Express Trusts: Formation - Res, Beneficiaries

Question 1

With regards to express trusts, what is the res requirement?

Answer 1

If there is no res (trust property), there is no trust

Question 2

With regards to express trusts and res, what is the rule re: existing interest?

Answer 2

Trus res –>

1. must be existing interest in existing property
2. must be identifiable and segregated

OK –>

1. future interest
2. future prosit from existing contract
3. fractional or undivided interest in specific property

NOT OK –>
- mere expectancy

Question 3

With regards to express trusts and res, can a debtor hold his own debt in trust?

Answer 3

No.

However –> debtor CAN declare himself trustee of property from which debt is to be paid, and debt can be held in trust by another person

Question 4

Can an unenforceable gratuitous promise be trust res?

Answer 4

No

Question 5

With regards to express trusts, what is the rule w regards to the requirement of beneficiaries?

What is the requirement that beneficiaries must be direct?

Answer 5

In general –> beneficiaries are NECESSARY to validity of trust. EXCEPTIONS:

• charitable trust
• honorary trust

Beneficiaries must be direct
EXAMPLE –> attorney designated in trust is not a beneficiary

Question 6

Who can be a beneficiary?

Answer 6

Any person capable of taking title

• natural or artificial

Question 7

Is notice to a beneficiary required for the validity of a trust?

Answer 7

No

HOWEVER –> lack of notice may indicate lack of intent

Question 8

Is acceptance by beneficiary necessary?

Answer 8

Yes, but can take place AFTER valid trust is created

May be:

1. express; OR
2. implied

NOTE –> acceptance is generally presumed

Question 9

May beneficiary disclaim their interest in trust?

What is the time limit?

Answer 9

Yes, by filing disclaimer w trustee or probate court as appropriate

Time limit for most states –> 9 months of interests creation
EXCEPTION: if person is under 21, they have 9 months after turning 21

Question 10

What is the rule w regards to a beneficiary’s disclaimer and estoppel?

Answer 10

Beneficiary may be estopped from making disclaimer IF:

1. she has exercised any dominion or control over the interest; OR
2. has accepted any benefits under the trust

Question 11

What is effect of disclaimer on disclaimant’s creditors?

Answer 11

Most statutes –> disclaimer relates back to date of transfer

Thus –> will defeat creditor’s claims, but not federal tax liens

Question 12

What is the requirement with regards to definiteness of beneficiaries in a private trust?

Answer 12

General rule –> there must be definite beneficiaries in private trust

Unascertained beneficiaries –> may be definite even if not ascertained (ie..they are unborn). They must be ascertainable by the time their interests come into enjoyment

Question 13

With regards to definiteness of beneficiaries and gift to class, what is required?

Answer 13

Class must be REASONABLY DEFINITE

• trust may authorize trustee to exercise his discretion in people to be benefited
• trust may provide that only those who meet certain requirements are benefitted.

HOWEVER –> if trustee’s powers are too broad, it might be considered a power of appointment or gift rather than trust

Question 14

What happens if trust fails for lack of beneficiary?

Answer 14

Resulting trust in favor of settlor or his successors is presumed