Trusts & Estates Flashcards
What are the elements of a trust?
(1) Settlor (2) Delievers (3) legal title of trust property (4) to a trustee (5) for the beneifit of beneficiaries (5) with intent to create a trust (6) for a valid purpose.
Intent - language to impose a duty not permissive language.
Valid purpose - not illegal, contrary to public policy, or impossible.
Trust property - must be certain and identifable. ( a property interest rather than an expectancy interest).
Grandfather tells uncle that he is leaving whiteacre to uncle in his will. Uncle then records a declaration of trust “ I declare myself trustee of my interest in whiteacre, income to nephew for life, remainder to issue? Is this a valid trust?
No, Uncle only had an expectation interest in the property not a valid property right. This is a gratuitious promise. However, even when grandpa dies, there is no trust unless uncle reaffirms intent by word or conduct. However, if newphew paid consideration, under K principles it would be valid.
Will a trust fail for lack of trustee?
No, the court will appoint unless the court finds that the settlor intended for the trust powers to be personal to the trustee. (rarely invoked).
F writes trust instrument naming X as trustee and providing that during F’s life, the income, if any, from trust property is to be distributed to F, and at F’s death, the income is to go to wife for life, remiander to F’s children. F does not transfer any assets into trust but instead names the trust as beneficiary under several insurance policies? valid trust?
Yes, an otherwise empty trust is valid if it named the direct beneficiary of a life insurance policy or person plan death beneift.
T’s will left 100,000 to my friend mosely, in trust for my friends”. Valid?
T’s will creates a testamentary trust for the benefit of her descendants, with the shares of each left to the discretion of the trustee. Valid?
No, because friends is not an ascertaibale class of beneficiaries. However, yo ucan make a power of appointment argument.
RULE - a private trust must have ascertainable beneficiaries.
Yes, if class is defined, shares may be left to discretion of trustee.
Vera rich learned that her nephew Tom was to be married, so she transferred 100,000 to reliable trust bank to be held in trust for toms future children. Tom was jilted by his fiancee, and Vera dies. No living beneficiaries, is that okay?
Father devises 5,000 in trust to daughter as trustee to spend principal and income for care of 3 dogs? what is this and is it valid?
Yes, beneficiaries dont need to be living. If Tom never has children, a resulting trust occurs, which is a reversionary interest in the settelor.
This is an honorary trust, and under the UTC, is valid for the life of the animals. Leftover money goes back to Father’s estates via resulting trust.
T placed her business realty in revocable trust, naming herself and her son charles as co- trustees and designating herself as the sole benefiicary of the income from the trust for her lifetime. The trust futher provides that on T’s death the trust property was to be held in fruther trust for charles daughter betty. T later exectured a will devising her residuary estate to the trust of which i am co- trustee with my son.
Are these Valid?
Yes, a revocable trust is valid even though the settlor retains the right to revoke, alter or amend, keeps an interest in the trust as benefiicary, retains a power of apoointment over the trust corpus or retains everyday control. Morever, the fact that she is sole beneficary is fine as long as (i) there are two trustees or (ii) if there are two beneficiaries. Additionally, the gift by will is valid.
The gift by will is valid because the Only requirements are that (1) the trust is identified in the will(2) and its terms are set out in a written instrument. However, if T revokes the trust, the gift lapses.
What is a totten trust?
Placing money in savings account for the benefit of another. Revoable during life by any manifestations of intent to revoke including withdrawls. The account is reachable by depositors creditors during lifetime. In a majority of states, it can be revoked by the depositors’ will. If the beficiary prediseases the depositor, it becomes a regular bank account.
S promised his widowed sister Marie that he would provide a home for her and her daughter angie if Marie would keep house and serve as hostess in his home. Thereafter, in the presence of witnesses, S handed his brother Frank a deed naming Frank as Grantee (no mention of trust), saying, hold this property in trust untill Marie’s death, then convey to angie. THis is in consideration of serviced rendered by Marie as agreed. Is this a valid express trust? If no, is there a way Marie ends up with the property?
No, an oral inter vivos trust of personality is enforceable provided its terms can be esablished by clear and convining evidence. However, trusts contaitning land, must be evidenced by a writing.
THis is not valid. However, a constructive trust may be imposed for maries benefit. A constructive Trust is a remedy imposed by a court to prevent unjury enrichment as the restul of wrongul conduct. Must show either (1) Fraud in the inducement (2) confidential relationship.
If no constructive trust, Marie can sue in quantum meruit for value of her services.
T orally agreed with her valet S that she would devise her home to him if he would forego any weekley salary and remin in T’s employ as long as she lived. S fufiled, but T never inserted a provision in her will for his benefit. Can S sue?
Majority rule - WIth respect to personal property, oral K’s to devise in a will are allowed as long as proponent can show by clear and convincing evidence the terms. However, this is for land, so violates the SOF.
Under the UPC - any K to make a will can only be shown if (i) terms are in will itself (ii) terms are in a written K or (iii) will refers to the K and extrinsic evidence proves the terms.
Thus, sue must sue in quntum meriet for services.
T dies leaving a will that devises Greenacre to Jones’ no mention of trust. T’s secretary now alleges that T orally told Jones that Jones was to hold the land as trustee for secretarys benefit, and the Jones agreed to serve as Trustee. What is this and can secretary enforce?
This is a secret trust. Secretary must show by clear, satisfactory and convining evidence that the agreement occured. If so, she gets constructive trust to prevent Jones unjust enrichment.
T’s will devises land to “my good friend sam smith, as trustee, for purposes I have already communicated to him.
Semi - Secret trust - this is not valid because there is no element of wrongdoing and thus violates the SOW that beneficiaries must be identifiable from langauge in the will. Smith cant even voluntarily comply.
What are the rules of a charitable trust?
- Not subject to RAP
- Must be for charitable purpose - religion, medicine, science, research, education
- Must be in favor of a reasonably large number of unidentifable beneficiaries
- When specific chartiable purpose can no longer be accomplished, may be reformed under Cy pres.
Cy pres - Look at what was the settlor’s primary intent? Under the UTC, the settlor’s general chartiable intent is conclusively presumed, so unless the trust terms expressly provide otherwise, Cy pres is mandatory.
What is the changed circumstances doctrine?(Trusts)
Court will permit a deviation from trust purpose if the specific intent of the trust is frustrated due to the impractiablity of specific direction. See Pulitzer case( hold stock as long trust was in excistence. Stock was shit, so court said specific intent was to provide for family, so they allowed sale of stock).
What is a spendthirft trust?
One in which the benficiary is unable to voluntarily or involuntarily transfer his interest in land. Protects against creditors. Exceptions
(1) claims for necessities
(2) Alimony and chils support obligations
(3) Claims by US or state.
