Express Trusts and Remedial Trusts Flashcards
Revocable versus Irrevocable Trusts
Traditional rule: a trust is presumed to be irrevocable unless it expressly states otherwise
Modern rule: a trust is presumed revocable unless it expressly states otherwise
Mandatory Trust
requires the trustee to distribute all trust income
Discretionary Trust
the trustee is given the power to distribute income at their discretion
Grantor/Settlor
the creator of the trust
Trustee
holds legal interest or title to trust property
Beneficiaries
receive the benefit of the trust
Income Beneficiaries
receive income from the trust
Remainder Beneficiaries
entitled to the trust principal upon termination of the trust
Private Express Trust
A private express trust must clearly state the intention of the settlor to transfer property to a trustee for the benefit of one or more ascertainable benficiaries.
Private Express Trust
Intent
- The settlor must intend to make a gift in trust
- The settlor’s intent may be manifested orally, in writing, or by conduct.
Private Express Trust
Trust property
When the trust is created, there must be some property that is put into the trust.
Private Express Trust
Valid Trust Purpose
For any purpose, as long as it is not illegal or contrary to public policy.
Ascertainable Beneficiaries
The beneficiaries must be identifiable
Indefinite Class
Can select a beneficiary from an indefinite class (e.g. “my friends”), unless the trustee must distribute equally to all members of the indefinite class (not valid).
Unborn children
Trusts for the benefit of unborn children are valid.
Class gifts
Trusts for a reasonably definite class will be upheld (e.g. my brothers, my grandchildren).
Private Express Trust
Writing requirement
- If the trust involves real property, it must be in writing
- If it is a testamentary trust, it must meet the statute of wills
- Otherwise, no writing required
Inter vivos trust
- Created while the trustor is living that transfers some or all of the trustor’s property into a trust.
- The trustor can designate himself or a third party as the trustee.
Pour-over provision
- In a will, directs the distribution of property to a trust, so that the property passes according to the terms of the trust.
- Can pour over into a non-existing trust
Charitable Trusts
Must have a stated charitable purpose for the benefit of the community at large or for a large class of persons.
Charitable Trusts
Cy Pres doctrine
A court may modify a trust if the charity becomes illegal or impracticable.
* If the trust has specific intent, the court cannot modify, and the trust will terminate, and become a resulting trust.
* If there is general intent, the court will modify.
Remedial Trust–Resulting Trust
If a trust fails in some way or where there is incomplete disposition of a trust, the court may require the holder to transfer the remains to the settlor.
