California Trusts Flashcards
DELETE Trust (California)
A fiduciary relationship where one party (the trustee) holds legal title to property for the benefit of another (the beneficiary) who holds equitable title.
Example sentence: John created a trust for his daughter, with his brother as the trustee.
Types of Trusts (California)
Express Trusts (created intentionally) and Implied Trusts (arise by operation of law).
Example sentence: Express trusts are commonly used for estate planning purposes.
Express Trusts (California)
Trusts created intentionally by the settlor.
Example sentence: Sarah established an express trust to protect her assets for her grandchildren.
Private Express Trusts (California)
Created to benefit private, non-charitable beneficiaries.
Example sentence: The private express trust was set up to ensure the financial security of the family members.
Charitable Trusts (California)
Created for charitable purposes or to benefit qualified charitable beneficiaries.
Example sentence: The charitable trust was established to support educational initiatives in underprivileged communities.
Implied Trusts (California)
Trusts that arise by operation of law.
Example sentence: The court recognized the implied trust based on the circumstances of the case.
Constructive Trusts (California)
Imposed to deprive a wrongdoer from retaining improperly obtained property.
Example sentence: The court imposed a constructive trust to remedy the fraudulent actions of the defendant.
Resulting Trusts (California)
Imposed irrespective of wrongdoing when circumstances require it, typically when a settlor transfers full legal title but fails to transfer full equitable title.
Example sentence: The resulting trust was established to clarify the intended distribution of the property.
Principal Players (California)
Settlor, Trustee, and Beneficiary.
Example sentence: The principal players in the trust relationship have distinct roles and responsibilities.
Settlor (California)
Sets up the trust.
Example sentence: The settlor carefully outlined the terms of the trust in the legal document.
Trustee (California)
Administers, manages, and owns legal title to the trust property.
Example sentence: The trustee is responsible for ensuring the trust assets are invested wisely.
Beneficiary (California)
Receives equitable title to the trust property.
Example sentence: The beneficiary has the right to receive the income generated by the trust assets.
Capacity (California)
The legal ability to create a trust; the settlor must be at least 18 years old and of sound mind.
Example sentence: The settlor’s capacity to create a trust is essential for the validity of the trust.
Intent (California)
The settlor’s intention to create a trust at the present time.
Example sentence: The settlor’s clear intent to establish a trust was evident in the trust document.
Formalities (California)
Legal requirements for creating a trust, such as writing and signing.
Example sentence: The trust document complied with all the formalities required by law.
Valid Purpose (California)
The trust must be created for a lawful purpose.
Example sentence: The court examined whether the trust had a valid purpose before approving its establishment.
Ascertainable Beneficiary (California)
A beneficiary who can be identified at the time the trust is created.
Example sentence: The ascertainable beneficiary was named in the trust document to ensure clarity.
Active Duties (California)
A trustee must have active duties to perform in administering the trust.
Example sentence: The trustee diligently carried out their active duties in managing the trust assets.
Declaration of Trust (California)
A settlor declares that they hold property in trust for certain beneficiaries.
Example sentence: The declaration of trust clearly outlined the settlor’s intentions and responsibilities.
Inter Vivos Trust (California)
A trust created during the settlor’s lifetime.
Example sentence: The inter vivos trust allowed the settlor to transfer assets to beneficiaries while still alive.
Testamentary Trust (California)
A trust created by a will that takes effect upon the settlor’s death.
Example sentence: The testamentary trust ensured the orderly distribution of assets according to the settlor’s wishes.
Secret Trust (California)
A trust where the will gives no indication of the existence of the trust.
Example sentence: The secret trust was revealed only after the settlor’s death, surprising the beneficiaries.
Semi-Secret Trust (California)
A trust where the will indicates the existence of the trust but fails to lay out all necessary terms.
Example sentence: The semi-secret trust required additional clarification to determine the beneficiaries’ rights.
Pour-Over Trust (California)
A will that directs the transfer of the decedent’s property into a trust established either by the testator during their lifetime or by another person.
Example sentence: The pour-over trust ensured the seamless transfer of assets into the established trust.
Trustee’s Powers (California)
The legal powers granted to the trustee to manage and administer the trust property.
Example sentence: The trustee’s powers were clearly defined in the trust instrument to guide their decision-making.
Express Powers (California)
Powers specifically granted to the trustee in the trust instrument.
Example sentence: The trustee exercised their express powers to make investment decisions on behalf of the trust.
Implied Powers (California)
Powers that are necessary or appropriate to carry out the terms of the trust.
Example sentence: The trustee utilized their implied powers to address unforeseen circumstances in trust administration.
Prudent Investor Rule (California)
A rule requiring the trustee to invest and manage trust assets as a reasonable and prudent investor would.
Example sentence: The trustee adhered to the prudent investor rule to ensure the long-term growth of the trust assets.
Duty of Loyalty (California)
A trustee’s obligation to act in the best interest of the beneficiaries.
Example sentence: The trustee’s duty of loyalty prevented any conflicts of interest in trust management.
Self-Dealing (California)
When a trustee acts in their own interest rather than in the interest of the beneficiaries.
Example sentence: The trustee’s self-dealing behavior led to legal action by the beneficiaries.
Conflict of Interest (California)
A situation where the trustee’s personal interests could conflict with their duties to the beneficiaries.
Example sentence: The conflict of interest required the trustee to recuse themselves from certain trust decisions.
Duty to Diversify (California)
A trustee’s obligation to diversify the trust’s investments to spread risk.
Example sentence: The duty to diversify helped protect the trust assets from market fluctuations.
Earmark Assets (California)
The requirement to keep trust property separate from the trustee’s own property.
Example sentence: Earmarking assets ensured the clear distinction between trust assets and personal assets.
Accounting (California)
The trustee’s duty to keep accurate records of trust administration and provide them to beneficiaries.
Example sentence: The trustee’s meticulous accounting practices enhanced transparency in trust management.
Impartiality (California)
The trustee’s duty to treat all beneficiaries fairly and without bias.
Example sentence: The trustee demonstrated impartiality in distributing trust proceeds to all beneficiaries.
Duty to Co-Trustees (California)
The obligation of each trustee to prevent and address breaches of trust by co-trustees.
Example sentence: The duty to co-trustees encouraged collaboration and accountability in trust administration.
Surcharging the Trustee (California)
Holding the trustee personally liable for losses to the trust caused by their breach of duty.
Example sentence: The court considered surcharging the trustee for the financial losses incurred due to their breach of duty.
Removal of Trustee (California)
The process of removing a trustee for failure to perform their duties.
Example sentence: The beneficiaries initiated the removal of the trustee due to their failure to fulfill their obligations.
Liability to Third Parties (California)
The trustee’s responsibility for contracts and torts involving the trust property.
Example sentence: The trustee’s liability to third parties required careful consideration in trust management.
Income Beneficiary (California)
A beneficiary who is entitled to receive income generated by the trust property.
Example sentence: The income beneficiary received regular payments from the trust’s investment returns.
Principal Beneficiary (California)
A beneficiary who is entitled to receive the trust property itself, also known as a remainderman.
Example sentence: The principal beneficiary inherited the trust property upon reaching a specified age.
Discretionary Trust (California)
A trust where the trustee has discretion over how much, if any, of the trust property is distributed to beneficiaries.
Example sentence: The discretionary trust allowed the trustee to allocate funds based on the beneficiaries’ needs.
Spendthrift Trust (California)
A trust that restricts the beneficiary’s ability to transfer their interest and protects it from creditors.
Example sentence: The spendthrift trust shielded the beneficiary’s inheritance from potential creditors.
Modification (California)
Changing the terms of a trust.
Example sentence: The modification of the trust was necessary to accommodate changing circumstances.
Termination (California)
Ending the trust and distributing its property.
Example sentence: The termination of the trust required approval from all beneficiaries.
Revocation (California)
The settlor’s ability to terminate a trust, which is generally presumed unless the trust is expressly made irrevocable.
Example sentence: The settlor considered revocation of the trust due to changing family circumstances.
Cy Pres Doctrine (California)
A doctrine allowing modification of a charitable trust when its original purpose becomes impractical or impossible to achieve.
Example sentence: The court applied the cy pres doctrine to ensure the charitable trust’s continued effectiveness.
