Express Trusts

Question 1

What are the elements of a private express trust?

Answer 1

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.

Can be broken down into elements:

(1) Intent
(2) Res (Trust Property)
(3) Valid Trust Purpose
(4) Ascertainable Beneficiaries

Question 2

What is required for intent and how may it be manifested?

Answer 2

The settlor must intend to make a gift in trust.

The settlor’s intent may be manifested orally, in writing, or by conduct.

Look for “trust words”: “in trust”; “for the benefit of”
NOT precatory language: wishing/hoping, ambiguous language, or gift (aka no bifurcated transfer)

Question 3

What is the res (trust property) requirement for a trust?

Answer 3

A valid trust must contain some 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.

Any property interest, including real property, personal property, money, intangibles, partial interests, or future interests (whether vested or contingent) are sufficient.

Exception: Pour-over trusts (a provision in a will that says property should go into the trust upon the happening of X event).

Question 4

Valid Trust Purpose

Answer 4

A trust can be created for any purpose so long as it’s not illegal or against public policy.

The invalid part will be stricken from the trust and will not cause the whole trust to fail unless the removal of the terms is fatal.

Question 5

Are restraints on a first marriage a valid trust purpose?

Answer 5

Generally, no because these violate public policy

Question 6

Are general restraints on marriage valid in a trust?

Answer 6

Yes, if the trustee’s motive was merely to provide support for a beneficiary while the beneficiary is single

E.g. Husband gives to widow until she remarries

Question 7

Ascertainable Beneficiaries

Answer 7

The beneficiaries of a trust must be ascertainable—meaning either a specific person or criteria to determine who the person is.

Exception: Unborn children, class gifts (must still be definite), and charitable trusts.

The settlor may refer to outside writings or acts to identify beneficiaries.

Question 8

Are trusts for an indefinite class valid? (e.g. “my friends”)

Answer 8

Yes, a trustee can select a beneficiary from an indefinite class unless the trustee must distribute equally to all members of the indefinite class, in which case the trust is not valid.

Question 9

Are trusts for unborn children valid?

Answer 9

Trusts for benefit of unborn children are valid, even though the beneficiaries are not yet ascertainable at the time the trust is created.

Question 10

Are class gifts valid for a trust?

Answer 10

Yes. Trusts for a reasonably definite class (such as “my brothers” or “my grandchildren”) will be upheld.

Question 11

Are charitable trusts valid?

Answer 11

Yes, so long as the trust does not have individual ascertainable beneficiaries.

Question 12

When must a trust be in writing?

Answer 12

A trust must be in writing when it conveys real property or is a devise (aka a trust created in a will).

Question 13

What are the two main types of private express trusts?

Answer 13

(1) Inter vivos trust

(2) Testamentary trust

Question 14

What is an inter vivos trust?

Answer 14

A trust created while the settlor is still living that transfers all of the settlor’s property into a trust.

The settlor can designate either himself or a third party as the trustee.

Question 15

What is a pour-over provision?

Answer 15

A pour-over provision in a will directs the distribution of the 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 reciting the trust in the will or executing the trust with the will formalities.

Question 16

What is a testamentary trust?

Answer 16

A testamentary trust is created in writing in a will or in a document incorporated by reference into the will.

The will containing the trust must meet the will formalities or holographic will requirements.

Question 17

What are the requirements for a charitable trust?

Answer 17

A charitable trust must have a stated charitable purpose and it must exist for the benefit of the community at large or for a class of persons the membership in which varies.

Elements (in addition to the other required elements):

(1) Charitable Purpose
(2) Indefinite Beneficiaries

Question 18

What are valid charitable purposes?

Answer 18

Relief of poverty, advancement of education or religion, and other purposes benefiting the community at large or a particular segment of the community.

Question 19

What is required for indefinite beneficiaries in a charitable trust?

Answer 19

The community at large, or a class comprising unidentifiable members—not a named individual or narrow group of individuals—must be the beneficiary of a charitable trust.

Question 20

Does RAP apply to charitable trusts?

Answer 20

No, charitable trusts may continue indefinitely.

Question 21

What is the cy pres doctrine as it applies to charitable trusts?

Answer 21

A court may modify a charitable trust to seek an alternative charitable purpose if the original one becomes illegal, impracticable, or impossible to perform.

Look out for: A charity that no longer exists. Court can apply the trust to a similar charity.

Question 22

What time of intent is required for a court to modify a charitable trust under cy pres?

Answer 22

General intent to help charity.

If a charitable trust has only a specific intent to help one charity, then the court may not modify the trust and the trust will be terminated and become a resulting trust (an implied trust held for the settlor and heirs).

Modern approach: A general intent is typically presumed.

Question 23

What is a resulting trust?

Answer 23

A trust that the court will create when a trust fails or when there is an incomplete disposition of trust property.

Requires the holder of the property to return it to the settlor or settlor’s estate.

When testamentary trust fails, the residuary legatee succeeds to the trust.

The purpose of a resulting trust is to achieve the settlor’s intent

Can avoid by having back up beneficiary.

Question 24

Who has standing to enforce a charitable trust?

Answer 24

The Attorney General.

UTC: Settlor also has standing.

Question 25

What is an instructive trust?

Answer 25

A court-created trust when someone has been bad and to prevent unjust enrichment, e.g. the settlor was forced to create the trust because of undue influence, fraud, or duress.