specialty Trusts Flashcards
Parties of a Totten Trust
bank, depositor, beneficiary
Totten Trusts - defined
hybrid of a will and trust
do not have to comply with formalities of a will
allow depositor to retain full control over account until death
then it passes to beneficiary
beneficiaries have no rights in trust until death
revocation, termination, or modification of a totten trust
withdrawal of funds from account
writing acknowledged and filed with bank where account is maintained
can be revoked by depositors will
or naming beneficiary in a will with specific account
revoked to the extent of any withdrawal
Beneficiary rights to a Totten Trust on death of depositor
vest in beneficiary subject to claims by depositors creditors
and wifes elective share
Totten trust beneficiary is a minor
funds less than $10k must be paid to minors parents
funds greater than $10k funds must be paid to a duly appointed guardian
Supplemental Needs Trust
enables person with disability to collect limited income from trust without sacrificing eligibility for Medicaid or other forms of govt assistance
Honorary Trust
Trust that is not a charitable trust because it does not have a charitable purpose and
not a private trust because no definite beneficiary
violates rules for trust creation and rule against perpetuities
courts will not enforce them
trustee can carry out terms if willing to do so
Statutorily Authorized Honorary Trusts
Trust to care for cemeteries or burial plots -
honorary trust to care for designated animal
pet trust terminates in 21 years of creation or on death of animal
court in its discretion can reduce amount transferred into trust if amount substantially exceeds amount needed to care for pet
Limit on Duration
Private Trusts cannot last forever
Rule against perpetuities serves as primary limit
Charitable Trusts
Must have a charitable purpose
includes religious, charitable, educational, or benevolent purposes
major categories encompassed in the definition of charitable purpose
- relief from poverty
- advancement of education
- advancement of religion
- promotion of health
- performance of governmental and municipal purposes
- other purposes beneficial to the community
- establish or maintain an observatory
- for professorships and scholarships
9 benefit public schools
10 relief of distress, parks and recreation
Charitable Trust Terms and Purpose
purpose can be broad if trustee constrained to use trust for objective
terms must facilitate charitable purpose
settlor cannot restrict benefits to a small group
beneficiaries must be indefinite
Beneficiaries of a charitable trust
must be indefinite
limited number of persons actually receiving funds will not cause trust to fail if chosen from a sufficiently indefinite group
Enforcement by Beneficiaries of a Charitable trust
Potential beneficiaries have no standing to sue unless
they comprise a small group of beneficiaries with a special interest in the trust
Attorney General has authority to sue to enforce trusts operating in NY
must be a party to any suit concerning a charitable trust
settlor can sue trust he created
Charitable Trusts Perpetual Existence
Not subject to Rule against perpetuities with some exceptions
Charity to Charity Rule
and
Mixed Trust Rule
Charity To Charity Rule
if a charitable trust is preceded by a non-charitable estate the charitable trust must vest within the period of time prescribed by the rule against perpetuities
Mixed Trust Rule
has charitable and private purposes
A trust with both private and charitable purposes will fail unless
the private and public purposes can be segregated into separate trusts
Modification under Cy Pres Doctrine
settlor’s charitable purpose cannot be carried out or was accomplished
settlor had a general charitable intent
court will direct trust property to another charitable purpose that approximates settlor’s intent
How can court modify charitable purpose under Cy pres doctrine
with consent of settlor
Settlor not living - look for evidence of general charitable intent which is often inferred from the creation of the charitable trust itself.
When court will not apply cy pres doctrine to modify charitable trust
where trust instrument makes clear preference trust should terminate
rather than continue if purpose cannot be accomplished.
gift over provision in instrument indicates lack of general charitable intent
Cy Pres can be used to modify a valid existing charitable trust and not
turn a private into a charitable trust
or reform an invalid charitable trust
Termination of a charitable trust
if trust cannot be performed and requirements for cy pres are not met
trust terminates
resulting trust in favor of settlor’s estate arises
Termination of charitable trust by petition
on petition of trustee or Attorney general
trust assets fall below $100k
cost of administration is not justified by income generated
assets will go to the trust designee or to another trust with a similar purpose
