Pg 29 Flashcards
What is an honorary trust?
Many people leave trusts or wills to benefit their pets, to keep up a gravesite, etc. This is not a true trust because there’s no ascertainable beneficiary to enforce the rights. At common law these are not accepted, but modernly they are.
How does an honorary trust work?
If a person named as the testator is willing to carry out the terms of a trust on their honor, then they get to keep the property for that purpose
If a settlor leaves A $100,000 to maintain her cat in the lifestyle she is used to, and A is willing to do that, then what happens?
An honorary trust is created, and A keeps the cat until the cat dies. If A spends the money on herself, that is not allowed. Usually someone must monitor and enforce the trust
When does merger happen with regard to trusts?
The trust terminates if the same person is or later becomes the sole beneficiary and the sole trustee. At that point there is no independent party to enforce the settlor’s terms. The legal and equitable interest merges into one person who becomes the outright owner of a gift.
Does merger apply when a settlor creates a trust naming himself as a trustee and a life beneficiary and on his death the trust is distributed to B?
No, because the settlor doesn’t hold all of the beneficial interests
What is a semi-secret trust?
These are not enforceable. They happen when the settlor expresses intent that the trust relationship be created, but he doesn’t name the beneficiary. The trust fails and the property is returned to the settlor or to his successors
If a will says that the settlor wants to leave a car in trust to A, but he doesn’t say who the trust is for/beneficiary, what happens?
It’s considered to be a semi-secret trust, and even legitimate extrinsic evidence that it was meant to be for a certain person doesn’t make it enforceable because it lacked an ascertainable beneficiary, which is an element of the creation of a trust. You cannot look at extrinsic evidence to vary the terms of the will. This means that the devise fails, so the property falls to the residuary beneficiary or is transferred through intestacy
What is a secret trust?
This is enforceable as a constructive trust and it happens when a trust document expresses neither intent to create a trust, nor the beneficiary, but other evidence that shows that is what was intended.
Are semi-secret trusts and secret trusts enforceable?
Semi secret trust are not enforceable, but secret trusts are
What is an example of a secret trust?
If a will makes what appears to be an outright devise, but the grantee in a separate interaction promises to hold the property for the benefit of others, then extrinsic evidence can be used to prove that the grantee was not personally entitled to the proceeds. The secret trust is enforced because it is not a true trust, but is a constructive one.
What is involved in the element of a trust that requires the res or the property?
This can be any property or transferrable interest of any value. It can include: money, land, contingent remainders, future interests, stocks, royalties, mineral rights, leaseholds, life insurance policies, etc. But if it is specific property it must be identified.
Can the res of a trust be purely speculative or a future possibility?
No, it must be specific identified property
What does it mean that a trust must be funded?
A trust doesn’t come into existence until it is funded. This means the settlor must take the final step of putting the property in the person’s name or transferring the property. This includes things like setting up a bank account with the funds, or transferring title to a home, etc.
What is the only exception to the rule that trusts must be presently funded?
Pour-over wills
If A has a life estate in land and B has a contingent remainder if he outlives A, B has no present right because he might die before A, but is his future interest in the land something that he can put in trust to benefit someone else?
Yes
