FIRST CONCEPT: PRIVATE EXPRESS TRUST Flashcards
Define a private express trust (You need to memorize)
A fiduciary relationship with respect to property whereby one person, the trustee, holds legal title for the benefit of another, the beneficiary, and which arises out of a manifestation of intent to create it for a legal purpose.
What is the corpus of the trust?
Any presently existing interest in property that can be transferred
What are 5 examples of what can be part of the corpus of a trust?
fee simple a future interest such as a contingent remainder a life insurance policy bonds stocks
What kind of interests cannot be the subject matter of a trust?
Illusory interests cannot be the subject matter of a trust.
What kinds of interests are illusory?
[a] Future profits to a business.
[b] A debt that settler owes beneficiary is not property and cannot be the corpus of a trust; a debt is a liability, not property.
[c] A mere expectancy: what settlor expects to inherit or receive as a gift because a mere expectancy is not property.
Who Can Be the Beneficiary of a Private Express Trust?
Any ascertainable person or group of people can be the beneficiary of a private express trust. Person includes a legal person
Is a corporation a legal person?
Yes
Is a unincorporated association a legal person?
Under common law?
Under Modern Law?
[a] Common law: unincorporated associations could not be the beneficiary of a private express trust.
[b] Modern law: an unincorporated association can be the beneficiary of a private express trust.
Are class gifts valid for a trust?
Yes
Are class gifts that are too big valid? Why or why not?
No, it is not valid if it cannot be administered
Is a a child conceived when the interest was created and later born an ascertainable person?
Yes
O conveys to bank and trust to A, but if liquor is ever sold, then to B. What result?
B’s interest is stricken, because of the RAP. A has a fee simple
Does a trust need to have a trustee?
Yes
Will a court allow a trust to fail if the trust does not have a trustee or a trustee refuses to serve?
No, The court will appoint a trustee
Who holds legal title when the trust does not yet have a trustee appointed by the court?
The settlor or the settlor’s estate will hold legal title.
There must be _________ intent made by the settlor.
present
Does the settlor need to use the words trust, trustee or beneficiary to make a trust?
No
are precatory words( words of wish or hope) sufficient to create a trust?
No
S gives $100,000 to his brother, with “the direction and order that he use it for my sister.” Is there a trust here?
Yes
S gives $100,000 to his brother, with “the hope and desire that he use it for my sister.” is there a trust here?
No, precatory words (hope or wish) by themselves are not sufficient to create a trust.
S gives $100,000 to his brother, with “the hope that he use it for my sister.” S was supporting his sister before transferring the money to the brother, but stopped supporting his sister after the money was transferred to the brother. is there a trust here? Why or why not?
Maybe, precatory words and parol evidence may equal a trust.
Here, because S stopped supporting sister after the transfer to the brother would be probative to show that S intended the money to be used in trust for the benefit of the sister, and that S was merely using his words imprecisely and did intend to create a trust.
If you conclude that the words are precatory and the parol evidence is not sufficient to cause a trust to be created, then then who owns the property?
the transferee in fee simple
Do trust of personal property have to be in writing?
No
Do trusts of real property have to be in writing?
Yes, because of the statute of frauds
If a settlor wants to createa trust upon his death, what is needed?
He must comply with the local probate code and a part of his will must ave a provision for a testamentary trust.
I devise blackacre to bank to hold in trust for the benefit of my son for his life. What is this an example of?
A testamentary trust.
If settlor wants to create a trust to take effect during his lifetime, there are two ways to accomplish this What are they called?
Transfer in Trust and Declaration in Trust.
What must the settlor do to create a transfer in trust of real property?
the settlor must execute and deliver a deed transferring title to the trustee.
What must the settlor do to create a transfer in trust of real property?
For a trust of personal property, there must
be delivery to the trustee of the trust property at the time settlor manifests the intent to create the trust. The delivery can be actual, symbolic or constructive
Is the promise to deliver the corpus in the future a delivery?
No
Who is the trustee in a transfer in trust?
A third party.
Who is the trustee in a Declaration in Trust?
The settlor herself.
What must the settlor do to create a declaration in trust of real property?
there must be some writing satisfying the Statute of Frauds indicating that settlor also is the trustee
In a declaration in trust of personal property is there any issue of delivery? Why or why not?
No, because the settlor herself is the trustee.
What do you need to look to for a declaration in trust of personal property?
the only thing we have to look to is the present manifestation of trust intent
“I declare myself as trustee for this 100K for the benefit of Able during Able’s lifetime.” What is this an example of?
a declaration in trust of personal property
A trust may be established for any ________ purpose.
legal
Will a trust stand if it’s purpose is illegal or against public policy at creation?
Maybe, if the court can get rid of the illegal part
Settler creates a trust for Able on the condition that Able divorce his spouse. Is this trust illegal or against public policy?
Yes
Settler creates a trust for Able on the condition that Able divorce his spouse. What will the court do with this trust? Also, what result?
The court will get rid of the condition against public policy.
Able will will take the trust free of the condition.
What if it is not possible to get rid of the illegal (or against public policy) part of the trust at creation. What are the two options for the court? Which one will the court choose?
- invalidate the trust at its inception
- Allow the trustee to keep the property for himself.
The court will choose the option with the best result.
If the court invalidates the trust at inception who owns the property of the trust?
The settlor owns the property
Settler creates a trust to defraud settler’s creditors. What will the court do? Why would they do this?
The court will invalidate the trust, so that settlor’s creditors can attach the assets.
Why would the court allow a trustee to keep the property in the trust?
to punish the settler who does not come with clean hands.
What happens if the trust becomes illegal after creation?
The trust will be decreed
Once a court decrees a resulting trust, the resulting trustee has only one obligation, what is that obligation?
to transfer the property back to the settlor if the settlor is alive, and if not, to the settlor’s estate
