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Requirements Flashcards

1
Q

What are examples of express trusts?

A

Private Trusts and Charitable Trusts

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2
Q

What are examples of implied trusts?

A

Resulting and Constructive Trusts

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3
Q

What is typically behind a failed express trust?

A

An implied trust

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4
Q

What is a trust?

A

An arrangement under which the trustee holds legal title to property for the benefit of beneficiaries.

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5
Q

What are the requirements of a trust?

A

(i) Settlor
(ii) Delivers legal title to
(ii) trust assets (the res)
(iv) to Trustee
(v) for the benefit of beneficiaries
(vi) with the intent to create a trust
(vii) for a valid purpose.

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6
Q

What is the delivery requirement for trusts?

A

Does not apply to self-declaration of trust or testamentary trust.

For inter vivos trust with third party as a trustee, there must be delivery of the subject matter of the trust.

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7
Q

When does a testamentary trust exist?

A

When the settlor dies

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8
Q

What is an inter vivos trust?

A

A trust created today where the trust res is delivered to a third party trustee.

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9
Q

What is created by “T as custodian for the benefit of T Jr.”

A

No trust has been created. A custodianship has been created under the Uniform Transfer to Minors Act.

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10
Q

What are the features of a custodianship?

A

It ends when the beneficiary turns 21-25 as determined by the creator.

Once the custodianship ends, the SOL ends two years later.

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11
Q

When does the SOL of a trust run?

A

Begins to run when trustee files in county the disclosure of relevant action.

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12
Q

A’s Will contains a bequest of $100k to B to be used for the education of X. Does B hold the money in trust for X?

A

Yes.
B is the trustee.
A is the Settler
X is the beneficiary

Intent to form a trust is created by the fact that legal title is in the name of one party with a duty to manage for others.

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13
Q

What is created by “To B, it is my wish that he look after X”?

A

This is not a trust. It is precatory language of suggested use.

Results in the money belonging to B because the language is permissive.

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14
Q

What is created by “it is my wish that B use the income to support X until X is 18 at which time the principal shall be distributed to X outright”?

A

Permissive language with lots of detail can create a trust. Intent was to require use of funds in a certain way.

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15
Q

Is this valid?

T’s will contains a bequest to Bank as trustee for benefit of J provided that if she ever marries, she will forfeit the entire interest in the trust.

A

The trust is good but the forfeiture condition is void.

The condition is void because it is an unreasonable restraint on marriage which is against public policy.

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16
Q

Is this valid?

Income to my husband until he remarries; then principal to J.

A

It is valid.

It does not prevent the husband from remarrying; it simply provides for him until he does.

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17
Q

What are public policy violations for trust purposes?

A

Provisions that encourage:

  • Divorce
  • Commission of Crimes
  • restraint on procreation
  • restraint of religion
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18
Q

Is this valid?

I make no provision for X because I disapprove of his marriage outside of the faith.

A

Yes - this is not an issue because it is not a condition - what you can’t do is grant and take away.

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19
Q

What is the Trust Res?

A

The corpus, principal, and subject matter of the trust.

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20
Q

What is the requirement regarding the Trust Res?

A

The subject matter of the trust must be certain and identifiable. If there is no identifiable property, there is no trust.

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21
Q

Is a trust created by “ I declare myself trustee of the debt that I owe X”

A

No trust is created as there is no separate property. What remains is a creditor-debtor relationship.

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22
Q

Is a trust created by “I declare myself trustee of the debt that A owes me, said trust for the benefit of C”?

A

Yes because the account receivable, the money that A owes, is property. It is an intangible right that will be given to C.

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23
Q

Is this valid?

G tells U that he is leaving 1-acre to U by will. U records a declaration of trust stating: I declare myself trustee of my interest in 1-acre income to N for life remainder to his issue.

A

No - an expectancy is not a recognized property interest.

Any interest written into a will only ripens into a property interest when the testator dies without changing his will and the will is admitted to probate.

Before that point, all that exists is a gratuitous promise to create a trust in the future

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24
Q

What interest do prospective heirs in an intestate estate have?

A

None while the individual is alive. They are just heir expectant.

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25
If a trust is attempted to be formed but fails because there is no property interest yet conveyed, does the trust arise when the property interest is conveyed?
No - there must be a reaffirmation of the intent to form by the trust by word or conduct.
26
Rule by Restatement of Trust about when a Trust arises as a result of a gratuitous promise?
Where a promise to create a trust is gratuitous (without consideration), a trust arises when all elements of a valid trust have been met if and only if at that the subsequent time the settlor manifests an intent to create the trust.
27
How is a reaffirmation found?
Can be express or can be implied through conduct taken by the settlor.
28
What occurs when the promise to hold property in trust is supported by consideration?
The trust automatically attaches when the property is received. If consideration is given, there is no need for reaffirmation.
29
What occurs if a trust has no trustee?
No trust fails for want of a trustee. If the intent to create a trust is clearly manifested and no trustee is name or the trustee died, the court will appoint a suitable trustee to execute the trust.
30
Is there an exception to the rule that the court will name a trustee for a trust that does not have a trustee?
Yes: If the court finds that the settlor intended for the trust powers to be personal to the trustee that is name, then the trust would terminate. This rarely invoked - Courts generally find that the primary purpose was to have a trust set up for a purpose, not that the trust's existence was dependant on the named person serving as trustee.
31
A is the residuary legatee under a valid will. Before the charges of the estate are known, A declares herself trustee of the interest of the will for support of her children. Thereafter, $2M is distributed to A. Is the trust valid?
Yes Where the testator has died, although the estate has not been distributed, a legatee has more than an expectancy; they have an interest which can be the subject of a trust. This is correct even if the amount the legatee will receive is unknown.
32
Is the trust corpus certain and identifiable if the interest is an interest in a will that has not yet been distributed even though the testator has died?
Yes - the interest is not the property itself but the account receivable of the estate that is owed to the Settlor of the trust.
33
Is an otherwise empty trust valid valid if it is named the direct beneficiary of a life insurance policy, pension, or plan death benefit?
Yes
34
In FL, can an otherwise empty trust be valid if the trust is named the direct beneficiary of the Settlor's will?
Yes
35
Is this a valid trust? T's will left 100k to my friend M in trust for my friends
Not a valid trust because the class of beneficiaries is not ascertainable.
36
Can a power of appointment be granted for this? T's will left 100k to my friend M in trust for my friends
In Florida, yes: Follow the modern view that it can be deemed a power of appointment. M has a reasonable amount of time to exercise his power. If not, the property is returned to T's estate.
37
Is this a valid trust? T's will left 100k to my friend M in trust for my high school football team.
Valid because the class is ascertainable through research.
38
Is this a valid trust? T's will left 100k to my friend M in trust for members of my immediately family.
Valid because the class is ascertainable by intestacy statute.
39
Is this a valid trust? T's will creates a testamentary trust for the benefit of his descendants with shares determined by a trustee
Yes, if the class of beneficiaries is described, shares can be left to the determination of trustee.
40
When V learned that T was to be married. V transferred 100k to bank to be held in trust to T's children. T's engagement fell through and V died. Is there a valid trust?
The trust is valid. The law does not require that beneficiaries are living, only that they are described and identifiable. Guardian ad litem will be appointed for the beneficiaries. If T never has children the money will be returned to V's estate and to her successors at death. Bank can send money back or the court can order a resulting trust/implied reversion to V's estate.
41
Is this valid as a charitable trust? Is this valid as a private trust? T's will left $250k to Bank as trustee to pay income to train spiritualistic mediums.
Yes if for a charitable purpose. No if intended as a private trust because the beneficiaries are not identifiable.
42
What are the characteristics of a Charitable Trust?
1) Charitable purpose (religion; medicine; science; research; education; governmental) 2) Trust must be for a reasonably large and unidentifiable segment of the public at large. 3) Not subject to RAP or Rule against Accumulations (can accumulate income perpetually) 4) When the specific charitable purpose can no longer be accomplished it can be reformed under the doctrine of cy pres.
43
My Estate left for research of scientific proof of a soul of the human body which leaves at death. Overtime I think there can be a picture of the soul leaving the body at death.
Courts did not find there to be a testamentary capacity issue. Held to be valid if it was a charitable trust.
44
What is an honorary trust?
Trust that is neither a private trust because it is not created for humans and is not a charitable trust
45
How long is an honorary trust valid for in Florida?
For the lifetime of the animals until the last animal dies.
46
Who has standing to enforce an honorary trust?
The settlor can designate an individual or one can be appointed by the court.
47
What happens to the money left over from an honorary trust?
Settlor can direct the transfer of funds in writing or it is returned to the Settlor or its estate by a resulting trust (implied)
48
What type of trust is created by: F devised $8k in trust to D as trustee to spend the principal and income for the case of F's 4 dogs. The rest of the estate is to be given to S.
Honorary Trust
49
What is the RAP period for Private Trusts?
360 years.
50
What is needed for a valid charitable purpose?
Focus on how the trust operates - there must be a mechanism in place to police the charitable objective.
51
Is this a valid charitable trust: The Trustee shall expend the income of the trust for the educational needs of grammar school students.
Yes - it is clear that the money would go to education.
52
Is this a valid charitable trust: Trustee to accumulate income for 20 years. On Monday before Christmas, trustee will given each student income for educational purposes.
No - it is not clear that this is for educational purposes. Seems more likely to be for christmas gift purchases.
53
Is this a valid charitable trust: Scholarships to BullHorn school for all residents of SW Apple Creek whose last name is oppenheimer?
No - the trust does not benefit a wide number of people.
54
Is this a valid charitable trust: Scholarships to Bullhorn school for all residents of holmes county with preference to those with a last name of miller?
Yes - if the county is large enough and since the last name is common, this meets the beneficiary requirement. The preference is not fatal to the creation of the trust.
55
Cy Pres Reformation
Tests: Primary Intent: Why did the Settlor create the trust? Specific Direction: From the Instrument. Courts are inclined to redirect the money to a similar cause rather than to hold the funds in a resulting trust to be redistributed to the Settlor's heirs.
56
What is required for deviation from the terms of the trust?
Changed circumstances - it applies to private trusts and charitable trusts.
57
What is the Fl rule of Cy Pres?
Can be applied to modify either the administrative or dispositive terms of a trust when unforeseen circumstances render them obsolete or inconsistent with the Settlor's Intent. Broader power for administration and distribution.
58
Income to S for life remainder to S's son. What is formed and what are S's rights?
A support trust. If there is a fight over the distributions, S can request a court order directing trustee to distribute money. If there is a lot of conflict, S can request that a different trustee be appointed.
59
Can the beneficiary of a support trust sell his income interest?
Yes - the interest can be sold, pledged, or assigned.
60
What are the options of a support trust beneficiary's creditor to get paid?
Can't get the actual trust assets. Can garnish the beneficiary's income stream to divert income to the creditor.
61
What is a spend thrift clause?
No interest of any beneficiary herein shall be assignable by such beneficiary nor shall it be subject to the claims of the beneficiary's creditors
62
What are the benefits of a spend thrift clause?
The creditors cannot garnish the income stream or interest. The creditor must wait until the income hits the individual's account.
63
What are exclusions to the spend thrift clause protections?
Alimony Obligations Child Support Obligations Judgment Creditor (like an attorney) who has provided services for the protection of the beneficiary's interest. You can garnish their interest even if there is a spend thrift.
64
What is a requirement for the spend thrift clause?
It must disable all alienation - cannot be limited to involuntary alienation.
65
What trust is formed by: Trustee to apply the income to support my husband during his life to the extent necessary in the sole discretion of the trust, remainder to my son.
This creates a discretionary support trust.
66
What is the duty of trustee of a discretionary support trust?
Duty to support the beneficiary from the income of the trust if they cannot support themselves. Always look at the express word of the instrument but presumptively the trustee can decline to provide support if the party is self sufficient.
67
What is the likelihood that a court will overrule a trustee?
Slim - Courts are reluctant to question a trustee's decision when they are given extended discretion.
68
What are key words that a trustee has discretionary?
Sole Discretionary Absolute Discretion Complete Discretion Uncontrolled Discretion
69
What trust is created by: To distribute income to M in the sole discretion of my trustee.
Pure Discretionary Trust
70
What are key characteristics of a pure discretionary trust?
The beneficiary has no right to compel distribution from the trust Third party creditors have no right to compel distribution from the trust.
71
Can a claim for alimony or child support compel distribution from a pure discretionary trust?
No but they can get a garnishment from the court of future distributions to the beneficiary. If done, any distribution that the trustee decides to make must be made directly to the child or spouse in payment of the beneficiary's support obligations.
72
Creditors of Trust Settlor
In Florida, you cannot insulate your assets from reach of your creditors by putting them in a trust for your own benefit.
73
Do spend thrift trust created by settlor for settlor provide protection against creditors?
No - these clauses are unenforceable so the creditor can reach any right to distributions that D has in the trust.
74
When can the creditor of a trust settlor reach the trust assets?
When the settlor has the power to revoke the trust or if the trustee has discretionary authority to make distributions to the settlor.
75
What rights does a settlor's creditor have as to irrevocable trust for third persons?
No rights at all.
76
What is the fraudulent transfer doctrine?
If a trust is created to defeat known creditors, the trust can be set aside.
77
Can a settlor modify, terminate, or reform a private trust?
Yes if: (i) the instrument does not state that the trust is irrevocable; and (ii) the settlor substantially complies with all provisions in the trust instrument pertaining to the form the proposed action must taken.
78
Can a court modify, terminate, or reform a private trust?
At the request of a trustee or living beneficiary, a court can modify or terminate a trust whether or not the trust contains a spend thrift if: (i) the modification or termination is not inconsistent with the settlor's intent (ii) the modification or termination is in the best interest of the beneficiaries even if it interferes with the material purpose of the settor.
79
Can a settlor prevent modifications and terminates of a trust?
Yes by (i) drafting the trust to comply with the rules against perpetuities (21 years or 90 years) and (ii) expressly prohibiting judicial modification in the trust instrument.
80
Can a court reform a trust?
Yes - in Fl a trust instrument may be reformed to fix a mistake of fact or law or effectuate the settlors tax objectives for the trust.

TRUSTS-MC (7 decks)

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