Trusts Flashcards
Trust Created By:
- Declaration by owner
- Transfer of property during owner’s life to trustee
- Transfer by owner in will
- Power of appointment
- Enforceable promise
What is a Trust?
Relationship where Trustor give a Trustee rights to hold legal title of property under fiduciary duty for benefit of beneficiary.
Trust Validity Requires:
- Settlor’s intent
- Trust property
- Legal purpose
- Ascertainable beneficiaries
- Court can appoint trustee (need not be named)
Express Trust?
All validity requirements met.
Testamentary Trust?
In will
Pour-Over Trust?
From pour-over will.
Secret Trust?
No intent on face but gift to beneficiary to hold in trust for another.
Semi-Secret Trust?
Gift to beneficiary to hold in trust but does not name beneficiary. Majority view is resulting trust; minority view is extrinsic evidence.
Spendthift Tust?
Beneficiary cannot alienate his interest; protected from most creditors.
Support Trust?
For beneficiaries health, education, maintanence; protected from creditors
Discretionary Trust?
Trsutee can distribute/withhold from beneficiary
Charitable Trust?
Charitable purpose and benefits society; if cannot be done, cy pres (court tries to sub); if not, then resulting trust.
Honorary Trust?
No charitable or private beneficiary; invalid except care for pets or cemetary plots; resulting trust
Totten Trust?
Beneficiary takes money left over in bank account
Resulting Trust?
Implied in fact; goes back to settlor’s estate.
Arises from:
* purpose of trust ends
* Trust fails
* Illegal trust
* Excess corpus
* Purchase money resulting trust
* Semi-secret
Constructive Trust?
Applied to prevent unjust enrichment for fraud, self-dealing, etc.
Powers of Trustee?
- Enumerated
- Implied (to do what needed to carry out)
Duties of a Trustee (AND I DID SLIDE)?
- Account and inform
- Not to Delegate unless uses skill and care
- Impartiality
- Due care
- Investigate (due care)
- Diversity (due care)
- Segregate and earmark
- Loyalty - no self-deal and no conflicts
- Invest prudently
- Defend action
- Enforce claims
Liabilities of Trustee?
- Personally liable for violating trustee duties
- Liable for torts and contracts within scope
Trusts - Transfer/Duties of Third Parties?
- Transfer to BFP cuts off beneficiary’s interest
- Transfer to non BFP can be set aside by beneficiary
- Third Party can hold property as constructive trust if knowingly receives trust property
Allocation?
Unless otherwise:
* Income to beneficiaries
* Principal to remainderman
* Trustee uses best judgment
Trusts - Modification/Revocation?
- Majority: Settlor can modify or revoke only if right reserved
- Minority: Settlor can modify or reven even if right not reserved
- Court can modify to meet settlor’s intent or for cy pres
Trust Termination?
- Trustee cannot terminate
- Beneficiaries can terminal if all compenent, all consent, and doesn’t frustrate purpose of trust
- Court can terminate if trust purpose frustrated or impossible
- Lapse and antilapse apply
Breach of Trustee Duties - Remedies?
- Trustee cannot offset losses where one breach is loss but another breach is profit
- Damages
- Constructive trust
- Tracing
- Equitible lien
- Remove trustee
- Surchage for resulting loss
