Trusts Flashcards
Creation
Inter-Vivos
One created by a living person for the benefit of another person. Also known as a living trust, this trust has a duration that is determined at the trust’s creation and can entail the distribution of assets to the beneficiary during or after the trustor’s lifetime.
Testamentary
A type of trust that is created after the grantor dies.
Testamentary Elements
*PIRAT
A. Purpose B. Intent C. Res - Trust Property D. Trustee E. Ascertainable Beneficiaries *PIRAT
Obligations of Trustee
Duty of Care
The trustee must exercise that degree of care, skill, and caution exercised by a reasonably prudent person in their own dealings. This duty requires:
- Diversifying assets
- Making property productive; and
- Making informed decisions regarding investment schemes.
Duty of Loyalty
A trustee is required to:
- Refrain from self-dealing
- Administer the trust in the best interest of the beneficiaries; and
- Act impartially towards each beneficiary.
Duty to Inform and Account
A trustee must disclose to beneficiaries complete and accurate information about the nature and extent of the trust property.
Types of Trusts
- Patron Saint Sam Supports Sassy Disciples by Praying, Charitably, Honorably, and Openly
1. Pour-Over Will
A testamentary device wherein the writer of a will creates a trust, and decrees in the will that property in his or her estate at the time of his/her death shall be distributed to the Trustee of the trust.
- Secret/Semi-Secret
Secret - no beneficiary/intent on face of trust
Semi - no beneficiary named, but intent
- Spendthrift
A provision that requires the trustee to use only so much income or principle as is necessary for the support of the beneficiaries.
- Support
For Beneficiary’s health, education, or maintenance.
- Discretionary
When a trustee has absolute discretion and power to determine distributions.
- Blended/Protective
Benes must meet conditions in order to benefit from the trust.
- Charitable
A trust is deemed charitable when it has a stated charitable purpose and exists for the benefit of the community at large or class of persons with continually changing membership. *Cy-Pres - An equitable doctrine where the courts will modify a charitable trust to be consistent or near as possible to the testator's intentions should the trust's purpose be frustrated.
- Honorary
No charitable or private beneficiary.
- Operation of Law
A. Resulting/Purchase Money Resulting - When a trust fails or the other is the incomplete disposition of trust property, a court may create a resultant trust to return the property to the settlor.
B. Constructive - applied to prevent unjust enrichment for fraud, and self-dealing.
*Patron Saint Sam Supports Sassy Disciples by Praying, Charitably, Honorably, and Openly.
