Private Express Trusts

Question 1

Definition MUST KNOW

Answer 1

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

Question 2

Property of a trust:

Answer 2

any PRESENTLY EXISTING interest in property can be the “corpus” of a trust:

1) fee simple
2) Future interests like contingent remainder
3) life insurance policy
4) Bonds
5) Stocks

Question 3

What CAN’T be subject matter of a trust?

Answer 3

Illusory interests like future profits or mere expectancies (only PROPERTY RIGHTS)

Question 4

Who can be the beneficiary?

Beware of?

Answer 4

any ascertainable person or group of people (includes legal person like a corporation), class gifts fine if not too big
Beware of Rules Against Perpetuities striking out interest

Question 5

Trustee

Answer 5

Must have trustee, trust can’t fail though b/c no trustee court will appoint one (until appointment estate holds legal title)

Question 6

Creating a trust - what’s required:

Answer 6

PRESENT manifestation of intent, does NOT NEED word “trust”
Words must be MANDATORY “for my brother” NOT “in hopes he uses for my brother” (precatory words)
Precatory words + parol evidence = trust (like he stopped using his own money to care b/c he used trusts’ money)

Question 7

No trust created what happens?

Answer 7

No trust=trustee owns in fee simple

Question 8

Trusts of personal property in writing

Answer 8

NOT REQUIRED, only real property must be in writing

Question 9

Time frame for trusts:

Answer 9

can be created at death of testator or during lifetime

Question 10

Trusts created at death of testator

Answer 10

The will must have a testatmentary trust which takes affect upon death

Question 11

Creating trust during life: 2 ways

Answer 11

Transfer in Trust: 3d person is trustee. Real property there must be transfer of deed transferring title to the trustee. Personal Property must have transfer of the property to the trustee (Delivery = Actual, Constructive, Symbolic)
Declaration in Trust: Settlor is the trustee, Real property must have a deed b/c of statute of frauds, personal property no delivery req’t.

Question 12

Legal purpose of trust

Result of illegal purpose:

Answer 12

any legal purpose suffices (no illegal purposes or against public policy like holding $ in trust to get someone to get a divorce).
Result: court excises the illegal part, if court can’t, it will either 1) invalidate trust (so settlor remains owner) or 2) let trustee keep the property as punishment to settlor)

Question 13

Illegality AFTER creation of trust (was legal, change in law made it illegal)

Answer 13

creates a “resulting trust” - favors settlor if settlor is alive, if not goes to his estate

Question 14

Elements of trust:

Answer 14

Define Trust; State who the trustee is, who is the beneficiary, what is the property held in trust (is it valid? present existing interest); legally created (intent/capacity?) Valid Legal purpose?

Question 15

What if trust has no beneficiary?

Answer 15

Presumed to go to the settlor or his successors