Creation and Requirements Flashcards
Creation
settlor transfers legal title to property to a trustee
trustee administers property per instructions provided by settlor
for the benefit of the beneficiaries
Trust Defined
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
Trust Purpose
may be created for any lawful purpose
Jurisdiction
surrogates court and supreme court
concurrent jurisdiction over inter vivos and testamentary trusts
with sufficient to persons or property in NY
Categories of Trusts - List
express
resulting
constructive
express trust
arises from the intention of settlor
can be private or charitable
resulting trust
results by operation of law
constructive trust
equitable remedy used to remedy fraud or
prevent unjust enrichment
Settlor
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
Settlor as Trustee and Beneficiary
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
Trustee
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
Creditors of Trustee
Cannot collect from trust assets
trustee holds legal title but not beneficial title
Trustee at Termination of Trust
legal ownership of property ends
trustees only power is to wind up affairs of trust
Lack of Trustee at Creation
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
Trustee is incompetent, dies, or otherwise fails to qualify
courts will
appoint a new trustee
does not impact validity of trust in the interim
Capacity of Trustee
what will disqualify a trustee
no minors mental incompetents non-domiciled alien felon drug addict, dishonest person, improvident must read and write english corporations may serve as trustees
Duties (directions) of trustee
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
Acceptance of Trustee Position
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
Removal of Trustee by Court Order
- failed in a material manner to perform duties according to trust
- becomes unable to adequately perform duties
Resignation of Trustee
once accepted, you cannot resign unless
specifically authorized to do so by trust instrument
all beneficiaries consent
obtain court order permitting resignation
Beneficiaries
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
Elements necessary to create a trust
- intent
- property
- beneficiaries
- valid purpose
Intent to create a trust
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
Precatory Language in trust creation
Settlor uses “suggest” or “hope” that property is utilized for benefit
generally indicates lack of present intent to create a trust
When will court find intent to create trust despite use of precatory language
- recipient stood in pre-existing fiduciary relationship with settlor
- recipient is not object of bounty but alleged beneficiary is
- instructions to recipient are detailed and specific as to use of property.
Gratuitous Promise
promise to create a trust in the future does not create a trust because there is no present intent to do so
conditional intent
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
Communicating intent to beneficiaries
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
