Express Trusts and Remedial Trusts

Question 1

Revocable versus Irrevocable Trusts

Answer 1

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

Question 2

Mandatory Trust

Answer 2

requires the trustee to distribute all trust income

Question 3

Discretionary Trust

Answer 3

the trustee is given the power to distribute income at their discretion

Question 4

Grantor/Settlor

Answer 4

the creator of the trust

Question 5

Trustee

Answer 5

holds legal interest or title to trust property

Question 6

Beneficiaries

Answer 6

receive the benefit of the trust

Question 7

Income Beneficiaries

Answer 7

receive income from the trust

Question 8

Remainder Beneficiaries

Answer 8

entitled to the trust principal upon termination of the trust

Question 9

Private Express Trust

Answer 9

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.

Question 10

Private Express Trust

Intent

Answer 10

• The settlor must intend to make a gift in trust
• The settlor’s intent may be manifested orally, in writing, or by conduct.

Question 11

Private Express Trust

Trust property

Answer 11

When the trust is created, there must be some property that is put into the trust.

Question 12

Private Express Trust

Valid Trust Purpose

Answer 12

For any purpose, as long as it is not illegal or contrary to public policy.

Question 13

Ascertainable Beneficiaries

Answer 13

The beneficiaries must be identifiable

Question 14

Indefinite Class

Answer 14

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).

Question 15

Unborn children

Answer 15

Trusts for the benefit of unborn children are valid.

Question 16

Class gifts

Answer 16

Trusts for a reasonably definite class will be upheld (e.g. my brothers, my grandchildren).

Question 17

Private Express Trust

Writing requirement

Answer 17

• 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

Question 18

Inter vivos trust

Answer 18

• 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.

Question 19

Pour-over provision

Answer 19

• 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

Question 20

Charitable Trusts

Answer 20

Must have a stated charitable purpose for the benefit of the community at large or for a large class of persons.

Question 21

Charitable Trusts

Cy Pres doctrine

Answer 21

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.

Question 22

Remedial Trust–Resulting Trust

Answer 22

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.