Trusts Flashcards
What is a trust
A trust is a fiduciary relationship where one party holds legal title to property for the benefit of another.
Express Trust
Arise from the intention of the parties.
Examples
- Private Express Trusts
- Charitable Trusts
Implied Trust
Equitable remedies that arise by operation of law
- Resulting Trusts
- Constructive Trust
Trust
A valid trust requires
- a settlor with requisite capacity to express a present intent to create a trust now
- delivery of specific trust property
- an ascertainable beneficiary
- active duties imposed on the trustee
- a proper trust purpose and
- a trustee.
Settlors intent:
The settlors intent is determined from the language used, his relationship with the parties involved, and any other appropriate circumstances. No specific words or acs are necessary to manifest intent. Suggestive or precatory language is not illusrative of intent.
Trust res: any identifiable property right that is transferable and capable of ownership may constitute trust res. A trust cannot exist without property, thus the trust must be capable of being identified.
Benificiaries must be presently ascertainable ( specifically named or capable of being identified without undue difficulty)., or ascertainable at a future time within RAP.A beneficiary may be a minor or incompetent and may enforce a trust through a guardian ad litem.
A trustee may be a settlor and a beneficiary however there must be an additional beneficiary because he must owe a duty to someone other than himself. The trustee may not be the sole beneficiary. A trustee must have the mental capacity to adminsiter the trust and may not be a minor or incompetent.
A trustee must be given active duties. Duties assigned by statute or implied include:
A trust must be created for a proper purpose other than illegal activity, violating RAP or contrary to public policy. A provision encouraging divorce or prohibiting marriage is invalid.
Inter vivos Trust
In order to create an express inter vivos trust, legal title must be transferred to the trustee. Where the trust res is real property, the transfer is effectuated by (1) execution of a deed conveying title to the trustee and (2) delivery of the document to the trustee. Where the trust res is personal property, the transfer may be made by (1) physical delivery (2) symbolic delivery(3) constructive delivery. Settlor may also manifest intent by declaring himself trustee or earmarking assets as trust res.
Testamentary Trust
is created by the testators will.
Pour over will
A will may pour assets into a trust under the doctrine of either incorporation by reference or facts of independent significance. For jurisdictions that have adopted the doctrine of incorporation by reference, pour over provisions are valid if they exist at the time that a will is executed and may be incorporated by reference if the will manifests this intention and describes the writing sufficiently to permit its identification.
Under the modern approach, later made amendments to the trust are valid.
Under common law, changes made after execution of a valid will are not valid.
Discretionary Trusts
trustee decides when to make a distribution to a beneficiary
beneficiary may not demand any part of the income or principle;
Creditor may not demand any part of the income or principle
creditor niether, unless they can show that the. dishonestly and in a state of mind not contemplated by the settlor.
A creditor of the beneficiary could attack the trust and get a lien, but the trustee would never have to pay out.
support trust
trustee pays what is necessary for beneficiary support
Spendthrift provision
restricts a beneficiary and prevents them from voluntary and involuntary transferring their interest and property.
creditor cannot reach beneficiarys distribution before they can.
Favored creditors:
- child or spousal support creditor
- judgment creditor who has provided services for the protection of a beneficiaries interest in the trust
- claim of the gov.
- creditors for claims for necessaries. ( not in states recognzing UTC)
