Private Trust and Ascertainable Beneficiaries

Question 1

Must a private trust have ascertainable beneficiaries?

Answer 1

YES - The rule is the opposite for charitable trusts

Question 2

T’s will left $100,000 “to my friend Lemuel Mosely, in trust for my friends.” Valid trust?

Answer 2

No, of course not, friends is not an ascertainable class of individuals, no objective criteria to determine beneficiaries (on the bar the analysis does not end here, continue) Can this instrument be given effect as a valid power of appointment? The traditional rule is that it cannot! A trust invalid for want of definite beneficiaries cannot be given effect as a power of appointment.. (If it can be a valid power of appointment than Moselys friends can get) *A trustee is under an obligation to perform, and a holder of a power is not. According to the traditional rule, these two are inconsistent
But: The majority rule today is that it can. So the special power of appointment argument should be made. 
---If the power of appointment is recognized, what happens if Lemual Mosely declines to exercise it? He is given a reasonable time to appoint property, if not \$\$ reverts to settlor or settlor's estate (the mechanism is called a resulting trust) Resulting Trust = Implied Reversion

Question 3

T’s will creates a testamentary trust for the benefit of her descendants, with the shares of each left to the discretion of the trustee. Valid trust?

Answer 3

Yes - If the class of beneficiaries is defined the shares may be left to the discretion of the trustee, and usually is

Question 4

T’s will left $250,000 to Bank as trustee, “to pay over the income and dividends to train spiritualistic mediums.” Valid trust?

Answer 4

Close question - Can we isolate the issue - If it is a charitable purpose than yes, if not it is invalid for want of definite beneficiaries
E.g. - Cf. Estate of Kidd, Ariz. 1971: Entire estate left “for research or some scientific proof of a sole [sic] of the human body which leaves at death. I think in time their (there?) can be a photograph of sole [sic] leaving the human at death.” - There was 1. Testamentary Capacity, and 2. AZ said scientific and religious (charitable), the court then decides who to give the $$ - There was a valid trust

Question 5

When Vera Rich learned that her nephew Tom was to be married, she was so pleased that she transferred $100,000 to the Reliable Trust Bank to be held in trust for “Tom’s future children.” Unfortunately, nephew Tom was jilted within the week by his fiancée, and Vera died shortly thereafter. - What result?

Answer 5

1. This trust has no living beneficiaries. Is that a problem? No - Beneficiaries do not need to be alive, just described, we will know who Tom’s children are when they are born
2. Who enforces the trust? - The guardian ad litem, until Tom has kids
3. In the event of no kids - Money would be returned to Vera Rich (her estate, and then flows through her estate)
   - The Bank would transfer the $$ on its own initiative, if not and needed the law to get $$ money back, then the remedy would be Resulting Trust (Implied Reversion)

Question 6

Father devised $5,000 “in trust” to Daughter “as trustee,” to spend the principal and income for the care of Father’s 3 dogs. The rest of Father’s estate was devised to Son. Daughter spent $1,000 during the first three years for that purpose after which time she discontinued that use saying she believed she’d keep the remainder of the “trust money” for herself. Valid trust?

Answer 6

1. Not private and not charitable - Not private trust, there are no named human beneficiaries; Not charitable because it is for a particular persons pet
2. At common law, honorary trusts violate the Rule Against Perpetuities and are void. (The money is returned to Father or Father’s estate by resulting trust.)
3. HOWEVER: Under the UTC - valid for the lifetime of the animals (death of the last dog)
4. If the trust is valid:
   i. - The court will appoint someone to have standing to enforce
   ii. - At the death of the last dog the instrument can designate