Requirements for a Trust

Question 1

What are the three categories of trusts?

Answer 1

1. Express trusts (the only real trust)
2. Resulting trusts*
3. Constructive trusts*

*Equitable Remedies

Question 2

What is an express trust?

Answer 2

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

Question 3

What is the term for the person who creates the trust?

Answer 3

The settlor

Question 4

What is the term for the person who manages the trust?

Answer 4

The trustee

Question 5

What does the settlor give to the trustee so that the trustee can exercise power over the property?

Answer 5

Legal title

Question 6

What is the term for the person for whom the trust is managed?

Answer 6

The beneficiary

Question 7

What type of title over the property is given to the beneficiaries?

Answer 7

Equitable title to enjoy the distributions from the trust.

Question 8

What are the two kinds of express trusts?

Answer 8

1. Lifetime (inter vivos trust)

2. Testamentary (created in testator’s will)

Question 9

What are the eight requirements for a valid trust?

Answer 9

1. A settlor, who makes a
2. Delivery of legal title to
3. Property to a
4. Trustee who holds legal title for the benefit of a
5. Beneficiary with
6. Intent to create a trust for
7. A lawful purpose
8. In a validly executed document

Question 10

Is consideration required to set up a trust?

Answer 10

No. A trust is like a gift.

Question 11

What are the requirements for the settlor?

Answer 11

Must be 18+ with the capacity to enter into contracts

Question 12

What are the requirements for delivery?

Answer 12

Title assets must be formally transferred to trustee.

Question 13

What kind of property may be put into a trust?

Answer 13

Can be almost anything, but the settlor must presently own it.

It must be clearly identified property.

Question 14

Who can be a trustee for a lifetime trust?

Answer 14

Anyone! There is no court involvement.

Question 15

Who can be a trustee for a testamentary trust?

Answer 15

Anyone except:

1. Those under 18
2. Judicially-declared incompetents
3. Convicted felons
4. Those incapable because of drunkenness, dishonesty, want of understanding, or improvidence

Question 16

Can a non-resident alien serve as trustee for a testamentary trust?

Answer 16

Only if:

1. That person is related to the decedent; and
2. A NY resident serves as co-fiduciary

Question 17

Can a trust fail for lack of a trustee?

Answer 17

No. The court will appoint one.

Question 18

What are the requirements for selecting a beneficiary?

Answer 18

The beneficiary must be definite and ascertainable

Question 19

What happens if the beneficiary is ambiguous?

Answer 19

The trustee holds in a resulting trust for the residual beneficiary of a will or intestate heirs

Question 20

Are “family” or “next of kin” too ambiguous for a trust?

Answer 20

No - these terms have legal definitions

Question 21

How does a settlor show intent to create a trust?

Answer 21

1. The settlor must use binding language to create an enforceable obligation
2. The trustee must be given duties to perform

Question 22

What is precatory language?

Answer 22

Language that is non-binding and insufficient to create a trust.

Examples:
“I would like”
“I request”
“It is my wish and desire”

Question 23

Can a trust call for the commission of a crime?

Answer 23

No

Question 24

Can a trust call for the destruction of property?

Answer 24

No

Question 25

Can a trust restrict marriage or promote divorce?

Answer 25

No - this is against public policy

Question 26

Are partial restraints on marriage allowed?

Answer 26

Yes, for limits to certain religions or ethnic groups

Question 27

How is a trust executed?

Answer 27

It must be in a writing, signed by both the settlor and the trustee, and either:

1. Acknowledged by a notary public; or
2. Signed by two witnesses