Requirements for a valid trust Flashcards
Generally, what’s a trust?
Trust is an arrangement for making gifts of property and for the management of assets, under which the trustee holds LEGAL TITLE to the trust assets for the benefit of beneficiaries, who hold EQUITABLE TITLE. The trustee has the burdens of ownership; beneficiaries have the benefits of ownership.
To have a valid trust, (7 things)
1) settlor
2) delivers
3) trust property
4) to trustee
5) for the benefit of the beneficiaries
6) with intent to create a trust
trust must be for a lawful purpose
Delivery element
delivery of subject matter of trust with the intent to transfer LEGAL TITLE to the trustee
doesn’t apply to self-declaration of trust (I hereby declare myself trustee) or testamentary trust
Trust property element
To have a valid trust, legal title to a specific interest in property must be conveyed to the trustee
the subject matter of the trust must be CERTAIN and IDENTIFIABLE
does not include expectancies (like when Grandpa told Hobie he was leaving Whiteacre to Hobie in his will and Hobie wrote trust)
Trustee element
no trust fails for lack of trustee!
if none named or if trustee dies or resigns w/ no provision for successor trustee, court will appoint a suitable successor to carry out trust (if trust created by will, court will usually appoint executor named in will)
What constitutes acceptance of the trust by the trustee? 2 things
1) trustee’s signature
2) acceptance by conduct (exercises trust POWER or performs trust DUTY)
Are friction and hostility b/w beneficiaries and trustee a proper ground for removal of a trustee?
Not unless it is so extreme that it compromises the ability of the trustee to faithfully perform its trust duties
A trustee may be removed for (4 things)
1) commission of a serious BREACH OF TRUST
2) lack of COOPERATION among cotrustees that impairs administration of the trust
3) unfitness, unwillingness, or persistent FAILURE TO EFFECTIVELY ADMINISTER the trust
4) substantial CHANGE IN CIRCUMSTANCES making removal in beneficiaries’ best interest
What if named trustee has no powers or active duties to perform?
no trust arises. to have a valid trust, trustee must owe duties to someone and not just hold bare title
Beneficiaries element: if a NONcharitable trust, bens must be…
definite and ascertainable AND their interests must vest, if at all, within pd of the RAP
oral or parol evidence NOT admissible to identify bens; must be identified in trust instrument
Beneficiaries element: if charitable trust…
cannot benefit identifiable individuals
not subject to RAP
Intent to create a trust element: wish, desire, request, hope, would like…
precatory language. non-binding suggestions, not enforceable obligations
Intent to create a trust element: need to use the words “trust” and “trustee”?
no. no particular words needed to create trust, it’s a question of intent
Lawful purpose element: trust whose purpose is to further commission of a crime, or calls for the destruction of property, is…
invalid as against public policy
Lawful purpose element: unlawful conditions are…
examples of unlawful conditions
unenforceable
encourage divorce
TOTAL restraint on marriage
