Trusts Flashcards
Express Trust Definition
Legal device that allows an owner of property to make transfers of property and to have those assets managed by someone else
Two kinds of express trusts
Lifetime- set up during the lifetime of the settlor
Testamentary- created by the settlor’s will
Requirements for valid trust (8)
1) Settlor
2) Delivery of legal title
3) Property
4) Trustee
5) Beneficiary
6) Intent to create trust
7) Lawful purpose
8) Validly executed
Requirements for settlor
1) Must be 18 or older
2) Must have capacity to enter into contracts
Requirements for property that can be transferred in trust
1) Owned by settlor (not merely an expectancy)
2) Must be identified property, not subject to future determination
Who can be a trustee?
For a lifetime trust- pretty much everyone
For a testamentary trust- anyone other than
a) Those under 18
b) Judicially declared incompetents
c) Convicted felons
d) Those incapable because of drunkenness, dishonesty, want of understanding, or improvidence
Non-resident alien can serve as trustee only if
1) Related to settlor AND
2) A New York resident serves as co-fiduciary
Intent requirement for trusts
Settlor must intend to create enforceable trust; precatory language insufficient
Three implications of lawful purpose requirement
1) Trust cannot call for commission of a crime
2) Trust cannot call for destruction of property
3) Trust cannot have a condition against public policy
Requirements for trust execution
Must be in writing signed by both settlor and trustee AND EITHER
1) Notorized
2) Signed by two witnesses
All trusts are presumed ______
Irrevocable unless provided otherwise
Pour-Over Gifts
Testamentary gifts to an existing revocable trust
Requirements for pour-over gifts
1) Trust must be in existence or
2) Executed concurrently with the will
Ways to make life-insurance proceeds payable to trust
1) Create unfunded revocable insurance trust and name the trustee as the policy beneficiary
2) Have the trust be testamentary and have the life insurance policy contract name “the trustee named in my will” as beneficiary
Totten trust
Bank account in depositor’s name “as trustee for” a beneficiary (no particular words needed)
Two things to remember about Totten trusts
1) Depositor makes deposits and withdrawals as he wishes during his lifetime
2) Beneficiary has no beneficial interest in the trust until depositor dies
Ways to revoke Totten trust (4)
1) Withdraw all money in account
2) Express revocation during lifetime by making a writing (i) naming beneficiary (ii) and financial institution (iii) and having the revocation notarized (iv) and delivered to the bank
3) Revocation in a will (complying with express revocation requirements)
4) Death of beneficiary
Change of beneficiary of Totten trust
Must comply with same requirements for revocation (making a writing (i) naming beneficiary (ii) and financial institution (iii) and having the revocation notarized (iv) and delivered to the bank)
UTMA
Uniform Transfers to Minors Act
Duties of UTMA custodian
1) Hold, manage, and invest the property under a “prudent person” standard
2) Pay over to the minor or for the minor’s needs what part of the property the custodian deems advisable
3) Pay what is left of the property to the minor when he turns 21 (18 for a pre-1997 gift)