Creation of a trust Flashcards
6 basic trust requirements
- has a valid legal purpose
- settlor must be competant
- must have a trustee (but the ct may appt one)
- settlor must intend to create a trust
- settlor must name at least one identifiable beneficiary
- settlor must satisfy each of the req’s
Valid legal purpose
means the trust must
1. have a reason to exist
2. for the trustee to hold and manage the assets
3. for another person
The trusts purpose cannot
be illegal or encourage illegal behavior
Trusts cannot violate public policy
- limits include
- incentivizing someone to change their religion
- incentivizing divorce
- rewarding someone for not marrying
- rewarding family members for not being in contact with each other
The settlor must be competent
testamentary and revocable trusts require
the same capacity as a will
The settlor must be competent
The standard for creating a irrevocable trust is
higher then for a will or a testamentary trust
Identifiabe beneficiary relationship with trustee
The trust structute requires that the beneficiary or beneficiaries be able to
hold the trustee accountable for exercising the trustees fiduciary duties
Trust must have one or more identifiable
beneficiaries
How to put property in a trust
property
must be deeded (or redeeded) to the trustee of the trust
How to put property in a trust
bank accounts, stocks, secuties, and the like
must be retittled in the name of the trust
How to put property in a trust
Personal property
should be listed on a schedule attached to an instrument transferring it to the trustee
A person can transfer property to
someone else in trust
Transfering property to self as trustee
declaration of trust
A trust that has to be funded
pour-over trust
Uniform Testamentary Additions to Trusts Act (UTATA)
A will may validly devise property to the trustee of a trust established or to be established
- During the testators lifetime by the testator, by the testator and some other person, or by some other person, including funded or unfunded life insurance trusts, althrough the trustor has reserved any or all rights of ownership of the insurance contracts,
OR - at testators death by testators devise to the trustee, in testators will or other instrument the terms are set forth, executed before or concurrently with or after will or in another individuals will that has predecessed the testator, regardless of the existance, size, or character of the corpus of the trust, the devide is not invalid bc the trust is amendable or revocable, or bc the trust was amended after the execution of the will of the actors
Acceptance and resignation of trusteeship
A person who is nominated as a trustee is under no obligation to
serve as trusee and decline the nomination
Acceptance and resignation of trusteeship
To accept, the designated trustee must
make some sign of affirmative acceptance
Acceptance and resignation of trusteeship
Once accepted, a trusteeship,
how to resign
must follow a procedure to resign
UPC 701 Accepting or declining trusteeship
A person designated as trustee accepts the trusteeship
- by substantially complying with a method of acceptance provided in the terms of the trust OR
- if the terms do not provice a method of acceptance provided in the terms is NOT expressly made exclusive, by accepting delivery of the trust property, exercising powers of performing duties as trustee, or otherwise indicating acceptance of the truseeship
UPC 701 Accepting or declining trusteeship
A person designated as trustee who has not yet accepted the trusteeship may
reject the trusteeship
UPC 701 Accepting or declining trusteeship
A designated trustee who does not accept the trusteeship within a reasonable time after knowing of the designation is deemed
to have rejected the trusteeship
UPC 701 Accepting or declining trusteeship
A person designated as trustee, without accepting hte trusteeship may:
- act to presetve the trust property if, within a reasonable time, after acting, the person sends a rejection of the trusteeship to the settlor, or if the settlor is dead or lacks capactiy, to a qualified beneficiary, and
- inspect or investigate trust property to determine potential liability under enviromental or other law or for any other purpose
A trust should specify the method by which the trustee
accepts the position and if that method is the exclusive way of accepting
A person can accept the role (and duties) of a trustee without formal procedure and sometimes
without even realizing that htey have accepted the role of fiduciary
