Requirements for a Trust Flashcards
What are the three categories of trusts?
- Express trusts (the only real trust)
- Resulting trusts*
- Constructive trusts*
*Equitable Remedies
What is an express trust?
A legal device that allows an owner of property to make transfers of property and to have those assets managed on behalf of someone else
What is the term for the person who creates the trust?
The settlor
What is the term for the person who manages the trust?
The trustee
What does the settlor give to the trustee so that the trustee can exercise power over the property?
Legal title
What is the term for the person for whom the trust is managed?
The beneficiary
What type of title over the property is given to the beneficiaries?
Equitable title to enjoy the distributions from the trust.
What are the two kinds of express trusts?
- Lifetime (inter vivos trust)
2. Testamentary (created in testator’s will)
What are the eight requirements for a valid trust?
- A settlor, who makes a
- Delivery of legal title to
- Property to a
- Trustee who holds legal title for the benefit of a
- Beneficiary with
- Intent to create a trust for
- A lawful purpose
- In a validly executed document
Is consideration required to set up a trust?
No. A trust is like a gift.
What are the requirements for the settlor?
Must be 18+ with the capacity to enter into contracts
What are the requirements for delivery?
Title assets must be formally transferred to trustee.
What kind of property may be put into a trust?
Can be almost anything, but the settlor must presently own it.
It must be clearly identified property.
Who can be a trustee for a lifetime trust?
Anyone! There is no court involvement.
Who can be a trustee for a testamentary trust?
Anyone except:
- Those under 18
- Judicially-declared incompetents
- Convicted felons
- Those incapable because of drunkenness, dishonesty, want of understanding, or improvidence
Can a non-resident alien serve as trustee for a testamentary trust?
Only if:
- That person is related to the decedent; and
- A NY resident serves as co-fiduciary
Can a trust fail for lack of a trustee?
No. The court will appoint one.
What are the requirements for selecting a beneficiary?
The beneficiary must be definite and ascertainable
What happens if the beneficiary is ambiguous?
The trustee holds in a resulting trust for the residual beneficiary of a will or intestate heirs
Are “family” or “next of kin” too ambiguous for a trust?
No - these terms have legal definitions
How does a settlor show intent to create a trust?
- The settlor must use binding language to create an enforceable obligation
- The trustee must be given duties to perform
What is precatory language?
Language that is non-binding and insufficient to create a trust.
Examples:
“I would like”
“I request”
“It is my wish and desire”
Can a trust call for the commission of a crime?
No
Can a trust call for the destruction of property?
No
