1. Requirements for a Trust

Question 1

What is an Express Trust?

Answer 1

A legal device that allows an owner of property to make transfers of property and to have those assets managed on behalf of someone else.

Question 2

Two (2) kinds of express trusts:

Answer 2

1. Lifetime trust, set up during the lifetime of the person who created the trust, who we call the settlor of the trust (also called an inter vivos trust).
2. Testamentary trust, set up in the settlor’s will.

Question 3

Eight (8) requirements for a valid trust:

Answer 3

1. Settlor (also called creator) who makes a…
2. Delivery of legal title to…
3. Property (also called res, or corpus, or principal) to a…
4. Trustee who holds legal title for the benefit of a…
5. Beneficiary (or beneficiaries) with…
6. Intent to create a trust for…
7. A lawful purpose…
8. In a validly executed document.

Question 4

Who can be a settlor?

Answer 4

The Settlor can be anyone 18 years of age or older, with the capacity to enter into contracts.

Question 5

What is required for proper delivery of an express trust?

Answer 5

Titled assets must be formally transferred for delivery to be valid.

Question 6

What property can be contained in an express trust?

Answer 6

The property can be almost anything, but must be identified property that the settlor owns.

Question 7

Who cannot be a trustee for a testamentary trust?

Answer 7

1. Those under the age 18
2. Judicially declared incompetents.
3. Convicted felons
4. Those incapable because of drunkenness, dishonesty, want of understanding, or improvidence.

Question 8

A non-resident “alien” can serve as trustee ONLY IF:

Answer 8

A New York resident serves as co-fiduciary.

Question 9

What effect does a failure to appoint a trustee have on an otherwise valid trust?

Answer 9

Failure to name a trustee in the trust does not matter; the court can appoint someone.

Question 10

What is required to properly list a beneficiary?

Answer 10

Beneficiaries must be definite and ascertainable; no ambiguity.

Question 11

What happens if the beneficiaries are ambiguous?

Answer 11

If ambiguous, the trustee holds in a resulting trust for the residuary beneficiary of a will (or intestate heirs in absence of a valid will).

Question 12

What if a beneficiary listed as someone’s “family” or “next of kin”?

Answer 12

A beneficiary listed as someone’s “family” or “next of kin” IS considered definite and ascertainable and the trust does not fail; consult the intestacy statutes for the names of the persons who fit the description in the trust.

Question 13

What intent is required of the settlor?

Answer 13

Settlor must intend to create an enforceable obligation; precatory (non-binding) language is not enough.

Question 14

What is the result if the trustee has no duties to perform under the terms of the trust?

Answer 14

Trustee must be given enforceable to perform; if trustee has no duties to perform it is called a passive trust, which is no trust at all.

Question 15

What purposes can a trust not call for?

Answer 15

1. A trust cannot call for commission of a crime
2. A trust cannot call for the destruction of property
3. A trust cannot have a condition against public policy

Question 16

May a condition of a trust restrict marriage or promote divorce?

Answer 16

No, that would be against public policy.

Question 17

Is a marriage restriction to members of a certain religion or ethnic group permissible?

Answer 17

Marriage restrictions to members of a certain religion or ethnic group are valid as permissible partial restraints on marriage.

Question 18

What is required for a valid trust execution?

Answer 18

1. Must be in writing, signed by both settlor and trustee,
2. And either:
   (a) Acknowledged by a notary public, OR
   (b) Signed by two (2) witnesses.