Trusts Flashcards
Requirements of an express private trust
- present intent
- corpus
- beneficiaries
- valid purpose
- mechanics and formalities
can sole trustee be sole beneficiary
no, must have one other person
What is required for settlor capacity and present intent?
capacity to make will
- Intend trust to take effect immediately
- Express intent by words or conduct
Note: Precatory expressions are insufficient; oral trusts are OK
Must trustee be named
Yes, but trust does not die if trustee does or rejects, can just appoint
What is required for res?
Property can be anything including future interest
It must be in power to convey and described with certainty
What is required for beneficiaries?
Must be ascertainable, notice not required; acceptance presumed
if class beneficiary:
CL: reasonably definite
UTC: can be indefinite
What is required for valid trust purpose?
Provision cannot be
1. illegal
2. impossible
3. contrary to public policy
4. intended to defeaud creditors
What is required for formalities?
Inter vivos: declaration (settlor is trustee) or present transfer+conveyance (s not trustee)
- no writing required unless SOF
Testamentary: essential terms must be ascertainable from will
What and how does a secret trust work?
Absolute gift made in reliance on beneficiary’s promise to hold property in trust for another; nature of trust not specified -> constructive trust
What and how does a semi secret trust work?
Gift in trust but fails to name beneficiary -> trustee holds property in trust for testator’s heirs
Inter vivos trust
Created during settlors life
Testamentary trust
Testamentary trust
Requirements for charitable trust
- Purpose must benefit public 2. Must have indefinite beneficiaries
Note: May be perpetual, RAP doesn’t apply unless shifting from private to charitable or vice versa
Who enforces charitable trusts?
Settlor, beneficiary, or AG
What is cy pres?
If settlor’s intended purpose is impracticable, unlawful, or wasteful, court
substitutes new charitable purpose
What is an honorary trust?
Not for charitable purpose, but no private beneficiaries who can enforce trust (e.g., trusts for pets, graves)
Who can enforce honorary trust? How long can enforce
Enforceable by someone named in the trust or appointed by court
Under UTC, enforceable for 21 years or for life of the animal
What is a spendthrift provision?
Beneficiary may not voluntarily or involuntarily transfer his interest
When is a spendthrift trust not enforceable?
Settlor also beneficiary; government or family order
What is a support trust?
A support trust directs the trustee to pay only so much of the income or principal (or both) as is necessary for the beneficiary’s support
Are beneficiaries equitable interest alienable? What does this mean?
Yes, can voluntarily transfer interest and creditors can levy on this interest
What is a discretionary trust? Can creditors reach?
Trustee has discretion to pay or withhold income or
principal
Note: before payment, creditors can’t reach interest