Trust Flashcards
Trust
Trust is a fiduciary relationship where one party hold a title for the equitable benefit of another. Trust requires;
1. Trust res- property
2. Intent
3. Legal purpose
4. Ascertainable beneficiaries ( can not be dog)
Lack of a trustee
A true will not fail for a lack of a trustee
Secret trust
Occurs when the settlor leaves a bequest to a beneficiary but with a private understanding of what the trust is to be used for.
Discretionary trust
A trust where a settlor reserves significant authority over the trust to the trustee which could include naming the beneficiaries/ amount and type of gifts.
Constructive trust
Created by court for the purpose of preventing unjust enrichment forcing the wrong-doer to transfer any property within the constructive trust to the proper beneficiaries.
Charitable trust
Trust created for a charitable purpose.
(Does NOT require a ascertainable beneficiary)
Cy pres doctrine
Allows when the beneficiary of the charitable trust no longer exist. The trust can be reformed to given gift to the successor or other organization doing the same work.
Duty to Administer
A trustee has a duty to follow the terms set in the trust. ( Except when they’re against public policy or illegal)
Duty of loyalty
Trustee has a duty to act for the sole interest and benefit of the beneficiaries.
They can NOT:
1. Take secret profits
2. Self deal
3. Unsprising trust opportunities
Duty to inform/ account
Trustee has a duty to keep the beneficiaries reasonable informed as to the trust administration and assets.
Duty to account to the beneficiaries(Min- annual)
Prudent investor rule( duty of diversify)
The trustee is to act as a reasonable prudent investor would under the circumstances. Trusteee are required to exercise reasonable care in exercise of financial trust assets.
Required to diversify investment to avoid loss under single investment
Duty to separate trust assets
Trustee has an obligation to keep trust assets segregated from other assets
Duty of impartiality
Trustee is obligated to treat all beneficiaries equally given the circumstances
Duty of care
Trustee has a duty to act as a reasonably prudent person under the similar
Circumstances
Duty to preserve trust property
Trustee is required to take steps to assure that trust property is properly cared for and maintained. In case of financial assets the duty is to avoid loss.
Duty to make property productive
Trustee is required to make sure that trust property which can be made productive and produce income for a trust is made productive.
( can NOT allow someone to live rent free)
Duty to not delegate
Trustee may not delegate functions that are within the trustees skills
( does NOT apply to financial asset/ management may be delegated)
Duty to Co- trustees
Co- trustees have a duty to act with each other in performance of trust duties and to manage the other trustee to avoid a breach or duties by another.
Duty to defend
Trustee has the obligation to defend against all claims of the trust
Revocable trust
A trust may be terminated by trustor /settlor. A trust can be revoked by
1. The manner indicated in the trust
2. By writing other then a will unless the trust makes the manner indicated in the trust exclusive
3. By any settlor as to their portion
4. Person granted power of revocation
Irrevocable trust
Trust becomes irrevocable at the death of the last settlor.
Termination of a irrevocable trust
If all beneficiaries agree they can petition the court for the termination of the trust as long as it does not disrupt the testator intent.
Modification or trust
A revocable trust maybe be modified/ amended by the settlor at any time while they are alive.
(In manner indicated or in a manner originally created)
Remedies against a trustee
Removed as a trustee
Personally liable for damages
Make trust whole
