Trusts Flashcards
Elements of private express trust
(1) settlor has capacity
(2) manifestation of intent
(3) trust property (rest)
(4) delivery
(5) trustee
(6) ascertainable beneficiary
(7) legal purpose
Types of trusts
- inter vivos trust
- testamentary trust
- charitable trust
- resulting trust
- constructive trust
- honorary trust
- spendthrift trust
- discretionary trust
- support trust
- will substitutes
What is an inter vivos trust?
trust created while settlor is alive
legal reqs: 7 trust elements; AND 2 options for inter vivos trust
(1) transfer in trust (2) declaration of trust
Writing req for real property
Parole evidence admissible if writing ambiguous on its face
Legal requirements of an inter vivos trust?
7 trust elements; AND 2 options for inter vivos trust: (1) transfer in trust (2) declaration of trust
Writing req for real property
Parole evidence admissible if writing ambiguous on its face
Is parole evidence admissible for an inter vivos trust?
Yes, if the writing is ambiguous on its face
Testamentary Trust
= trust contained in a will
legal reqs:
7 trust elements AND
TERMS ASCERTAINABLE BY:
- terms of the will instrument
- existing docs incorporated by reference
- acts having independent significance; OR
- power of appt
Legal reqs of testamentary trust
legal reqs:
7 trust elements AND
terms ascertainable by
- terms of the will instrument
- existing docs incorporated by reference
- acts having independent significance; OR
- power of appt
Charitable Trust
and legal reqs
Trust created for benefit of society
legal reqs:
6 trust elements (all elements except ascertainable beneficiary req)
(7) unascertainable beneficiaries
(8) RAP ≠ apply
(9) Cy pres doctrine - only applies to charitable trusts, not to private express trusts
- reqs (for cy pres doctrine):
(a) general charitable intent
AND
(b) mean impracticable/not possible - no cy pres if specific charitable intent = resulting trust
Which trusts do the cy pres doctrine apply to?
only to charitable trusts
- reqs:
(1) general charitable intent
AND
(2) mean impracticable/not possible
no cy pres if specific charitable intent = resulting trust
Resulting Trust
(1) implied in fact trust
(2) private express trust = resulting trust when…
(3) charitable trusts = failure of charitable trusts + cy pres inapplicable
(4) purchase money resulting trusts
(5) semi-secret trusts = gift in trust but beneficiary not name
When do Private Express Trusts become Resulting Trusts?
- Natural termination and no provision for remaining trust corpus
- Beneficiary Problems
- failure due to lack of ascertainable beneficiary
- beneficiary dead or cannot be found - Trust is void/unenforcable
- Express Corpus
When do purchase money resulting trusts occur?
- consideration must be paid before or when trustee takes title
- rebuttable presumption
- burden of proof = beneficiary (clear and convincing evidence)
- exception: close personal relationship = rebuttable presumption of gift
When do semi-secret trusts become resulting trusts?
Gift in trust but beneficiary not named
Constructive Trusts
Equitable restitutionary remedy designed to prevent unjust enrichment
- Burden of proof = clear and convincing evidence on party seeking constructive trust
- BFP > Beneficiary
- Equitable Defenses Available
What are common situations for constructive trusts?
• theft/conversion • fraud/duress/mistake of fact • breach of fid. duty • arising from homicide • breach of promise = generally no; EXCEPTIONS º fiduciary relationship º fraudulent promise º detrimental reliance º secret trust = gift absolute on its face but made in reliance of promise (parole evidence admissible) (burden of proof = clear and convincing evidence)
What is the burden of proof for a constructive trust?
clear and convincing evidence on party seeking constructive trust
Honorary Trust
Trusts w/ neither a charitable purpose nor ascertainable private beneficiary where the trustee is “on her honor” to fulfill her duties and carry out settlor’s intent
trustee unwilling = resulting trust
violate RAP
RAP and Honorary Trusts
Violate RAP = honorary trusts do not have a measurable life so they violate RAP
COURTS SPLIT
- trust invalidated at inception = resulting trust
- valid for 21 years followed by resulting trust
What are some will substitutes?
- revocable inter vivos trust
- life insurance trust
- totten trust (tentative bank account trust)
What is a revocable inter vivos trust?
Pour over will
validated by:
(1) incorporation by reference
(2) acts of independent significance
(3) uniform testamentary additions to trusts act
What is a totten trust?
Totten Trust - Tentative Bank Account Trust
Revocable by:
(1) withdrawal of funds
(2) act manifesting intent to revoke; OR
(3) contradictory will
How is a totten trust (tentative bank acct trust) revocable?
(1) withdrawal of funds
(2) act manifesting intent to revoke; OR
(3) contradictory will
What are the EXCEPTIONS to when a breach of promise can create a constructive trust?
• breach of promise = generally no; EXCEPTIONS
º fiduciary relationship
º fraudulent promise
º detrimental reliance
º secret trust = gift absolute on its face but made in reliance of promise (parole evidence admissible) (burden of proof = clear and convincing evidence)
What types of delivery are there?
- actual
- symbolic
- constructive
What is actual delivery?
hand-to-hand delivery of property (personal property only)
What is symbolic delivery?
some item representing ownership, including a writing (required for real property)
What is constructive delivery?
presenting the means to access the property, or modernly, doing everything reasonably possible to put the trustee in possession, without raising suspicion of fraud/mistake
CL: settlor gives trustee access to a place where the property is located b/c property is too large/otherwise unavailable (e.g., a key)
Modern view: settlor has done “everything possible to effectuate a delivery” and there is no fraud or mistake
What is a trustee?
A trustee who owes fiduciary duties to the beneficiary is necessary for a trust?
- capacity
- must have duties (no “passive trusts”)
- lack of trustee = cts will appoint unless settlor intended otherwise
What is an ascertainable beneficiary
Any ascertainable person/group of people can be the beneficiary of a private express trust.
If the beneficiary is too indefinite, no trust comes into being.
By the remedy of resulting trust, the trust property returns to the settlor/settlor’s estate.
What is capacity?
trust capacity = donative capacity = testamentary capacity
this is a lesser level of capacity than K capacity
What is the manifestation of intent?
the settlor must clearly manifest that deliver of the property is made with the present intention to create a trust
What is trust property (res)?
The corpus of a trust must be a valid currently existing interest in property and may not be a mere expectancy or any other illusory property
(1) validly presently existing interest in property
(2) must be identifiable and segregated
(3) exception: unfunded life insurance trust - in most jxns, a valid trust can be created of the proceeds of a life insurance policy on a still-living person
What are some prohibited interest (for trust property (res))?
- no illusory property - e.g., future profits of business
- no mere expectancies - e.g., prospective inheritance/gifts
- settlor’s own debt - a debtor may not hold her debt in trust b/c it’s not a property interest, it is a liability
