Requirements Flashcards
What are examples of express trusts?
Private Trusts and Charitable Trusts
What are examples of implied trusts?
Resulting and Constructive Trusts
What is typically behind a failed express trust?
An implied trust
What is a trust?
An arrangement under which the trustee holds legal title to property for the benefit of beneficiaries.
What are the requirements of a trust?
(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.
What is the delivery requirement for trusts?
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.
When does a testamentary trust exist?
When the settlor dies
What is an inter vivos trust?
A trust created today where the trust res is delivered to a third party trustee.
What is created by “T as custodian for the benefit of T Jr.”
No trust has been created. A custodianship has been created under the Uniform Transfer to Minors Act.
What are the features of a custodianship?
It ends when the beneficiary turns 21-25 as determined by the creator.
Once the custodianship ends, the SOL ends two years later.
When does the SOL of a trust run?
Begins to run when trustee files in county the disclosure of relevant action.
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?
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.
What is created by “To B, it is my wish that he look after X”?
This is not a trust. It is precatory language of suggested use.
Results in the money belonging to B because the language is permissive.
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”?
Permissive language with lots of detail can create a trust. Intent was to require use of funds in a certain way.
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.
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.
Is this valid?
Income to my husband until he remarries; then principal to J.
It is valid.
It does not prevent the husband from remarrying; it simply provides for him until he does.
What are public policy violations for trust purposes?
Provisions that encourage:
- Divorce
- Commission of Crimes
- restraint on procreation
- restraint of religion
Is this valid?
I make no provision for X because I disapprove of his marriage outside of the faith.
Yes - this is not an issue because it is not a condition - what you can’t do is grant and take away.
What is the Trust Res?
The corpus, principal, and subject matter of the trust.
What is the requirement regarding the Trust Res?
The subject matter of the trust must be certain and identifiable. If there is no identifiable property, there is no trust.
Is a trust created by “ I declare myself trustee of the debt that I owe X”
No trust is created as there is no separate property. What remains is a creditor-debtor relationship.
Is a trust created by “I declare myself trustee of the debt that A owes me, said trust for the benefit of C”?
Yes because the account receivable, the money that A owes, is property. It is an intangible right that will be given to C.
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.
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
What interest do prospective heirs in an intestate estate have?
None while the individual is alive. They are just heir expectant.
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.
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.
How is a reaffirmation found?
Can be express or can be implied through conduct taken by the settlor.
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.
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.
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.
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.
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.
