intro + trust validity

Question 1

what is a trust

Answer 1

a trust is a fiduciary relationship in which a trustee holds legal title to specific property under a fiduciary duty to manage, invest, safeguard, and administered the trust assets and income for the benefit for the designated beneficiaries, who hold equitable title

Question 2

what is a trustee

Answer 2

a fiduciary who has the responsibility of ownership but receives no benefit from the legal title

Question 3

property in an inter vivos trust passes outside of probate

Answer 3

–

Question 4

5 main elements of a trust

Answer 4

1. intent
2. identifiable corpus
3. ascertainable Bs
4. proper/legal purpose (for creating the trust)
5. compliance with requisite mechanics and formalities

Question 5

5 elements for an express trust

IOW: how to create a valid trust

Answer 5

1. settlor
   
   1. settlor (grantor, donor) with capacity to convey
2. present intent
   
   1. settlor has present intent to create trust for a valid purpose
3. deliver to trustee
   
   1. settlor delivers trust property to a competent trustee with duty to hold/manage for beneficiaries
4. definite beneficiaries
5. split of title
   
   1. same person is not the sole trustee and sole beneficiary

Question 6

does a trust need consideraton

Answer 6

no

Question 7

list (6)

present intent to create trust relationship

Answer 7

The Yes’s

1. intent manifested at time property is owned
2. must intend to take effect immediately

The No’s

1. NO formal words required
2. NO communication to B that B will gain from trust required (aka not necessary)
3. mere hope, wish, suggestion do NOT create trust
4. CANNOT change character of gift

Question 8

split of title

Answer 8

split of tile ok as long as same person does not own legal and equitable title

Question 9

identifiable corpus

Answer 9

need trust property (res)

Question 10

what type of property can be held in trust

Answer 10

any property that the settelor can transfer!

Question 11

what type of property cannot be held in trust

Answer 11

any property that the settelor has no right to transfer!

ie expectancy you have to be someone’s heir, your spouses ½ in a community property states, future income

Question 12

who is a B

Answer 12

one (person or corporation) who can take title and hold title

1. current B
2. first-line remainder man - person who will receive B’s interest if B does something to not receive it

Question 13

Anti-lapse statutes can be applied to future interests created in trusts

Answer 13

–

Question 14

divorce

Answer 14

benefits are voided for spouse who was originally a beneficiary

Question 15

list (5)

trust purposes are invalid if

Answer 15

1. illegal
2. contrary to public policy
3. impossible to achieve
4. intent is to defraud the settelor’s creditors
5. based on illegal consideration

Question 16

wait and see period

Answer 16

90 year vesting period to save interest

Question 17

list (5)

how does a person accept trusteeship

Answer 17

1. Writing- signing trust or separate written acceptance
2. Compliance - substantially comply with accepted terms in trust instrument
3. Delivery - accept delivery of trust property
4. Performance - exercise powers or performing duties of trust
5. Acceptance - indicate acceptance

Question 18

list (4)

removal of trustee

Answer 18

1. serious breach of trust
2. serious lack of cooperation among co-trustees
3. unfit, unwilling, or persistent failure to administer
4. substantial change in circumstances

Question 19

SOF applies to

Answer 19

trusts for land

Question 20

PER in trust formation allowed?

Answer 20

most states allow extrinsic evidence where there is an ambiguity

Question 21

pour-over gift from will to trust

Answer 21

trust has to be clearly ID’d in the will

Question 22

testamentary secret trust

Answer 22

• Settlor agrees with a will beneficiary that the WB will hold the property for intended B in a trust.
• Settlor relies on WB’s promise BUT the will does not state the nature of the trust (holding property for the IB)
• The intended B can present extrinsic evidence of the WB’s promise to hold property in a trust.
• If promise can be proven through clear and convicting evidence, a constructive trust will be created in favour of the intended B

Question 23

testamentary semi-secret trust

Answer 23

makes gift in trust but fails to name B