Can You Enforce an Oral Trust in Florida?

One of the cardinal rules of wills in Florida is that they must be in writing. Florida probate courts will not recognize or admit an oral will. Not only must a valid will be in writing, it must also be personally signed by the testator (or someone signing at the testator’s direction) in the presence of at least two witnesses.

But what about trusts? It turns out that it is possible to create a valid oral or non-written trust. Florida Statutes 735.0407 expressly recognizes such trusts. The statute provides that with certain exceptions, “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.”

Proving the Existence of an Oral Trust

So how would an oral trust even come about? To give a simple hypothetical example, Joseph gives Angela $1,000 in cash. He tells her the money is for the benefit of Angela’s daughter, Sheila, and that the $1,000 should go towards paying Sheila’s college tuition. Angela takes the money and then spends it on herself, ignoring Joseph’s instruction.

A Florida court could construe this as an oral trust. The grantor (Joseph) gave property to a trustee (Angela) for the benefit of a third party (Sheila). By using the money in a manner that contradicted Joseph’s instructions, Angela breached her fiduciary duty as trustee. In theory, Sheila could sue her mother for that breach.

Now let’s look at a real-world case. This is taken from a 2018 decision by the Florida Third District Court of Appeal. In Calderon v. Vazquez, René Vazquez took out a $120,000 life insurance policy on himself. He designated his brother Juan as the beneficiary. But he told Juan that the proceeds of the policy must be held in trust for the benefit of his wife and son. (Although René lived and worked in the United States, his wife and son lived in their native Bolivia.) René also signed a Bolivian will expressly stating he had taken out the life insurance policy for the purpose of benefiting his wife and son.

René died in 2003. The insurance company paid the $120,000 to Juan. Apparently, Juan used half of the money to pay for his nephew’s college education, as René wanted, but took the other half to pay for renovations to his own house. Later, in 2015, René’s son Luis demanded his uncle turnover the rest of the funds to pay for his college. Juan refused.

Luis then sued his uncle in Florida state court. The Third District, reversing a trial court’s order dismissing the lawsuit, noted that the issue here was whether Juan “became a trustee with respect to the proceeds paid over to him as designated beneficiary.” Since Florida law recognized oral trusts when proven by clear and convincing evidence, the appellate court held Luis stated a viable claim for relief.

Contact Pompano Beach Trust Litigation Attorney Mark R. Manceri Today

If you are involved in a dispute over a Florida trust–including a disagreement as to whether a valid trust even exists–it is important to work with a Pompano Beach estate and trust litigation attorney who focuses on this complex area of law. Contact the offices of Mark R. Manceri, P.A., today to schedule a consultation with a member of our team.

Sources:

flsenate.gov/Laws/Statutes/2023/0736.0407

scholar.google.com/scholar_case?case=6555317650918875407