Trusts Flashcards
Duties of Trustee
- Impartiality
- Creates principal/income problem
- Loyalty & good faith
- Segregate funds
- Prudence (sound investing)
- Disclose/Account for trust assets
Constructive Trusts
*prevents unjust enrichment in the event of some unlawful conduct
- Confidential/Fiduciary Relationship
- Promise
- Transfer of property in reliance on that promise
- Resulting unjust enrichment
Termination w/o consent
- When purpose has been accomplished
- Cannot be terminated if material purpose remains
- spendthrift trust has material purpose of asset protection
Remedial Trusts
- Honorary (failed charitable purpose)
- Resulting (failed trust)
- Constructive
Spendthrift Trusts
NY presumptively assumed spendthrift trusts.
- expressly restricts the beneficiary’s power to voluntarily or involuntarily transfer his equitable interest
Exceptions:
- Children/spouses seeking family support
- People providing necessities
- Government
- Income beyond that needed to provide beneficiary according to his station in life
Cy Pres
Allows terms of charitable trust to be modified if illegal, impossible or impracticable
Support Trust
Trustee must pay out in accordance w/ some pre-specified objective standard
Creditor access to trust property
- Mandatory –> only mandatory payments
- Discretoinary –> can’t access trust property
Removing trustee
- incapacity
- breach
- conflict of interest (not apparent at time of creation)
- serious disagreement
- poor performance
Saving statute
creates a presumption that grantor intended to require that a condition be met w/n perpetuities period
Trusts
Dividing legal and equitable title to the property.
Intent
No special language
- just intent to separate equitable interest
No Further Inquiry Rule
A self-dealing trustee is auto liable
Suspension statute
prevents fragmentation of an estate beyond perpetuities period – requires that some combinition of people be able to convey a FSA w/n perpetuities period
Express Trust Requirements
- Intent
- Trust Property
- Valid trust purpose
- Beneficiaries
- In writing
Lifetime trust:
- writing
- signed by settlor and trustee
- notarized or executed in presence of 2 Ws + signed
Legit charitable purposes
- Relief of poverty
- Advance education/religion
- Promotion of good health
- Gov purposes
- Other purposes benefitting community at large or particular segments of community
GHOPE
Gov,
Health,
Other
Povertu.
Education/religion
Terminating Trust
- Revocable trust –> pursuant to terms of trust
- Irrevocable trust –> via settlor and beneficiary agreement
Discretionary Trust
Discretion as to how much trustee pays out
- beneficiary has no claim but trustee cannot abuse discretion
Trust purpose
Any purpose so long as not illegal or against public policy
Trust formation (interests)
Require separation of agreement. Even a contingent remainder beneficiary suffices –
O puts property in trust for O for life w/ O as trustee, remainder to O’s kids
NY Trust Presumption
Presumption of irrevocability and non-amendability
Trust beneficiaries
Must be ascertained at time they will TAKE not at time of will’s creation
Pet trusts
OK but expire after 21 years
Pour Over trusts
Created inter vivos but funded at death
