Express Trusts Flashcards
What is an express trust?
An express trust is created as a result of the express intention of the owner of the property to create a trust relationship with respect to the property. There are two categories of express trusts: private express trusts and charitable trusts.
What is a private express trust?
A private express trust clearly states the intention of the settlor to transfer property to a trustee for the benefit of one or more ascertainable beneficiaries.
What are the elements of a private express trust?
(1) Settlor has capacity to create the trust;
(2) Settlor clearly expresses present intent to transfer ownership of
(3) Property to
(4) A trustee who has duties to perform;
(5) For the benefit of the ascertainable beneficiaries;
(6) For a valid purpose
*Consideration is not required. Invalid terms may be included, but they will be struck from the trust.
How does a Court determine the Settlor’s intent to create a trust?
Common terms like “in trust” or “trustee” will create a presumption of intent, but are not required. Courts will look at a variety of factors like the specific terms used, definite news of property involved, prior conduct and relationships, and whether construing the disposition as a trust would be consistent with the transferor’s desire.
What is a precatory trust?
A precatory trust is created when a donor transfers property to a donee using language that expresses a hope or wish that such property be used for the benefit of another. To be considered a precatory trust, the transfer must meet two requirements: first, it must contain specific instructions to a fiduciary, and second, it must be shown that absent imposition of a trust, there would be an unnatural disposition of the donors property because of familial relations or a history of support between the donor and the intended beneficiary.
What is trust property?
A valid trust must contain some property that was owned by a settler at the time the trust was created and was at that time transferred to the trust or trustee. Put differently, the trust must be funded. Any property interest including real property, personal property, money, or intangibles will suffice, although mere expectancy will not. The requirement of identifiable trust property (res) distinguishes a trust from a debt.
What is a valid trust purpose?
The trust can be created for any purpose, as long as not illegal, restricted by rule of law or statue, or contrary to public policy. The trust and its terms must be for the benefit of its beneficiaries.
Who can be a beneficiary of a private trust?
The beneficiary must be ascertainable and identifiable by name.
What is an inter vivos trust?
A trust that is a lifetime transfer. It can be revocable or irrevocable.
What is a pour-over trust?
It is created by a provision in a will that directs the distribution of property to a trust upon the happening of an event, so that the property passes according to the terms of the trust without the necessity of the will reciting the entire trust.
Is a pour-over trust valid under the Uniform Testamentary Additions to Trusts Act?
Yes. A will may pour-over estate assets into a trust, even if the trust instrument was not executed and according with the statue of wills, as long as the trust is identified in the will, and the terms are set forth in a written instrument. Furthermore, if these requirements are met, the pour-over bequest is valid even if the trust is unfunded, revocable, and amendable.
What is a Totten trust?
It is not a true trust, because there’s no separation of legal and equitable title. Rather, it is a designation given to a bank account in a depositor‘s name is trustee for one or more named beneficiaries. This trust can be revoked by any lifetime act manifesting the depositors intent to revoke, or by will. It is distinguishable from a joint bank account.
What is a living trust?
Also known as a revocable trust, it is created primarily to avoid probate of property upon death. Settlor transfers ownership of assets to a revocable trust and serves as the trustee and current primary beneficiary of the trust. Upon death, a successor trustee is named and responsible for distributing assets.
What is a testamentary trust?
Occurs when the terms of the trust are containing a will or in a document incorporated by reference into a well. Testamentary trust must comply the applicable jurisdictions statue of wills. If it does not meet the requirements of statute of wills, it may still be deemed as a constructive trust for resulting trust, depending on whether it’s a secret or semi-secret.
What is a secret trust?
It looks like a testamentary gift, but it is created in reliance on the named beneficiaries promise to hold and administer the property for another. The intended beneficiary is permitted to present extrinsic evidence to prove the promise. If proven by clear and convincing evidence, that a constructive trust is imposed on the property for the intended beneficiary, so as to prevent the unjust enrichment of the secret trustee.
