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Wills, Trusts > Trusts > Flashcards

Trusts Flashcards

1
Q

Trusts: What is a Trust?

A
  • A legal from that divides the benefits from the burdens of property between 2 people or groups.
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2
Q

Trusts: What does a trustee do?

A

Trustees have legal title and manage the property (one person or a group or people)

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3
Q

Trusts: What do beneficiaries do?

A

Beneficiaries receive benefits of ownership (a different person or group of people from the trustee.)

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4
Q

Trusts: What do trust do, generally?

A

Trusts split title to property, and simultaneously imposes duty on trustees.

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5
Q

Trusts: 3 uses of a trust:

A

1) Avoid probate and leave everything to wife easily.
2) Benefit a new wife and poor kids from marriage with ease.
3) Leave money to someone who is not responsible and ensure it won’t get blown in a year.

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6
Q

Trusts: What to examine to determine if something is a trust?

A
  • Language of Document
  • Extrinsic Evidence of Trust
  • Identity of Beneficiary receiving property.
    Degree of Specificity a Settlor used?
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7
Q

Trusts: Who is the settlor?

A

Person establishing a trust.

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8
Q

Trusts: What to really look out for when it is not clearly a trust?

A

Someone things may just be GIFTS rather than TRUSTS.

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9
Q

Trusts: Oral Trust: What evidence is needed?

A

Clear and Convincing evidence an oral trust was made.

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10
Q

Trusts: Oral Trust: When can a trust not be oral?

A
  • Best practice is to put it in writing.
  • Can not be an oral trust when it involves land, a trust through will, or the statute of frauds.
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11
Q

Trusts: The revocable trust: What is it?

A

A revocable trust is one where the settlor retains complete control over assets while alive, then dispenses without court supervision at death.

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12
Q

Trusts: Revocable Trust: When the settlor is the trustee:

A

Settlor may revoke at any time and get it back.

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13
Q

Trusts: Revocable Trust: What happens when settlor dies?

A

Successor trustee is named and given instructions as to what to do upon death of settlor.

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14
Q

Trusts: Revocable trust: What usually accompanies a revocable trust?

A

Revocable trusts are accompanied by “pour over” wills?

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15
Q

What is a pour over will?

A

A section in the will that provides anything not given in a will pours over to a trust.

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16
Q

Trusts: What is a Private Express Trust?

A

Enforced by beneficiaries.

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17
Q

Trusts: Charitable Trusts, generally:

A

Rule against perpetuities does not apply, Attorney General Enforces.

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18
Q

Trusts: Inter Vivios Trusts generally:

A

Set up during the creator’s lifetime.

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19
Q

Trusts: Testamentary Trusts generally

A

Set up in a will.

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20
Q

Trusts: Revocable Trusts generally

A

Gives settlor power to modify and revoke, most states presume a trust is revocable.

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21
Q

Trusts: Irrevocable trusts generally:

A

It is irrevocable.

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22
Q

Trusts: 7 Requirements

A

1) Parties
2) Intent
3) Property
4) Capacity
5) Legal Purpose
6) Writing
7) Rule Against Perpetuities

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23
Q

Trust: What has more formalities, a will or a trust?

A

Trusts have less formalities.

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24
Q

Trusts: Why can trusts have less formalities?

A

Settlor turn over property when alive, so they typically feel the tang of loss.

25
Q

Trusts: (4) Capacity: What is it the same as?

A

Same rules for capacity as Wills.

26
Q

Trusts: (5) Legal Purpose: What Can a trust not be?

A

A trust can not be illegal or promote an illegal purpose.

27
Q

Trusts: (6) Writing: When is a writing required?

A
  • Statute of Frauds (Land being transferred)
  • Testamentary Trust (Must meet Will Formalities)
28
Q

Trusts: (1) Parties: Who are the 3 parties?

A

Settlor
Trustee
Beneficiary

29
Q

Trusts: (1) Parties: Settlor: Who are they and what must they do?

A
  • Person who creates the trust.
  • If settlor is not also the trustee then the settlor must deliver the property to trustee.
30
Q

Trusts: (1) Parties: Trustee: general rules

A
  • A trust will not fail for want of a trustee (court will appoint one)
  • Elected trustees may refuse to accept.
  • People often use banks but it is expensive.
  • A trust is a legally separate entity from a trustee.
31
Q

Trusts: (1) Parties: Trustees: What do they do (3 things):

A

1) Administer the Trust
2) Invest the Property
3) Administer assets to beneficiaries when appropriate.

32
Q

Trusts: (1) Parties: Trustees: When do fiduciary duties kick in?

A

When the property is delivered and accepted by the trustee. (same for legal obligations)

33
Q

Trusts: (1) Parties: Trustees: What are their fiduciary duties?

A

1) Duty of Loyalty
2) Duty of Prudence (care)
3) Duty of Impartiality
4) Duty to account

34
Q

Trusts: (1) Parties: Beneficiaries: What do they need to know?

A

Need to know who trustee is so they can call them into account.

35
Q

Trusts: (1) Parties: Beneficiaries: What can’t they be?

A

Can’t be trustee and sole beneficiary.

36
Q

Trusts: (1) Parties: Beneficiaries: What if there is a group of beneficiaries?

A
  • Need a definite group. (“Friends” is too broad). (“My relatives” may work due to intestacy)
37
Q

Trusts: (1) Parties: Beneficiaries: What if no beneficiary present/named?

A

Plop everything back in the estate.

38
Q

Trusts: (1) Parties: Beneficiaries: Animals

A

generally can not be beneficiaries

39
Q

Trusts: Honorary Trusts: what is is?

A
  • A specific non-capricious purpose when there is no beneficiary.
  • Trustee acts on their honor.
  • Judicially made.
  • usually for pets and graves
40
Q

Trusts: pet trusts

A
  • Animal given to someone in care.
  • Trustee named (and doles out money for pet)
  • Has to be a reasonable amount left to pet.
41
Q

Trusts: (1) Parties: Beneficiaries: General Rule

A

The same person can be settlor, trustee, and beneficiary.
- Just not the trustee and SOLE beneficiary (legal title would not be split in a meaningful way).

42
Q

Trusts: (2) Intent: Does the word “trust” being present matter?

A

No, there is no magic formula for establishing a trust.

43
Q

Trusts: (2) Intent: What is language is too broad?

A

it could end up being a gift.

44
Q

Trusts: (2) Intent: Good evidence of intent to be a trust?

A
  • More specific the gift = more it looks like a trust.
  • If a lawyer or financial advisor gets the gift = looks like a trust.
45
Q

Trusts: (2) Intent: Test

A

Is the settlor intending to split the burdens from the benefit of ownership?

46
Q

Trusts: What is the legal term for non-specific language?

A

Precatory Language
(it expresses something like “desire”, “hope”, or “request”)

47
Q

Trusts: (2) Intent: Is it usually clear?

A

Intent is usually pretty clear from the settlor, just watch out for precatory language.

48
Q

Trusts: (3) Property: Blackletter law:

A

Property must be Ascertainable and In Existence.

49
Q

Trusts: (3) Property: What does it mean to be Ascertainable?

A

It means the property is described with sufficient certainty.

50
Q

Trusts: (3) Property: What does it mean to be In Existence.

A

The property has to be available.

51
Q

Trusts: (3) Property: What is best practice?

A

Always retitle assets in the name of the trust.

52
Q

Trusts: (3) Property: Are IP rights property?

A

yep, IP rights are property because they are in existence.

53
Q

Trusts: (3) Property: Statutory Exception for the “In Existence” Requirement:

A

-Pour over trust (remember the pour over clause must be in the will when it is executed).

54
Q

Trusts: (3) Property: Can future interests be property?

A

No.

55
Q

Outright Gifts: Definiton

A

Gratuitous transfer of property from donee by donor. Donee must accept. Donor perfects the gift through delivery.

56
Q

Gift Through Trust: Definition

A

Can be done through imposing fiduciary duties on the holder of property.

57
Q

What can litigants do when a defective gift is present?

A

They may try to turn it into a trust.

58
Q

3 types of delivery of property?

A

1) Actual
2) Symbolic
3) Constructive

59
Q

Who came up with honorary trusts?

A

Peter Singer

Wills, Trusts (13 decks)

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