Trusts Flashcards
What is a trust?
Relationship in which trustor gives trustee right to hold legal title to property under fiduciary duty to manage, invest, safeguard trust assets for benefit of beneficiary.
What are the methods for creating a trust?
- Declaration by property owner
- Transfer during lifetime of property transfer to another as trustee
- Transfer by will (pour-over)
- Appointment power given to someone as trustee
- Enforceable agreement to create trust
Basic requirements of trust
- Intent
- Property (Res)
- Purpose (not illegal or against public policy)
- Beneficiary
Does a trustee need to be named?
No, court will appoint.
BUT, trust by deed may fail due to lack of delivery.
Trusts - Real Property requirements
- Must be in writing
2. Signed by trustee or settlor
Trusts - Personal property reqs
Oral trust of personal property may be proven by clear and convincing evidence.
What is the max term for a non-charitable trustee?
21 years after death.
What are the types of trusts?
- Express
- Testamentary
- Pour Over
- Secret
- Semi-secret
- Spendthrift
- Support
- Discretionary
- Charitable
- Honorary
- Totten
- Resulting
- Purchase money resulting
- Constructive
What is express trust?
Property transferred from one owner to another to be held for benefit of beneficiary.
What are testamentary trusts?
- Created by will
- Will sets terms
- Trust created upon death
What is a pour-over trust?
Structured to receive and dispose of assets at settlor’s death.
Often established by will.
What is a secret trust?
If settlor leaves gift to beneficiary without indicating intent to create a trust, but in reliance on promise that beneficiary will hold property in trust.
What is a semi-secret trust?
When settlor leaves gift to person in trust in will, but doesn’t name beneficiary.
Majority: trust is invalid, applies RESULTING trust
Minority: allows extrinsic evidence to prove beneficiary.
What is a spendthrift trust?
One where beneficiary cannot alienate his interest and is protected from creditors except for necessaries.
What is a support trust?
Directs trustee to make limited distributions to pay beneficiaries support (health, education, etc). Not reachable by creditors if it would interfere with payments.