Trusts Flashcards
How to create a trust
Settlor must have capacity + indicate an intention to create a trust.
Must a trust be written?
No. But an oral trust and its terms must be established by clear and convincing evidence.
is a trust presumed to be revocable or irrevocable?
Revocable
What happens when the settlor instructs the trustee to violate the terms of a trust?
If revocable –> Must abide by settlor’s wishes.
If irrevocable –> Must honor terms of the trust.
What is the Uniform Prudent Investor Act (UPIA)?
The UPIA sets the default rules for the trustee’s management of the trust.
Standard for trustee is that of a prudent investor
What is the prudent investor standard?
The trustee must (i) consider the purposes, terms, distributional requirements, and other circumstances of the trust, and (ii) exercise reasonable care, skill, and caution
What is a “pour over” trust?
A devise in which the decedent’s assets, upon her death, is effectively determined by the terms of a trust rather than a will.
How to make an effective pour over devise
(1) trust is sufficiently identified in the testator’s will and (2) terms are in a written trust
What is a spendthrift trust
A spendthrift trust protects beneficiary interests from creditor claims, but only if the beneficiary is not also the settlor.
There is a presumption against spendthrift trusts so must be clearly stated in well drafted trust
Exceptions to creditor protections in spendthrift trust
Beneficiary’s child who has a judgment or court order against the beneficiary for support;
Judgment creditor who has provided services for protection of beneficiary’s trust interest;
Government entities—the U.S., VA, or any county, city, or town;
Exception creditors DO NOT include spouses or former spouses
What is a constructive trust
AN equitable remedy (1) When property has been acquired by fraud or improper means OR (2) when it has been fairly and properly acquired, but it is contrary to the principles of equity that it should e retained, at least for the acquirer’s own benefit.
What is a resulting trust
An equitable remedy. Arises when an express trust fails and the settlor has not declared his intent, or when the trust purpose is fully satisfied yet there is still some remaining trust property.
Property reverts to the settlor
Standard of proof to establish trust was created
clear and convincing evidence
