Trusts Flashcards
what are the Trustee’s duties?
(1) deal with the property with reasonable care (2) must maintain utmost degree of loyalty; and (3) is personally responsible if conduct alls beneath required standards
Classifications of trusts
1) express trusts
- private
- charitable
2) trusts created by operation of law
- Resulting trusts: attempted to carry out an implied intent
- constructive trusts: remedy to prevent unjust enrichment
what are the 5 main elements of a valid trust?
1) intent
2) identifiable corpus
3) ascertainable beneficiaries
4) proper purpose
5) mechanics and formalities
If I am poorly medicated
elements of intent
1) split legal and equitable title
2) impose enforceable duties on holder of legal title
identifiable corpus
trust property must be ascertainable with certainty
ascertainable beneficiaries
any person that can take and hold title
effect of no ascertainable beneficiaries?
property reverts to settlor
proper purpose
anything except illegal, require trustee to commit crime, or contrary to public policy
what is it called when settlor is the trustee?
declaration of trust
what capacity must a trustee have?
take, hold, and manage property
what happens no trustee is named?
court will appoint a replacement
does trust need to be in writing?
can be oral unless it involves real property or is contained in a will
pour over will
Will containing gift to previously existing inter vivos trust
Testamentary secret trust
A will names someone as beneficiary but supposed to hold property for someone else, but not called a trust; courts allow “trust” beneficiary to seek a constructive trust remedy against will beneficiary
testamentary semi-secret trust
testamentary gift is in trust, but doesn’t indicate beneficiaries
effect: trust fails and property passes through testator’s estate to successors in interest
Discretionary trust
trustee determines how much beneficiary receives (so beneficiary has nothing to transfer, and nothing for creditor to reach)
spendthrift trusts
beneficiary may not transfer interest of trust, creditors can’t attach to beneficiary’s trust interest
support provisions
use of trust property limited to beneficiary’s support
standard = accustomed standard of living
revocation of irrevocable trust?
in some states, possible if settlor received written consent of all living persons with vested or contingent interests
when can beneficiaries moditify or terminate a trust
all beneficiaries agree, are legally competent, and settlor’s intent is not frustrated
trustees implied powers
powers which are necessary or appropriate to carrying out the terms of the trust if those powers are not expressly forbidden by the trust
Trustee’s full list of duties
1) duty of loyalty and good faith
2) avoid self-dealing
3) keep accurate records and render accountings upon demand
4) general standard of care
5) investments standard of care
6) duty to review trust property
8) duty of impartiality
general standard of care
use the care and skill of a prudent person with regard to trust property: insulate trust property (label and segregate)
prudent investor standard- portfolio approach
view all investments together, not individually; some speculation may be appropriate or required; also, diversification is required
when is prudent investor standard measured?
time of decision
duty of loyalty
must manage trust solely in the interest of beneficiaries
C pres doctrine
if circumstances have made it impossible to carry out original trust purpose (for charitable trust), courts can alter provisions to follow settlor’s intent if settlor had a general charitable intent
who is charged with enforcing charitable trusts
the attorney general
