1) Validity Flashcards
trust: def
flexible fiduciary relationship, where one person provides assets, and another holds the assets, for the benefit of a 3rd party
trusts: approach
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?
express trust: kinds
1) private
2) charitable
private vs charitable trusts: differences
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
trusts created by operation of law: kinds
1) resulting trust
2) constructive trust
resulting trust: def
equitable reversion back to the person who created the trust –> result when express trust fails for some reason
constructive trust: def
equitable remedy imposed by a court to prevent unjust enrichment
main people involved in trust
settlor
trustee
beneficiaries
settlor: def
creator of the trust, who establishes and funds it
trustee
administers and managest trust. OWNS LEGAL TITLE
beneciary
receives the benefit of the trust. OWNS EQUITABLE TITLE
legal / equitable title: who
trustee: legal
beneficiary: equitable
requirements for a valid trust
1) capacity
2) intent
3) identifiable trust corpus
4) ascertainable beneficiaries
5) created for a proper purpose
(6? w proper mechancis)
valid trust: capacity: def
–settlor must have capacity (similar to wills)
valid trust: capacity: presumption
–capacity is presumed, in the absence of fraud, undue influence, or mistake
valid trust: intent
- -18 + of sound mind
- -must manifest present intent to create trust, CONCURRENT WITH transfer of trust property
valid trust: intent: ways it won’t work
1) precatory language
2) settlor retains too much control
precatory language: def
does not clearly express intent to impose enforceable duties on transferee
precatory language: result
does not create a trust
precatory language: exs
wish, hope, request, desire that you use the property to benefit another
valid trust: identifiable trust corpus: def
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
valid trust: identifiable trust corpus: expectancy?
no – have to own it now
valid trust: future interest
yes – if future interest in real property (that’s conveyable, dnn to be possessory)
valid trust: debt
yes, BUT the trustee can’t be the debtor
valid trust: ascertainable beneficiaries: def
can be any person capable of taking and holding title to property
–if private trust must have explicitly identifiable beneficiary
valid trust: ascertainable beneficiaries: class gift problem
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
valid trust: ascertainable beneficiaries: class gift, trust fails, result
if trust fails bc too indefinite, result: court will make resulting trust (equitable reversion back to settlor)
valid trust: must be created for proper purpose: def
proper purpose can be any lawful purpose
valid trust: must be created for proper purpose: NOT a proper purpose
1) trustee must do crime or tort
2) purpose contrary to public policy
valid trust: must be created for proper purpose: rule for charitable trusts
–must be created expressly (can’t be implied by law)
ways to create a trust
1) declaration
2) inter vivos transfer
3) testamentary transfer
create trust: declaration: how
settlor declares that she is holding property for beneficiary. Must identify + separate trust property from own.
(settlor and trustee are same person!).
create trust: inter vivos: how
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)
create trust: inter vivos: what if don’t designate trustee?
- -can’t transfer legal title
- -but, trust won’t fail. Court can appoint
create trust: inter vivos: what if don’t designate trustee?: exception
- settlor specifies that the existence of the trust is dependent on acceptance by the named trustee
create trust: inter vivos: settlor designates trustee who lacks capacity or has capacity but refuses to be trustee
–court will appoint replacement
again, unless clear that settlor only intended for 1 person to serve as trustee and now it failed
create trust: testamentary trust: reqs
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
create trust: testamentary trust: designated trustee lacks capacity or refuses
court will appoint one
secret trust: def
face of will gives no indication of trust (looks like cash)
+ separate agreement btwn testator and beneficiary that it will be a trust
secret trust: rule
extrinsic evidence is allowed to establish existence of trust
semi-secret trust: def
face of the will indicates existence of trust but w/o all the dx (often w/o beneficiary).
semi-secret trust: rule
extrinsic evidence is barred and the trust fails.
semi-secret trust: result
resulting trsut (give back to settlor)
pour over will: def
testator uses will to fund a trust created prior to his death
pour over will: Uniform testamentary Addition to Trusts Act
if trust existed before, or after will, doesn’t matter – pour over provision is still valid
totten trust
bank acct payable on death, universally recognized as valid
