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Bar Trusts > 1) Validity > Flashcards

1) Validity Flashcards

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1
Q

trust: def

A

flexible fiduciary relationship, where one person provides assets, and another holds the assets, for the benefit of a 3rd party

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2
Q

trusts: approach

A

1) what kind of trust?
2) valid?
3) administerd appropriately?
4) accounted for appropriately?
5) any interest in trust transferred?
6) any changes/modifications to trust, or terminated?
7) is there a trust by operation of law?

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3
Q

express trust: kinds

A

1) private

2) charitable

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4
Q

private vs charitable trusts: differences

A

1) private trust requires ascertainable beneficiaries but charitable trust does not – AG or gvt can enforce
2) c. must be created for charitable purpose
3) cy pres applies to charitable only

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5
Q

trusts created by operation of law: kinds

A

1) resulting trust

2) constructive trust

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6
Q

resulting trust: def

A

equitable reversion back to the person who created the trust –> result when express trust fails for some reason

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7
Q

constructive trust: def

A

equitable remedy imposed by a court to prevent unjust enrichment

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8
Q

main people involved in trust

A

settlor
trustee
beneficiaries

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9
Q

settlor: def

A

creator of the trust, who establishes and funds it

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10
Q

trustee

A

administers and managest trust. OWNS LEGAL TITLE

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11
Q

beneciary

A

receives the benefit of the trust. OWNS EQUITABLE TITLE

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12
Q

legal / equitable title: who

A

trustee: legal
beneficiary: equitable

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13
Q

requirements for a valid trust

A

1) capacity
2) intent
3) identifiable trust corpus
4) ascertainable beneficiaries
5) created for a proper purpose
(6? w proper mechancis)

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14
Q

valid trust: capacity: def

A

–settlor must have capacity (similar to wills)

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15
Q

valid trust: capacity: presumption

A

–capacity is presumed, in the absence of fraud, undue influence, or mistake

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16
Q

valid trust: intent

A
  • -18 + of sound mind

- -must manifest present intent to create trust, CONCURRENT WITH transfer of trust property

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17
Q

valid trust: intent: ways it won’t work

A

1) precatory language

2) settlor retains too much control

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18
Q

precatory language: def

A

does not clearly express intent to impose enforceable duties on transferee

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19
Q

precatory language: result

A

does not create a trust

20
Q

precatory language: exs

A

wish, hope, request, desire that you use the property to benefit another

21
Q

valid trust: identifiable trust corpus: def

A

trust must contain existing interest in real or personal property.

property must be transferred ot the trustee

must be identifiable, separate from other property owned by trustee

22
Q

valid trust: identifiable trust corpus: expectancy?

A

no – have to own it now

23
Q

valid trust: future interest

A

yes – if future interest in real property (that’s conveyable, dnn to be possessory)

24
Q

valid trust: debt

A

yes, BUT the trustee can’t be the debtor

25
Q

valid trust: ascertainable beneficiaries: def

A

can be any person capable of taking and holding title to property
–if private trust must have explicitly identifiable beneficiary

26
Q

valid trust: ascertainable beneficiaries: class gift problem

A

if language to create class is too indefinite, trust will fail!

ok for trustee to pick from a group as long as group is ascertainable and definite

27
Q

valid trust: ascertainable beneficiaries: class gift, trust fails, result

A

if trust fails bc too indefinite, result: court will make resulting trust (equitable reversion back to settlor)

28
Q

valid trust: must be created for proper purpose: def

A

proper purpose can be any lawful purpose

29
Q

valid trust: must be created for proper purpose: NOT a proper purpose

A

1) trustee must do crime or tort

2) purpose contrary to public policy

30
Q

valid trust: must be created for proper purpose: rule for charitable trusts

A

–must be created expressly (can’t be implied by law)

31
Q

ways to create a trust

A

1) declaration
2) inter vivos transfer
3) testamentary transfer

32
Q

create trust: declaration: how

A

settlor declares that she is holding property for beneficiary. Must identify + separate trust property from own.

(settlor and trustee are same person!).

33
Q

create trust: inter vivos: how

A

under SOF must be in writing by person who had power to create the trust at time of transfer IF real property (but not personal property)

34
Q

create trust: inter vivos: what if don’t designate trustee?

A
  • -can’t transfer legal title

- -but, trust won’t fail. Court can appoint

35
Q

create trust: inter vivos: what if don’t designate trustee?: exception

A
  • settlor specifies that the existence of the trust is dependent on acceptance by the named trustee
36
Q

create trust: inter vivos: settlor designates trustee who lacks capacity or has capacity but refuses to be trustee

A

–court will appoint replacement

again, unless clear that settlor only intended for 1 person to serve as trustee and now it failed

37
Q

create trust: testamentary trust: reqs

A

1) can create trust thru will
2) must be in writing
3) trust must be ascertainable from: (a) the will (b) other docs properly incorporated (c) facts w significance apart from effect on disposition of property

38
Q

create trust: testamentary trust: designated trustee lacks capacity or refuses

A

court will appoint one

39
Q

secret trust: def

A

face of will gives no indication of trust (looks like cash)

+ separate agreement btwn testator and beneficiary that it will be a trust

40
Q

secret trust: rule

A

extrinsic evidence is allowed to establish existence of trust

41
Q

semi-secret trust: def

A

face of the will indicates existence of trust but w/o all the dx (often w/o beneficiary).

42
Q

semi-secret trust: rule

A

extrinsic evidence is barred and the trust fails.

43
Q

semi-secret trust: result

A

resulting trsut (give back to settlor)

44
Q

pour over will: def

A

testator uses will to fund a trust created prior to his death

45
Q

pour over will: Uniform testamentary Addition to Trusts Act

A

if trust existed before, or after will, doesn’t matter – pour over provision is still valid

46
Q

totten trust

A

bank acct payable on death, universally recognized as valid

Bar Trusts (6 decks)

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