1. Formalities (UTC) Flashcards
Is consideration required to form a trust?
No
What must the Settlor have?
1) Capacity
- No undue influence/duress/fraud (revocable trust)
- Legal power (irrevocable trust)
2) Present intent to create trust
- Written/Oral
- During property ownership
- Before conveyance
- Precise directions/Addressed to fiduciary/Otherwise unnatural disposition/Extrinsic evidence of Settlor previously supporting beneficiary
What happens if Trustee and Sole Beneficiary are the same person?
Title merger => Trust terminated
How may Beneficiary disclaim his interest?
1) Written disclaimer to Trustee
2) Within 9 months of interest vested
What happens if Beneficiary disclaims his interest?
1) Trust read as though Ben predeceased Testator as of relevant date
2) Passes to remaindermen (if no condition precedent)/Trustee’s heirs (if no remaindermen)
What happens if Beneficiary fails to disclaim his interest?
Trustee holds trust income
- Distribute according to Trust instructions
- Distribute to Settlor’s heirs
- Accumulate for ultimate remaindermen
- Distribute to presumptive remaindermen (even if condition not fulfilled) (time to time)
What is required for trust property?
Existing/Future (Settlor re-manifests intent to create trust once property comes into existence)/Future profits
Power to convey (Settlor)
Identifiable + Segregated
NOT Debtor’s debt/unenforceable gratuitous promise
What is required for trust purpose?
NOT contrary to public policy
- NOT induce others to commit crimes/torts
- NO immorality
- NOT neglect civic duties
NOT impossible to achieve (RAP)
NOT intended to defraud Settlor’s creditors
NOT illegal
What happens if Settlor and Sole Beneficiary are the same person?
Resulting trust is created (in favour of Settlor’s heirs)
- Lawful purpose
- NO consideration for original transfer
- NO contrary instructions re disposition if trust fails
