Substantive trust elements

Question 1

Requirements for creation of a trust:

Answer 1

1. Res
2. Intent to create a trust
3. Trustee with fiduciary duties
4. Definite beneficiaries
5. Lawful Purpose

Question 2

Rev trust income

Answer 2

taxed as income to the Grantor.

Question 3

Ways to plan for incapacity:

Answer 3

1. Durable power of attorney
2. Trust
3. Convenience account
4. Guardianship

Question 4

3 certainties to create a trust:

Answer 4

1. Certainty as to a res
2. Certainty as to intention
3. Certainty as to a beneficiary

Question 5

Settlor’s intent has 3 facets:

Answer 5

1. Transferor must have intended a trust
2. The settlor must have the capacity to formulate the requisite trust intent
3. The intent to create a trust must be a present intent

Question 6

Precatory language

Answer 6

terms such as “I wish,” “I strongly desire,” and “I request”; these terms create confusion as to a settlor’s intent

Question 7

Use of precatory language can be construed as either:

Answer 7

1. Manifesting an intent to create a trust with its attendant enforceable legal obligations on the trustee or
2. Merely indicating a desire on the part of the transferor to impose a moral obligation, which is legally unenforceable

Question 8

Capacity of settlor

Answer 8

Settlor must have capacity to create a valid trust. § 736.0402(1)(a)

§ 736.0601 provides that as to a revocable trust, the type of capacity required of a settlor is the same as that required for a will

But the FTC does not address the type of capacity required to create an irrevocable inter vivos trust or a testamentary trust

Because a testamentary trust is created in a will, the capacity required is the same as that needed to make an outright devise

Question 9

How often must a trustee be paid?

Answer 9

At least one time per year

Question 10

Co-trustees

Answer 10

MUST have an odd number

Question 11

2 parts to the trustee element:

Answer 11

1. MUST name trustee(s)
   - IF failure to name trustee, Court has the power to appoint § 736.0201
2. MUST give duties to perform
   - May have substantial discretion, BUT NOT UNLIMITED

Question 12

Beneficiaries

Answer 12

A private express trust must generally have at least one definite beneficiary presently ascertainable or ascertainable within the applicable Rule Against Perpetuities. § 736.0402(1)(c), (2)

§ 736.0402(e) provides, however, that a “power of a trustee to select a beneficiary from an indefinite class is valid”

Question 13

Ascertainable beneficiary can have a:

Answer 13

Present or future interest (e.g. class gift)

With vested or contingent interests

As long as it complies with RAP