Definitions Flashcards
Inter vivos Trust
Settlor transfers property during lifetime.
Testamentary Trust
The intention to create a trust and the other elements of a trust (benes, res, purpose) must be ascertainable by the terms of a will/codicil itself.
Power of Appointment
A discretionary power given to an executor created by the will to appoint benes of a testamentary trust
Elements of a Trust
- Settlor’s intent
- Trust purpose
- Res
- Trustee
- Beneficiary
Secret Trust
A trust which does not appear on the face of a will, but where the devisee has orally promised the testator to use the property for another person.
Semi-Secret Trust
The will mentions the trust but does not specify the benes or any terms of the trust.
Spendthrift Trust
Prohibits benes interest from voluntary (bene’s action) or involuntary (creditor’s action) transfer.
Support Trust
A provision inside a private express trust that provides that the trustee shall pay income and principal as necessary to provide for the bene’s education or support.
Discretionary Trust
A provision inside a private express trust that gives the trustee sole discretion to distribute or withhold payments of income or principal to or from a beneficiary.
Blended Trust
A trust created for a group of persons and the interest of one member is inseparable from the interest of others.
Protective Trust
Ordinary trust that pays out income regularly, but which contains a “forfeiture” provision, that upon an attempted alienation of beneficiary’s interest, becomes a discretionary trust to apply the income for the benefit of any or all of a group that included the original beneficiary.
Charitable Trust
Effect of the trust instrument is to promote the welfare of mankind or the public at large, of a community, or of some other class of persons which is indefinite as to numbers and individual entities.
Cy Pres Doctrine
Court will put trust funds to “next best use, in accord with the dominant charitable purpose of the donor.”
Honorary Trust
A non-charitable, specific purpose trust, which has no bene with standing to enforce it.
Trust created by Operation of Law
Court imposed to prevent unjust enrichment.
Resulting Trust
Created when and express private trust fails.
Purchase Money Resulting Trust
A trust that results from one person providing the consideration for the purchase of property but consents that title is taken in name of another person.
Constructive Trust
Created by courts to prevent injustice or unjust enrichment.
Trustee’s Duty of Due Care
Trustee is obligated to act with that degree of care, skill and prudence, which would be exercised by a reasonably prudent person in managing “an enterprise of like character and with like aims to accomplish the expressed purpose of the trust.”
Prudent Investor Rule
Trustee must act in good faith with reasonable prudence at the time of each individual investment.
Three Remedies Available to Trust Benes
- Damages
- Removal of Trustee - Injunction
- Constructive Trust
Seven Duties of Trustee
- Duty of due care
- Duty of loyalty
- Duty to preserve trust property
- Duty to earmark and segregate property
- Duty of personal performance
- Duty to secure and safeguard property
- Duty to account