Express Private Trusts Flashcards
Elements of an Express Trust
1) settlor with capacity to convey
2) present intent to create trust
3) competent tustee w/ duties
4) definite beneficiary
5) same person is not the SOLE trustee and SOLE beneficiary
6) trust property (res)
7) valid trust purpose
Settlor’s Capacity
Same as will. Cant have undue influence, fraud, duress. must have legal power to convey
Present Intent to Create Trust
written, spoken, or conduct. Check for SoW and SoF
Delivery of the deed to a trustee is sufficient
Settler Owns Property
Settlor must own property when he intents to make trust and must intent for trust to take effect immediately
Precatory expressions
Settlor’s expression of a hope, wish, or suggestion is precatory and does NOT create a trust
How to avoid precatory expressions
1) definite and precise
2) direction addressed to a fiduciary
3) unnatural disposition
4) evidence showing settlor previously supported the beneficiary
Trustee
an established trust will not fail because the trustee dies, refuses to accept or resigns. Court will apoint a successor unless clear that trust was meant to end with trustee
Acceptance of a Trusteeship
BY
1) substantially complying with the acceptance terms in the instrument
or
2) accepting delivery of trust property, exercising powers or performing duties, or by indication.
Rejection of a Trusteeship
Trustee may preserve the trust property and still reject by sending notice of rejection to settlor or beneficiary.
Trustee must have Duties
Settlor must intent to impose enforceable duties on the trustee. IF no express then court will imply them.
Qualification of Trustee
1) can acquire property
2) can administer the trust
Minors and insane can hold property but not administer
Compensation and Reimbursement
Trustee is entitled to reasonable compensation and expenses
Removal of Trustee
Upon request of the Settlor, beneficiary, or co-trustee.
based on whether the continuation would be detrimental
Factors for Removal of Trustee
1) breach of trust
2) lack of cooperation
3) unfitness, unwillingness, or persistent failure
4) substantial change in circumstances
Relation back of acceptance
When a testamentary trust is made the acceptance of trustee dates back to T’s death and Trustee can be liable for torts between death and “later” acceptance
Resignation of Trustee
Either by 1) giving 30 days notice to beneficiaries, settlor, and co-trustees
or 2) obtaining court approval
successor Trustee
takes all rights, powers, and privileges of original
subject to all duties, liabilities, and responsibilities
MERGER of Trustee and Beneficiary
IF the SOLE trustee ever becomes the SOLE beneficiary then the two merge and the trust terminates
Beneficiary
Necessary to the validity of every trust, except charitable and honorary trusts.
Qualified Beneficiary
on the date of qualification is
1) current beneficiary
or 2) first-line remainderman
Capacity of Beneficiary
any person capable of holding title
Notice to and Acceptance by Beneficiary
Notice is not essential. Acceptance can take place after a valid trust is created. but it ultimately required. Acceptance is presumed
Beneficiary Disclaimer
by written instrument within 9 months of the interests creation or after turning 21
Beneficiary Disclaimer Estoppel
can be esttopped is exercised any dominion or control or received any benefits.
Anti-Lapse Statutes
Several states + UPC apply anti-lapse statute to future interest created in trusts
Divorce
Revokes all beneficial gifts
UPC extents to revokable designations of former spouse
Unascertained Beneficiary
you MUST have define beneficiaries
Beneficiaries can be definite even though not ascertained so long as they are ascertainbel at the time the interest are to come into enjoyment
Class Gift
Class must be reasonable definite UTC - settlor can empower trustee to select class members from an indefinite class
Resulting Trust
Trust fails for lack of beneficiary = resulting trust for settlor or his successors
No Res = No Trust
Trustee must have property to manage
Trust property
1) must be segregated from other property
2) debtor cannot hold own debt in trust
3) Trust property must be existing
4) Must be property that settlor has power to convey
Trust purposes
Trust will be INVALID if purpose is 1) illegal 2) contrary to public policy 3) impossible to achieve or 4) intended to defraud the settlors creditors
RAP
discuss RAP & wait and see
Ways of Creating an Express Trust
1) Inter vivos transfer,
2) inter vivos declaration,
3) will
Formal Requirements - SoF
look for SoF even though writing is technically required for trusts
Secret Trust
Absolute gift in will to a person to hold property for another- results in constructive trust in favor of intended beneficiary
Semi-Secret Trust
Gift in will to a person “in trust” but no beneficiary - results in “trustee” holding onto resulting trust for T’s heirs
