Express Private Trusts Flashcards
In Virginia, trusts are governed by the…
Uniform Trust Code (“UTC”)
The elements for a valid express trust are:
- Settlor with capacity to convey title to the trustee;
- An intention to create trust;
- One or more ascertainable beneficiaries;
- Present disposition of identifiable property;
- A lawful purpose.
Is a trustee required to create a valid trust?
No, but there must be a trustee with active duties for the trust to operate.
Can the sole trustee and sole beneficiary be the same person?
No
Can an unborn person be a beneficiary of a trust?
Yes, if they will be identifiable at the time their interest comes into enjoyment.
Does the anti-lapse statute apply to trusts?
Yes, but only if the trust instrument or provision is revocable immediately before the settlor’s death.
A divorce decree or annulment will…
Revoke all beneficial interests in favor of the settlor’s former spouse, unless the instrument provides otherwise.
When is a class of beneficiaries allowed?
So long as the individual members of the class are readily ascertainable at the time trust property is distributed.
Trust property may be any property that the settlor…
has the power to convey.
If a tenancy by the entirety is transferred to a trust, the immunity from creditors will not be lost if…
- The couple remains married;
- The property continues to be held in trust, and
- It continues to be their property.
A trust may be established for any purpose that is not…
unlawful, contrary to public policy, or impossible to achieve.
Normally, a total restraint on marriage is void as against public policy, however…
a partial restraint on marriage is valid– for example, requiring marriage within a particular faith or condition changing the beneficiary upon the original beneficiary’s remarriage.
Settlor places property in trust “for Aiden for life, if he divorces Roberto, otherwise to Chastity.” Is this a valid trust?
Probably not, because encouraging divorce is likely against public policy.
Is writing required to create a trust?
In Virginia, no writing is required to create a trust, even if real property is involved.
The terms of an oral trust must be proved by…
clear and convincing evidence.
If a trustee dies, becomes incapacitated, resigns, or is removed, what happens to the trust?
Nothing. A trust will not fail for lack of trustee, the court will appoint a successor trustee.
The qualifications of a trustee are that the trustee must be:
- Of legal age;
- Competent;
- Have capacity to enter into contracts.
A nonresident individual can be named as a trustee, with the requirement that they…
appoint a resident agent for service of process.
A person accepts a trusteeship by…
- Substantially complying with the acceptance terms in the trust instrument;
- Accepting delivery of trust property; or
- Exercising trust powers or performing trust duties, or
- Indicating acceptance.
Before accepting a trusteeship, the person designated may may…
preserve, inspect, or investigate trust property without accepting.
If a trusteeship is not accepted within a reasonable time…
it is presumed to be rejected.
A settlor must intend to impose…
enforceable duties on the trustee.
An individual trustee (is/is not) required to post a bond.
Is not – UNLESS the court finds that a bond is needed to protect the beneficiary’s interests, or required by the terms of the trust.
A bank qualified in Virginia (is/is not) required to post a bond for trusteeship…
is not – ever, even if the bond is required by the terms of the trust.
What compensation is a trustee entitled to?
The compensation as specified in the trust instrument, or if none, to reasonable compensation.
Additionally, a trustee is entitled to any reimbursement for expenses incurred in the trust’s administration.
A successor trustee is subject to…
all of the original trustee’s duties, liabilities, and responsibilties.
A trustee may resign by:
EITHER:
- Giving 30 days’ notice to the settlor (if living), all co-trustees, and all qualified beneficiaries; or
- By obtaining court approval.
Who can request for a trustee to be removed?
- The court (on its own motion;
- The settlor;
- A co-trustee;
- A beneficiary; or
- the Attorney General.
Grounds for removal of a trustee include:
- A serious breach of trust;
- Lack of cooperation among co-trustees;
- Unfitness, unwillingness, or persistent failure to administer the trust effectively; or
- A substantial change of circumstances.
If the settlor had knowledge of grounds for removal before appointing the trustee, the court…
may not act if the grounds for removal were known to the settlor, and the settlor appointed the trustee anyways.
If the sole trustee and the sole beneficiary are the same individual and hold precisely the same interests…
titles merge and the trust terminates.
An express trust can be created by:
- Inter vivos or testamentary transfer to a trustee;
- Self-declaration of trust; or
- Exercise of a power of appointment.
While trusts are generally valid donative transfers, a promise to create a trust in the future…
is not enforceable without consideration.
The Virginia “opt-out” rule allows for…
one to opt out of the default RAP provision in trusts, thus validly creating a perpetual trust.
Virginia has enacted the Uniform Statutory Rule Against Perpetuities, which provides that an interest is valid if:
- It is valid under common law RAP (certain to vest no later than 21 years after the death of some life in being at the interests creation); or
- The interest actually vests or terminates within 90 years after the interest’s creation.
