Trusts Flashcards
A Trust is…
a fiduciary relationship in which one party (trustee) hold legal title to property for the benefit of designated beneficiaries
settlor
person who created the trust
revocability of trusts
generally yes, unless trust terms expressly state trust is irrevocable
express trust
created by settlor’s express intent
private trust
created for benefit of certain defined or ascertainable persons
two ways to create a private trust
inter vivos
by will
charitable trust
created for the benefit of an indefinite class of people or the public generally
Resulting trust
trust that is implied or imposed by law
when does a resulting trust usually occur
when an express trust fails for some reason
constructive trust
equitable remedy used in cases to rectify unjust enrichment or wrongful conduct
Elements of a Valid Express Trust (6)
- settlor with capacity to convey
- settlor has clear present intent to create a trust
- competent trustee with duties
- definite beneficiary
- present and clear disposition of settlor’s specific property in trust
- valid trust purpose
Powers of a trustee
may only exercise powers expressly or impliedly conferred
Duties of a trustee
duty to administer in GF duty of loyalty (no self dealing) duty to report to benficiaries duty to not commingle duty to enforce claims and keep records duty to preserve property and make it productive
What is a protective (discretionary/support) trust
restrict beneficaries access to trust property by terms of the trust
Creditors & Protective Trusts
because beneficiaries have limited access to trust property, their creditors are limited in accessing the beneficiaries trust interest
discretionary trust
- trustee has absolute power and discretion to make decisions regarding distribution of trust property to beneficiaries
- creditors cannot compel payment
Support trust
- directs trustee to pay beneficiaries from trust as much as is necessary for beneficiaries support
- creditors cannot compel payment
Spendthrift Trust
- prohibits beneficiaries from transferring trust interests in the trust, either voluntarily or involuntarily
- creditors cannot reach
Distinguishing Characteristics of a Charitable Trust
- indefinite beneficiaries required
- charitable purpose
- can be perpetual in nature
Cy Pres Doctrine for Charitable Trusts
allows a court to modify terms of a charitable trust to as near as possible as settlor’s original intention
termination of trusts
- trusts terminate automatically at the expiration of a specified trust term; or
- when its purposes have become accomplished, unlawful, impossible, or contrary to public policy
