Trust Rule Statements Flashcards
Elements of a private express trust
Settlor with capacity
Settlor with intent
Ascertainable beneficiaries
Trustee duties
Trust property
Trust purpose
Settlor capacity
(a) Settlor with capacity: The capacity required to create a revocable trust is that required to make a will.
A person has sufficient testamentary capacity if she (i) comprehends the natural objects of her bounty;
(ii) understands the kind, nature, and extent of her property;
(iii) knows the manner in which she desires her act to take effect; and
(iv) realizes the effect her act will have upon her estate.
All persons are presumed to have mental capacity. The burden of proving lack of mental capacity rests on the contestant.
Settlor intent
(b) Intent: To create a trust, the grantor must indicate an intention to create a trust.
A private express trust clearly states the intention of the settlor to transfer property to a trustee for the benefit of one or more ascertainable beneficiaries.
The settlor’s intent may be manifested orally, in writing, or by conduct.
Ascertainable beneficiaries
(c) Ascertainable beneficiaries: The same individual cannot serve as sole trustee and sole beneficiary of a trust because such an arrangement would result in a lack of enforcement power by the beneficiary against the trustee.
If the trustee is the sole beneficiary, then title merges and the trust terminates.
Trustee duties
(d) Trustee’s duties: To create a valid trust, there must be a trustee and the trustee must have duties to perform. A named trustee must have the capacity to acquire and hold property for his own benefit and the capacity to administer the trust. Assuming Paul is neither a minor nor incompetent, he would qualify as trustee.
Trust property
e) Trust property: A valid trust must contain some property that was owned by the settlor at the time the trust was created and was at that time transferred to the trust or to the trustee (i.e., the trust must be “funded”).
When, as in this case, a third-party trustee has been named, delivery must accompany the declaration. That is, the settlor must part with control over the trust property at that time.
Valid trust purpose
(f) Valid trust purpose A trust can be created for any purpose as long as it is not illegal, restricted by rule of law or statute, or contrary to public policy. The trust and its terms must be for the benefit of its beneficiaries.
Inter vivos trusts
Inter vivos trusts are lifetime transfers in trust and are often used to avoid the costs and delays of the probate process.
How does a power of attorney stop
Death of the principal
