Elements of an Express Trust

Question 1

What are the main elements of an express trust?

Answer 1

1. Settlor with capacity to convey
2. Present Intent to create a trust (manifested by settlor’s words, writing, or conduct)
3. A competent trustee with duties
4. A definite beneficiary (charitable and honorary trusts are excluded from this requirement)
5. The beneficiary is NOT the sole trustee and the sole beneficiary
6. Proper purpose
7. Trust Property: There must be a present disposition in trust of specific property then owned by the settlor

Question 2

What is a qualified beneficiary?

Answer 2

A qualified beneficiary is someone who, on the date the beneficiary’s is determined, is:

• A current beneficiary OR
• A first-line remainderman (someone who would become eligible to receive distributions were the event triggering the termination of a beneficiary’s interest or of the trust itself to occur on the qualification date)

Question 3

May a trust be created without notice to the beneficiary?

Answer 3

Yes, notice to a beneficiary is not essential BUT the beneficiary MUST accept the trust.

Question 4

What is the rule with unascertained beneficiaries of private trusts?

Answer 4

Beneficiaries may be “definite” even though not yet ascertained (for example, unborn children). Beneficiaries must be ascertainable by the time their interests are to come into enjoyment.

Class Gifts: Beneficiaries may be designated by generic descriptions such as “children.” Beneficiaries may be unascertainable when the trust is created. However, when the class member is supposed to benefit, the trustee must be able to determine who belongs to the class

• Common Law — The class must be reasonably definite.
• UTC — The settlor may empower the trustee to select the beneficiaries from an indefinite class

Question 5

What are the main invalid trust purposes?

Answer 5

A trust purpose is invalid if it is:

1. Illegal
2. Contrary to public policy
3. Impossible to achieve
4. Intended to defraud the settlor’s creditors or based on illegal consideration

Question 6

Will a trust fails if the trustee dies, refuses to accept appointment, or resigns?

Answer 6

No. Once established, a trust will not fail because the trustee dies, refuses to accept appointment, or resigns. The court will appoint a successor trustee unless it is clear that the settlor intended the trust to continue only so long as a particular trustee served.

Question 7

How does a person accept a trust?

Answer 7

A person accepts a trusteeship by:

1. Signing the trust or a separate written acceptance
2. Substantially complying with the acceptance terms in the trust instrument OR
3. Accepting delivery of trust property, exercising powers or performing duties as trustee, or indicating acceptance.

Question 8

What are the main requirements for someone to serve as a trustee?

Answer 8

Trustee must have:

1. Capacity to acquire and hold property
2. Capacity to administer that property.

Question 9

How can a trustee be removed?

Answer 9

A court can remove a trustee on its own motion or upon request by the settlor, a beneficiary, or a co-trustee.

Grounds for removal include:

• A serious breach of trust
• Serious lack of cooperation among co-trustees
• Unfitness, unwillingness, or persistent failure to administer
• A substantial change in circumstances

The basic factor considered is whether continuation in office would be detrimental to the trust.