settlor with Biscayne Co. v. Baile , (Fla. 1917); Fraser v.
the formalities required for the execution Lewis , 187 So. 2d 684 (Fla. 3rd DCA 1966); In
of a will in this state. For purposes of re Estate of Herskowitz , 338 So. 2d 210 (Fla.
this subsection, the term "testamentary 3rd DCA 1976).
aspects" means those provisions of the
trust instrument that dispose of the trust
property on or after the death of the settlor
other than to the settlor's estate.”
Judge Sarah Shullman
Robing Ceremony
§689.05: “All declarations and creations of
trust and confidence of or in any messuages,
lands, tenements or hereditaments shall be
manifested and proved by some writing,
signed by the party authorized by law to
declare or create such trust or confidence,
or by the party’s last will and testament, or
else they shall be utterly void and of none
effect;…”
Scrivener's Summary: The Florida Trust
Code Scrivener's Summary provides the
following aspects to the application of
§736.0403(2)(b) that may not be apparent
from a casual reading:
• The section applies both at the creation
of a revocable trust and to any subsequent
amendments because trust amendments
are included within the definition of trust
instrument. See § 736.0103(20).
Friday, February 14, 2020
4:00 PM - 5:00 PM
Palm Beach County Courthouse
205 N Dixie Hwy
Courtroom 11A
West Palm Beach, FL 33401
PBCBA BAR BULLETIN
15
Oral Trusts Of Personal Property
(Part II/Case Summaries)
In Bay Biscayne Co. v. Baile, 73 Fla. 1120; 75
So. 860 (Fla. 1917), Bay Biscayne Company
(“Bay Biscayne”) was in the business
of managing business transactions
and collecting rents and interest due
on loans. Baile was vice-president and
Ogden was the president of the company.
Baile personally retained a note and
mortgage owned by Bay Biscayne. Baile
subsequently sold and assigned his
stock in Bay Biscayne to Ogden and
Ogden demanded the return of the note/
mortgage. In defense, Baile testified that
the note/mortgage were held in trust for
the benefit of Carhart, i.e., Ogden’s former
housekeeper of 12 years, and that the
agreement between himself and Ogden
being that he shall hold the note/mortgage
in trust to pay to Carhart the sum of twelve
hundred dollars per annum so long as she
may live, or remain dependent, and finally
to refund to Ogden the amount in notes
or money when it is shown that Carhart
is married, or is no longer dependent, or
is no longer living. Baile refused to turn
over the note/mortgage to the Ogden
for the reason that the said security was
transferred to him in trust and that to
return the same without instructions
from both parties to the trust agreement
would be a violation of the trust. The court
determined that the trust was created
by parol as it was evidenced by separate
writings of both Ogden and the trustee as
well as testimony at trial that showed the
intention of Ogden to create a trust. The
evidence also showed that it was Ogden's
intention that the trustee act as such. The
court held that the note/mortgage were
held in trust with the consent of Ogden
until the trust's termination.
(Part II continued on next page)