Private Trusts Flashcards
Trust
A trust is a fiduciary relationship in which a trustee holds legal title to specific property under a duty to manage, invest, safeguard and administer the trust assets and income for named beneficiaries who hold equitable title.
Valid Private Trust?
Settlor with capacity (18+ and sound mind; understand what they are doing)
Present intent to create a trust (manifested by words, writing or conduct; no precatory/wishful language)
Trustee with duties (but will not fail for lack of trustee)
Definite beneficiaries (same person cannot be sole trustee and sole beneficiary)
Identifiable property
Valid purpose
Beneficiaries
-Can disclaim (in writing within 9 months)
-Majority doesn’t apply anti-lapse to save a trust gift; UPC does
-Must be ascertainable by the the time their interests are to be enjoyed
-Common law requires a class to be reasonably defined; UTC lets trustee select beneficiaries from an indefinite class
Inter Vivos
Created while settlor is alive either by settlor declaring himself the trustee or by the settlor transferring the property to another as trustee.
Testamentary
Created in the settlor’s valid will. The intent and essential terms of the trust have to be ascertained from the will itself or a writing incorporated into the will.
Pour-Overs
A settlor can make gifts by his will into a trust that was established during his lifetime. Pour-over property can also be the initial funding for the trust if the trust is identified in the will and the trust is executed before his death.
Oral Trusts
Oral trusts for personal property may be established by clear and convincing evidence. Trusts for land must be in writing (unless holder of legal title acts like a trustee and part performance applies).
Transfer
Unless otherwise stated, beneficiaries can freely transfer their interests in the trusts and creditors can reach those interests.
