Express and Remedial Trusts Flashcards
How is an express trust created?
By the expressed intention of the owner of the property to create a trust relationship with respect to the property.
What are the two types of express trusts?
Private express trusts and charitable trusts.
What law applies to express trusts in Pennsylvania?
The Uniform Trust Act, which provides rules pertaining to trusts, trustees, and beneficiaries.
What UTA rules cannot be contracted out of?
- Trust creation requirements;
- trustee’s duties of good faith and loyalty to the beneficiaries, including the duty to keep the beneficiaries informed and act in accordance with the terms and purposes of the trust;
- requirements that the trust purpose be lawful, in keeping with public policy, and capable of achievement;
- court’s power to modify or terminate a trust;
- effect of spendthrift provisions; and
- rights of third parties engaging in transactions with the trustee.
What are the elements of a valid private express trust?
- Intent
- Trust property
- Valid trust purpose
- Ascertainable beneficiaries
What will create a presumption of intent to create a trust?
“In trust” or “trustee”
When must the intent be manifested?
Either prior to or simultaneously with the transfer of property. If transfer doesn’t occur immediately, then the intent should be manifested anew at the time of transfer.
Can you make an oral trust?
No, the settlor’s intent must be manifested in writing, although there is no requirement that the settlor communicate his intent to the beneficiaries.
What if there is ambiguous languageas to intent?
A determination must be made regarding whether a bifurcated transfer was intended and, if so, whether theintent was more than a mere hope or wish.
What if you use precatory language as to the disposition of property?
It will not create a trust in Pennsylvania. The words will either be construed as mandatory or as meaningless.
What property may be incldued in a trust?
Property that was owned by the settlor at the time the trust was created and was at that time transferred to the trust or to the trustee.
Will fractional property interests suffice?
Yes. Anything except for a mere expectancy. (Future earnings under an existing agreement are good though.)
What distinguishes a trust from a debt?
A trust requires identifiable trust property–it involves the duty of one party to deal with specific property for another.
A debt involves the obligation of one party to another.
N.B.: If a recipient of funds can use them and co-mingle them as he pleases, then the obligation to pay the funds to another is a debt, not a trust.
What requirements are there for trust property?
- Segregated
- Identifiable
- Described with reasonable certainty
What constitutes a valid trust purpose?
Any purpose, as long as it isn’t illegal or contrary to public policy.
Are trusts severable?
Yes. If a term is violative of public policy, any alternative terms provided by the settlor will be honored. If none, then the term will be stricken, but the trust will still be valid (unless removing that term proves fatal).
What does the “ascertainable beneficiary” requirement entail?
That the beneficiary be ascertainable (like, identifiable by name) so that the equitable interest can be transfered automatically by operation of law.
What are the three exceptions to ascertainable beneficiary requirement?
- Unborn children
- Class gifts
- Will be upheld if the class is reasonably definite, even when the trustee may select the beneficiaries from among the members of a class.
- Charitable trusts
- Only private trusts need to have ascertainable beneficiaries.
How can you create a trust?
- Inter vivos
- Testamentary
When do inter vivos trusts become possessory?
At the death of the settlor.
When does the trustee take legal title of the property?
For real property: upon the delivery of a deed or other document of title, PROVIDED THAT the trust is in a writing that satisfies the SOF.
For personal property: upon delivery of the personal property.
What if the Statute of Frauds is not satisfied?
Then a constructive trust is created and the purported trustee must distribute the real property to the intended beneficiaries outright, rather than in a trust.
What if the terms of a written trust instrument are ambiguous?
Parol evidence is admissible to prove intent. Otherwise, it is not admissible.
What is a Totten trust?
It’s a fake trust. A designation given to a bank account in a depositor’s name as “trustee” for a named beneficiary. Depositor has control and depositor’s creditors can get at it.
Will automatically terminate if the beneficiary predeceases the depositor.
Can be revoked by any act manifesting the depositor’s intent to revoke, including by will. (This distinguishes it from a joint bank account, which passes to the co-tenant at death.)