Express Trust Flashcards
What is a private express trust?
A trust in which the grantor/settlor clearly states their intention to transfer property to a trustee for the benefit of one or more ascertainable beneficiaries.
What are the elements required of a private express trust?
Requires
-> intent from settlor
-> trust is funded with property
-> trust has a valid purpose
-> the trust has ascertainable beneficiaries
What is the rule regarding the settlor’s intent?
When must the manifestation of intent happen?
What kind of terms creates the presumption of intent?
Is consideration needed?
A settlor WITH capacity may manifest the present intent to transfer to trustee who has duties to perform for the benefit of one or more ascertainable beneficiaries for a vlid purpose.
Manifestation of intent must occur prior to or simultaneously with the transfer of property.
Usage of common trust terms will create a presumption of intent.
No consideration is needed.
What is a precatory trust?
A trust in which the settlor expresses a hope or wish that the property transferred to the trustee be used for the benefit of another rather than creating a legal obligation that the trustee must follow.
What are the requirements of a precatory trust?
The trust
-> must contain specific instructions to a fiduciary
AND
-> must be shown that absent imposition of a trust, there would be an unnatural disposition of the donor’s property BECAUSE of familial relation or history of support between donor and intended beneficiary
What must a trust be funded with?
How does a trust become invalid? How does the settlor re-validate the trust?
What is the rule regarding trust property?
A trust must be funded with identifiable trust property
If a trust that is invalid for a lack of assets is later funded
-> a trust arises if the settlor RE-MANIFESTS the intent to create a trust
The trust property must be identifiable and segregated, and it must be described with reasonable certainty.
What is required of a trust’s purpose for it to be a valid trust purpose?
A trust can be created for ANY purpose AS LONG as it is
-> not illegal
-> not contrary to public policy
OR
-> not impossible to achieve;
AND
-> is for the benefit of its beneficiaries.
How can a trust deal with invalid terms?
If one of several trust terms violates public policy
-> alternative terms will be honored
OR
-> if there are no alternative terms THEN the term will be stricken
BUT
-> if the trust will not fail UNLESS removal of the term if fatal.
What is the rule regarding ascertainable beneficiaries?
Beneficiaries must be IDENTIFIABLE by name so that the equitable interest can be transferred atomically by operation of law AND directly benefit the person.
Can the settlor identify beneficiaries in other manners that don’t include using a name?
The settlor may refer to acts of independent significance to identify the beneficiaries.
What are the exceptions to the requirement of.a trust needing ascertainable beneficiaries?
Trusts for the benefit of unborn children OR to a reasonably definite class WILL be upheld.
Charitable trusts do need ascertainable beneficiaries.
What are charitable trusts?
Trusts that exist for the good of the public.
What are the two types of express trusts?
Two types are
-> inter vivos trusts
-> testamentary trusts
What’s the difference between an inter vivos trust and a testamentary trust?
A living trust (sometimes called an inter vivos trust) is one created by the grantor during his or her lifetime, while a testamentary trust is a trust created by the grantor’s will.
What is the rule of an inter vivo trust regarding
-> delivery
-> writing
-> parol evidence
Delivery
-> must accompany the declaration of trust if a third-party trustee is named, whereby the settlor parts with dominion and control over the trust property
Writing
-> required for real property
-> a court will impose a constructive trust when a writing is lacking
Parol evidence
-> evidence outside of the written agreement is permitted to show the settlor’s intent only if the written agreement is ambiguous on its face
