Express and Remedial Trusts Flashcards
Traditional rule for irrevocable vs revocable trusts
Trust is presumed irrevocable
Majority and UTC Rule for revocability
Trust is presumed revocable unless expressly stated otherwise
Mandatory trust
require trustee to distribute all trust income
Discretionary trust
Trustee given power to distribute income at their discretion
RAP
- Trusts are subject to RAP
- Charitable trusts are not subject to RAP
Parties to a Trust
- Grantor/settlor = creator
- Trustee = holds legal interest/title to trust property
- Beneficiaries = receive benefit
Beneficiary types
- Income beneficiary
- Remainder beneficiary - entitled to trust principle upon termination of trust
Types of Express Trusts
- Inter vivos trust
- Testamentary trust
Private Express Trust Requirements
- Intent
- Trust property
- Valid purpose
- Ascertainable beneficiaries
- If real property, must be in writing to comply with SOF
Intent to Create a Trust
- must intend to make a gift in trust
- must be manifested orally, in writing, or by conduct
Trust property
- must be some property in the trust at creation
- If a trust is at first invalid due to lack of property, if settlor puts property in later with intent to create trust at time of doing so, it will be a valid trust
Valid Trust Purpose
- Any purpose as long as not illegal
- Violate public policy wil be stricken
Purposes against public policy
- Restraint on first marriage likely violates
- Unless motive was to provide support while beneficiary was still single
- Restrain on surviving spouse remarrying after death of settlor is likely upheld
Ascertainable Beneficiaries
- Identifiable
- May refer to outside writings
Exceptions to Identifiable Beneficiaries
- Indefinite classes (“my friends”) unless trustee must distribute equally to all members of idefinite class
- Unborn children
- Class gifts - reasonably definite class (“my brother” or “my grandchildren”)
- Charitable trusts - must NOT have indiviual beneficiaries
Writing Requirement
- If real property involved, it must be in writing to comply with the Statute of Frauds
- If testamentary trust, than it will need to meet Statute of Wills in that jurisdiction (may need to be in writing, witnessed, etc.)
Inter vivos trust
- Created while trustor is living
- Trustor can designate self or third-party as trustee
- Pour-over provision
Pour-over provisions
Provision in a will that directs distribution of property to a trust, so that property passes accoring to terms of the trust
Even if trust doesn’t exist at time of pourover execution
Amendments to trust are also valid
Not same formalities as a will needed
Testamentary Trust
Created in writing or will or in document incorporated by reference to will
Created upon death of settlor
Charitable Trusts
- Must have stated charitable purpose (ie. religion, poverty, education)
- Benefit community at large or large class of persons (ie indefintie beneficiary)
Cy Pres Doctrine
- Original purpose become impossible, impracticable, or illegal to perform
- Court may modify trust to seek alternative charitable purpose
- Look to specific intent or general intent
Cy Press Specfic Intent
- Intent to help one charity
- Court may not modify trust
- Trust is terminated and become a resulting trust
Cy Pres General Intent
- General intent to help charity
- Court will subsitute a similar charity
Remedial/Resulting Trust
If a trust fails or incomplete disposition of property, court creates a resulting trust requiring the hold to return to settlor or settlor’s estate
