Non-Probate transfers Flashcards
5 most common non-probate transfers
- Inter vivos trusts
- Life insurance
- Joint tenancies and tenancies by the entirety
- Payable-on-death and transfer-on-death accounts and contracts
- Pension accounts
Requirements for Intervivos, revocable trusts
Must be in writing and signed
How are payable on death accounts treated?
Like life insurance policies. When a will addresses these assets, the will doesn’t control
For POD’s accounts, is extrinsic evidence permitted?
Yes, extrinsic evidence is permitted to show decedent’s intent as to who takes the contents of the account (even when the account is joint tenancy w/ a right of survivorship)
Is there a 120 hr rule for non-probate transfers?
Nah, just need “sufficient evidence” that the recipient survived
3 classifications of trusts
- By manner of creation
- By time of creation
- By duties
Subcategories of trusts by manner of creation
- Express
- Private Express Trusts
- Charitable Trusts
- Resulting (implied)
- Constructive (by law)
Subcategories of trusts by time of creation
- Inter vivos
- Revocable
- Irrevocable
- Testamentary
Subcategories of trusts by duties
- Active
2. Passive
3 ways a trust can be created
(1) transfer of property to another person as trustee during the settlor’s lifetime or by will or other disposition taking effect upon the settlor’s death (i.e., a deed of trust);
(2) declaration by the owner of property that the owner holds identifiable property as trustee (i.e., a declaration of trust); OR
(3) exercise of a power of appointment in favor of a trustee
Elements of a Valid Private Express Trust (8)
- The trust must have a valid purpose
- The settlor must have the capacity to create a trust
- The settlor must have the intent to create a trust
- Settlor must deliver assets to trustee
- The trust must have property
- must have ascertainable beneficiaries
- must be in writing
- must have a competent trustee who has duties to perform
(1) The trust must have a valid purpose
Must be for the benefit of it’s beneficiaries
(2) The settlor must have the capacity to create a trust
Same capacity required to make a will
(3) The settlor must have the intent to create a trust
Self explanatory, use of the word trust/trustee is not required
(4) Settlor must deliver assets to trustee
Assets to be held in trust must be delivered to the trust and placed in the trustee’s name
(5) The trust must have property
A trust isn’t valid until its funded with property
Exceptions to rule about trusts having property
- pour over wills/trusts
- Life insurance trusts
What kind of property must inter vivos trusts be funded with?
Must be funded with specifically identifiable property during the settlor’s lifetime to be valid
What kind of property must testamentary trusts be funded with?
Funded at the settlor’s death from probate assets
(6) The trust must have ascertainable beneficiaries
2 exceptions, 1. a charitable trust, 2. trust created for the care of an animal.
When is a beneficiary definite
A beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities
(7) The trust must be in writing
Trusts w/ real property need to be in writing to satisfy statute of frauds
Requirements needed to create a trust (5)
(1) the settlor has capacity to create a trust;
(2) the settlor indicates an intention to create the trust;
(3) the trust has a definite beneficiary or is:
(A) a charitable trust;
(B) a trust for the care of an animal, as provided in Section 408; or
(C) a trust for a non charitable purpose, as provided in Section 409;
(4) the trustee has duties to perform; and
(5) the same person is not the sole trustee and sole beneficiary
Precatory Trusts
Trusts whose language does NOT clearly indicate whether the testator intended to create a trust with fiduciary duties imposed on the devisee or merely an unenforceable moral obligation. Ex. “I hope” “I wish”