Creation and Requirements

Question 0

Creation

Answer 0

settlor transfers legal title to property to a trustee
trustee administers property per instructions provided by settlor
for the benefit of the beneficiaries

Question 1

Trust Defined

Answer 1

fiduciary relationship concerning specific property
one party (trustee) holds legal title to property (corpus)
for the benefit of another (beneficiary)

legal title held by trustee,
equitable title held by beneficiary

Question 2

Trust Purpose

Answer 2

may be created for any lawful purpose

Question 3

Jurisdiction

Answer 3

surrogates court and supreme court
concurrent jurisdiction over inter vivos and testamentary trusts
with sufficient to persons or property in NY

Question 4

Categories of Trusts - List

Answer 4

express
resulting
constructive

Question 5

express trust

Answer 5

arises from the intention of settlor

can be private or charitable

Question 6

resulting trust

Answer 6

results by operation of law

Question 7

constructive trust

Answer 7

equitable remedy used to remedy fraud or

prevent unjust enrichment

Question 8

Settlor

Answer 8

property owner who creates the trust

transfers property to trustee with intent to create trust relationship

once created, settlor no longer owns assets

may create inter vivos trust
or testamentary trusts

Question 9

Settlor as Trustee and Beneficiary

Answer 9

settlor can create inter vivos trust and be trustee and beneficiary

so long as not the sole beneficiary and sole trustee

otherwise legal and equitable title merge and there is no longer a trust

Question 10

Trustee

Answer 10

legal owner of trust property
fiduciary and holds property for benefit of beneficiaries
can act as the owner but cannot spend for his own benefit
or in ways that are inconsistent with the trust

Question 11

Creditors of Trustee

Answer 11

Cannot collect from trust assets

trustee holds legal title but not beneficial title

Question 12

Trustee at Termination of Trust

Answer 12

legal ownership of property ends

trustees only power is to wind up affairs of trust

Question 13

Lack of Trustee at Creation

Answer 13

will not affect trust creation
failure to designate or appoint qualified trustee will not cause trust failure
if settlor’s designation of trustee is obviously personal and exclusive in nature trust may fail if trustee refuses to accept

Question 14

Trustee is incompetent, dies, or otherwise fails to qualify

courts will

Answer 14

appoint a new trustee

does not impact validity of trust in the interim

Question 15

Capacity of Trustee

what will disqualify a trustee

Answer 15

no minors
mental incompetents
non-domiciled alien
felon
drug addict, dishonest person, improvident
must read and write english
corporations may serve as trustees

Question 16

Duties (directions) of trustee

Answer 16

must be given positive duties (directions)
for trust to be valid
will arise from trust instrument and statute

without direction, trust is passive and fails
property passes directly to beneficiaries

Question 17

Acceptance of Trustee Position

Answer 17

individuals and corporations may accept or decline position
accept by words or conduct
but protecting property temporarily is not sufficient

silence or inaction disclaims position

acceptance relates back to the inception of trust relationship

Question 18

Removal of Trustee by Court Order

Answer 18

1. failed in a material manner to perform duties according to trust
2. becomes unable to adequately perform duties

Question 19

Resignation of Trustee

Answer 19

once accepted, you cannot resign unless
specifically authorized to do so by trust instrument
all beneficiaries consent
obtain court order permitting resignation

Question 20

Beneficiaries

Answer 20

Equitable owners
right to enforce the terms of the trust
cannot affect disposition or terms of the trust
get benefit of trust according to terms set by settlor

Question 21

Elements necessary to create a trust

Answer 21

1. intent
2. property
3. beneficiaries
4. valid purpose

Question 22

Intent to create a trust

Answer 22

settlor must manifest by words or conduct
present intention to create trust relationship

no particular words are necessary but use of words “in trust for” does not necessarily create a trust relationship

must look to totality of circumstances

Question 23

Precatory Language in trust creation

Answer 23

Settlor uses “suggest” or “hope” that property is utilized for benefit

generally indicates lack of present intent to create a trust

Question 24

When will court find intent to create trust despite use of precatory language

Answer 24

1. recipient stood in pre-existing fiduciary relationship with settlor
2. recipient is not object of bounty but alleged beneficiary is
3. instructions to recipient are detailed and specific as to use of property.

Question 25

Gratuitous Promise

Answer 25

promise to create a trust in the future does not create a trust because there is no present intent to do so

Question 26

conditional intent

Answer 26

settlor purports to create a trust
designates prerequisites to be completed in the future
no present intent to create trust

if later re manifests intent when missing element is furnished, trust is created as of later date

Question 27

Communicating intent to beneficiaries

Answer 27

no need to communicate words or conduct manifesting
present intent to create a trust to beneficiaries

failure to communicate to anyone will demonstrate lack of present intent to create a trust