Revocable inter vivos grantor trusts.

• Author: Riggs, Frank P.

For some time now, many "estate planners" have been recommending do-it-your self trusteeships. To one with the disadvantage of having studied the law of trusts, this is a very dangerous way to avoid the "time and expense" of "probate."

However, recently one of the finest minds in the estate and trust fields, Rohan Kelley, has apparently endorsed revocable trusts for uncomplicated estates (whatever that is).[1] The Kelley article does not expressly approve one-man (grantor) trusts. All revocable trusts, without distinction between declarations of trust and transfers into trust, are apparently approved.[2]

This article shall constitute a dissent to this excellent author. I do not believe we have begun to see the dangers inherent in attempting to use a system (trusts) developed and perfected over centuries of use, to perform another function (wills) developed and perfected over a comparable period of time.

The difference between a traditional trustee (usually a bank trust department) and a modern "do-it-yourself" trustee is monumental.

Those of us who have served bank trust department clients know that trust officers frequently call to check as to propriety before taking action; the self-declared trustee adopted his or her trust to avoid dealing with an attorney! The modern trust officer has to study constantly to keep up with a complicated financial and tax world. The self-declared trustee has not lost a day on the golf course due to becoming a trustee. Regardless, they are fungible members of this monolithic concept which we call "trusts."

It is ludicrous to apply the same law to two concepts which are so different, but with minor exceptions, Florida law does apply the same rules. This failure to differentiate harms both the traditional trust and the do-it-yourself "estate plan."

The traditional trust is endangered by two Florida statutes that obviously had modern "do-it-yourselfers" in mind but were not restricted to only that type of "trust." F.S. [sections] 737.402 provides for extensive administrative powers for a trustee (without restricting its application). Under the common law, a trustee had no administrative powers except those expressly stated in the trust instrument or necessarily implied by the trustee's duties.[3] It is very doubtful that [sections] 737.402 will be applied retroactively to impair existing trust agreements, but a prudent lawyer certainly will refer to this statute when preparing a trust for traditional purposes (and clearly adopt or deny [sections] 737.402).

Section 737. 111 requires all trusts to be signed at the end, in the presence of two attesting and subscribing witnesses, who sign in the trustor's presence and the presence of each other--or the "testamentary" provisions are invalid. (One can visualize thousands of remaindermen gasping their last breaths!)

The 1997 Legislature has partially awakened to this problem. SB 818 (awaiting Governor Chiles' signature as this Journal went to press) corrects the problem by restricting [sections] 737.111 to trusts created on or after October 1, 1995. The...