Trust Creation Flashcards
What does the trustee HOLD?
What does the beneficiary HOLD?
Trustee holds legal title.
Beneficiary holds equitable title
What is a private express trust?
A trust that clearly states the intention of the settlor to transfer property to a trustee for the benefit of one or more ascertainable beneficiaries.
How is intent determined in an express trust?
If settlor had capacity, the manifestation of intent must occur prior to or simultaneously with teh transfer of the property; no consideration required.
What is a Precatory Trust?
A trust that expresses a hope or wish that the property transferred be used for the benefit of another rather than creating a legal obligation.
How is intent measured in
a precatory trust?
Must contain specific instructions to the fiduciary, and must be that without this trust there would be an unnatural disposition of the donor’s property because of family r/ship or history of support b/t donor and the intended beneficiary.
When is an express trust funded with?
It must be funded with identifiable trust property (res); it must be described with reasonable certainity
If a trust that is invalid for lack of assets is later funded, what is the result?
A trust will arise if the settlor re-manifests the intent to create a trust.
What does it mean to have a
“valid trust purpose”?
Trust can be created for any purpose as long as:
* it is not illegal or contrary to public policy;
* it is possible to achieve
* it is for the benefit of the beneficiaries
What happens if one or more terms of the trust violates public policty?
Alternative terms will be honored; if none then the term will be stricken
The trust will NOT fail unless the removal of the term is fatal.
What is an ascertainable beneficiary
the Bene is identifiable by name so that the equitable interest can be transferred automatically by operation of law
settlor may refer to acts of independant significance to identify the Bene
What are the exceptions to the requirement of having an ascertainable bene in the trust?
Trusts for benefit of unborn child or to a reasonably definite class are ok. Charitable trusts do not need individual ascertainable bene.
What are the general rules regarding an
inter vivos trust?
The declaration of the trust must accompany the delivery, where the settlor parts with dominion and control over the trust; writing is only required for real property (court will impose a constructive trust if no writing), parol evidence is allowed to show the settlor’s intent if the written agreement is ambigous on its face.
What is a pour-over trust?
A provision in a will that directs the distribution of property upon the happening of an event.
Even if it wasn’t executed appropriately, as long as the trust is identified in the will and its terms are set for th in a written instrument, it will be enforceable.
What is a Totten Trust?
Can it be revoked?
A designation given to a bank account in a depositor’s name as trustee for a named bene (no sep of legal & equitable title);
It can be revoked during depositor’s lifetime by any act manifesting the intent to revoke.
What is a life insurance trust and is it revocable?
Life insurance proceeds go to trust upon death; trust is the owner of the policy and it is irrevocable
What is a testamentary trust?
It occurs when the terms of the trust are contained in writing in a will or in a document incorporated by reference into the will.
What is a “secret” trust?
Looks like a testamentary gift, but it is created in reliance on the named bene’s promise to hold and administer the property for another person
Result: a constructive trust is imposed on the property for the intended bene
What is a “semi-secret trust”?
occurs when a gift is declared in a will to be held in trust, but the TT fails to name a bene or specify the terms or purpose of the trust
A resulting trust is imposed to be held for the TT’s heirs.
What is the modern trend regarding secret and semi-secret trusts?
To impose a constructive trust in favor of intended beneficiaries (if known) in both.
What is the purpose of a charitable trust and who are its beneficaries?
Purpose must be relief of poverty, advancement of education or religion, good health, governmental purposes, and other purposes benefiting the community at large.
The beneficiaries must be the community at large (directly or indirectly).
How does the cy pres document relate to charitable trusts?
It allows a court to modify a charitable trust to seek an alternative charitable purpose if the original one becomes illegal, impracticable, or impossible to perform.
What are honorary trusts?
The have no private beneficiaries
Usually for pet or non-charitable purpose.
What are remedial trusts?
Name 3 kinds of them?
They are an equitable remedy that is NOT subject to trust requirements.
1. Resulting Trust
2. Constructive Trust
3. Gift Over Clause
What is a resulting trust?
When a trust fails, the court creates a resulting trust requiring the holder of the property to return it to the settlor or his estate to prevent unjust enrichment.
