Trusts Flashcards
Creation of Trusts (SIP-D-ATV)
SIP-D-ATV
Settlor - Intent - Property - Delivery - Ascertainable Bennys - Trust - Valid Purpose
Modification & Termination 🔧
3 WAYS:
Consent of settlor & all beneficiaries OR
Consent of all beneficiaries UNLESS a material purpose remains OR
According to its own terms.
Remedies for Breach of Trust 🕺
Approve to Remove - Dam - Disco - Set
Approve the Transaction
Remove the Trustee
Damages
Disgorge Profits
Set Aside Transaction & Impose a Constructive Trust (Beware of BFP)
Trustee Duty of Care 👓
The duty of care requires a trustee administer a trust in good faith, exercising its powers as a prudent person would with“ reasonable care, skill and caution.”
Trustee Duty of Loyalty 💂🏻
The trustee must act in the best interests of the beneficiaries. There no can be no “self-dealing” and/or conflicts of interest; Good faith or good results are not a defense, the trustee cannot benefit from the trust.
Trustee’s Duty to Act Impartially 🧔👱👩🦰
In cases of more than one beneficiariary, the trustee must act impartially in distributing the res and cannot favor any one beneficiary over the other, for any reason (even medical).
Trustee’s Duty to Diversify Assets 🗃
Trustee shall diversify the investments of the trust. Diversification is one of the fundamental elements of prudent investing and usually requires spreading investments throughout different industries to minimize risk.
Trustee - Prudent Investor Rule 〽️
The trustee must invest using the “Reasonably Prudent Investor” standard. Meaning, they must consider all the property in the trust when investing trust property and objectively invest.
Doctrine of Cy Pres 🐘
The Doctrine of Cy Pres means, “as nearly as possible.” Meaning, courts will use intrinsic and extrinsic evidence to ascertain and determine Settlors’s intent.
👑 DISCRETIONARY TRUST
Testator’s sole discretion to determine how much to pay B. Must be expressly stated in terms of trust. No voluntary or involuntary alienation.
Settlor can trust for himself, but can’t with regard to involuntary alienation in order to deny creditors.
🛡️ SPENDTHRIFT TRUST
Prevents B from voluntarily transferring future payments and protection from creditors. EXCEPT for Child / Spousal support and/or necessites.
💀 TOTTEN TRUST 💸💰
Bank account trust naming B who takes whatever is left in account at death.
💀 TESTAMENTARY TRUST by WILL
A trust created by will at the time of T’s death.
🔙 RESULTING TRUST
If express trust ends or fails for illegality or lack of B the trust reverts back to the Settlor.
If the intent was to go the B and there is no more B, then logically the S would want the property back.
