Pg 26 Flashcards
Why does RAP not apply to charitable trust?
Since property is meant to be used to benefit the public, charitable trusts are an exception
What are some examples of valid charitable trust purposes?
– researching a rare birth defect that affects one in 1 million
– providing transparency in government in a town of 30 people
– scholarship for native student majoring in Russian literature
What are the differences between private trusts and charitable trusts?
– ascertainable beneficiaries: private trusts need these and charitable trusts only need valid charitable purposes
– enforceable by beneficiaries: private trusts are, but charitable trusts are only enforceable by the attorney general or the settlor
– limited duration: private trusts have a limited duration because of RAP, but charitable trusts don’t
– modification: private trusts can be modified under the equitable deviation doctrine, and charitable trusts can also be modified by Cy Pres
Is it possible to have a mixed trust that is both charitable and non-charitable in its purposes?
Yes. I.e.: trust to support my daughter for life, and on her death, to establish a scholarship at my alma mater
If a charitable trust was for a certain church, but in the interim, that church merged with another church, what do most courts say?
They still give the property to the consolidated church unless there’s language of the trust that shows an intent only to give it to the first one.
If a charity closes, like a church that closes, what do courts say with regard to a charitable trust to fund that church?
Some courts still give the gift to the larger governing body
What is a testamentary trust?
This is a trust that is created by a will and irrevocable, since dead people cannot revoke
What is an example of a testamentary trust?
If a will says, “house to D in trust on behalf of E.“
What are the things you can specify in a testamentary trust?
The terms that the property should be managed on or successive classes of beneficiaries
What kind of trust is this? “D will manage the house for A for A’s life, and then on his death, whatever is left goes straight to F.“
Testamentary trust
With regard to a testamentary trust, if the intent to create a trust is not stated clearly, what happens?
It can be inferred from the language and structure of the will in light of all the circumstances
What are the two different ways that a testamentary trust can be created?
- by DECLARATION of trust
- by DEED of trust
How do you create a testamentary trust by declaration of trust?
This happens when the settlor is also the trustee. You don’t need any special words, the testator just expresses intent that property be held in trust for someone else. He doesn’t need to transfer the property because he is also the trustee, but he does have to do something to show that the property is now held in trust [through a document, action, or oral statement]. This could include segregating property and putting it in a separate account, or changing the way the title is held.
How do you create a testamentary trust by deed of trust?
This is used when the trustee is someone besides the settler. No special words are needed, and it doesn’t actually involve a deed, it is a term of art to reflect the requirement that there be some transfer to the trustee. This could involve delivery to the trustee of the property, or delivery of a document that says the terms of the trust. There must be something that is delivered to the trustee, because just expressing intent to create a trust without delivery of a document or property is not enough.
What is a testamentary marital trust?
Federal estate tax allows for deductions for property that’s given to a surviving spouse. I.e.: if a husband devises property to X in trust to pay the income to his wife for her life, then when she dies, to pay the principal to his kids. No state taxes need to be paid at the husband‘s death.
