Trusts Flashcards
What is a trust?
A fiduciary relationship where a trustee manages property and income from that property for a beneficiary
Who holds equitable title in a trust?
The beneficiary
How is trust property divided?
Between income and principal
When is a trust presumed to be revocable in Pennsylvania?
It is automatically presumed to be revocable, absent express language to the contrary
What is a mandatory trust?
A trust that requires the trustee to distribute all trust income
What is a discretionary trust?
A trust that allows the trustee to distribute income at his discretion
Who is the settlor?
The creator of the trust
Who is the trustee?
The person who holds the legal interest or title to trust property
Can the same individual serve as a sole trustee and sole beneficiary of a trust?
No
Will a trust fail if a trustee dies, becomes disabled, resigns, or fails to accept the office within a reasonable amount of time?
No, the court can appoint a successor trustee, unless the settlor expressly conditioned the trust on a particular trustee’s service
Must a trustee be given specific duties to perform?
Yes, or the trust will fail and legal and equitable title will merge in the beneficiary
Who has legal title to a trust?
The trustee
What qualifications are necessary for a trustee?
The same capacity as needed for a will, i.e., over 18 and of sound mind
Is a trust valid without a beneficiary?
No
What are the Uniform Trust Act’s mandatory rules for a trust?
- Trust creation requirements;
- Duties of good faith and loyalty to beneficiaries, including the duty to keep beneficiaries informed;
- That the trust be lawful, in keeping with public policy, and capable of achievement;
- The court’s power to modify or terminate a trust;
- the effect of spend-thrift provisions; and
- The rights of third parties engaging in transactions with the trustee.
What is a private express trust?
A trust that clearly states the intention of the settlor to transfer property to a trustee for one or more ascertainable beneficiaries
What are the elements of a valid private express trust?
- The settlor’s intent, presumed on use of common trust terms;
- Trust property, which must be identifiable and segregated;
- a valid purpose (anything legal); and
- Ascertainable beneficiaries
In Pennsylvania, can a settlor’s intent be manifested orally?
No, unlike most states
Does a settlor have to communicate his intent to establish a trust to the beneficiaries?
No, delivery is sufficient
Do precatory words (e.g., “hope”) about the disposition of property create a trust in Pennsylvania?
No; the words will be either construed as mandatory or have no effect at all
Can unborn children be ascertainable beneficiaries?
Yes
Can class gifts qualify as ascertainable beneficiaries?
Yes, as long as reasonably definite
Do charitable trusts require ascertainable beneficiaries?
No
What is an inter vivos trust?
A lifetime transfer that becomes possessory at the death of the settlor
