Creating Trusts Flashcards
6 elements for creating a valid trust
(1) settlor intent
(2) delivery of trust property
(3) ascertainable beneficiary
(4) trustee
(5) active duties on trustee
(6) proper trust purpose
Settlor intent element
Settlor with requisite capacity who expresses a present intent to create a trust
Delivery element
Delivery of SPECIFIC trust property:
● Must be delivered to trustee with intent to do it right now (not in future)
● Must be some certainty over what is the trust property
Beneficiary element
An ASCERTAINABLE beneficiary:
● Must be determinable when the trust is to be distributed
● Need some objective standard (reasonable basis) to identify the beneficiaries
Proper trust purpose element
A trust can be created for any purpose except those that are illegal, fraudulent, or against public policy
Types of trusts
(1) inter vivos trust
(2) testamentary trust
(3) totten trust
Inter vivos trust
Created during the settlor’s lifetime
Trust property must be placed into the trust
Testamentary trust
Created by testator’s valid will
Pour over provision
“Pour over” provision in testamentary trusts = directs the transfer of the decedent’s property into a trust established by either the testator during his lifetime or by another person
Totten trust
An arrangement with a bank that allows the depositor to open a bank account in the depositor’s own name, as trustee for other parties
Beneficiary entitlement in totten trust
The only right the beneficiary has is to take whatever is left in the account when the depositor dies (if the beneficiary is still alive)
Duration of private trusts
All private, non-charitable trusts must comply with the Rule Against Perpetuities (RAP)
RAP modification
Wait-and-See Approach: The court’s determination of whether the rule has been violated depends upon what actually happens rather than what might happen
