Trusts Flashcards
4 elements to creation of a valid trust
- Intent by settlor
- Trust property (res)
- One or more beneficiaries, and
- A trustee
Precatory language
Language merely expressing the settlor’s hope, wish, or desire that a trust be created generally DOES NOT CREATE A TRUST.
Exception to inference of creation of trust with precatory language
- The directions are NOT VAGUE.
- Addressed by a decedent to his executor.
- Failure to impose trust results in unnatural disposition by the testator; OR
- Extrinsic evidence shows the transferor had been supporting the intended beneficiary prior to executing the instrument.
Trust with tangible personal property:
Need not be in writing
Trust with real property:
Must be in writing.
Pour over trust
Trust funded by a provision of a will devising property to a trustee of a trust established or to be established during the testator’s lifetime
Trustee
Can be court appointed in absence of successor.
Constructive “Trust”
Not a trust at all - an equitable remedy used to prevent unjust enrichment of one person.
Times to apply constructive trusts:
- Fraud
- Undue influence, or
- Breach of fiduciary duty
Constructive trust cannot be imposed on:
property in the hands of a bona fide purchaser.
Trustee’s duty under a constructive trust:
to convey to the P the property on which the trust is imposed.
Spendthrift trust
Prohibits the beneficiary from transferring his interest. Cannot sell or give away rights to future income from trust until the funds are actually distributed.
Language found in a spendthrift trust
“the principal and the income of the trust shall not be liable for the debts of the beneficiary; neither may the beneficiary transfer in his interest \s in this trust to the creditors”
Exceptions to prohibitions on spendthrift trusts
- Satisfy claims of dependents. (Child support, alimony)
- A creditor who furnishes necessaries
- Taxes.
