trusts: intro/creation of trusts

Question 1

what kind of transaction is a trust?

Answer 1

a three party transaction

Question 2

what is the mame of the person who makes the trust

Answer 2

the settlor

Question 3

what is the name of the person who benefits from the trust

Answer 3

beneficiary

Question 4

what is the general idea behind the trust

Answer 4

for some reason, the settlor doesnt want the beneficfary to get the gift outright; instead they give it to someone else to have custody over gift but for it to still benefit the beneficiary

Question 5

do trusts have to go through the probate system

Answer 5

no

Question 6

what role does the trustee play

Answer 6

they are a fiduciary; if they mishandle the power they can be sued by the beneficiaries

Question 7

can there be more or less than three people in this transaction

Answer 7

yes

More than one person can be a settlor
You can have more than one trustee
You can name multiple beneficiaries

Question 8

can the same person serve in more than one role?

Answer 8

yes

You can be settlor and trustee
You can be a trustee and beneficiary
You can be a settlor and beneficiary
You can be the settlor, beneficiary and trustee

Question 9

we know that you can be the settlor, beneficiary and trustee – but what must occur for this to happen/be allowed

Answer 9

Must be other beneficiaries there
ie you cant be the only beneficary

Question 10

what is an intervivos trust; how is it created

Answer 10

a non probate will; you made the gift during your life

can be revocable or irrevocable

created via deed of trust or declaration of trust

Question 11

what is a testamentary trust? how is it usually created

Answer 11

created in a will so it DOES involve probate; its also irrevocable

Question 12

what is needed for trust creation? what additional element may be needed if the trust is testamentary or is to hold land?

Answer 12

1. intent by the settlor to create a trust
2. ASCERTAINABLE BENEFICIARIES who can enforce the trust and
   3/ specfic property to be held

if the trust is testamentary or is to hold land, a writing may be required to satisfy the wills act or the SOF

Question 13

How do people usually communicate the intent that is needed via the first element of trust creation? (intent by the settlor to create a trust)

Answer 13

“To my trustee, in trust, to be held and administered”

Those words are not required to create a trust but it makes it easier

Question 14

lux v lux

the lang was the following:

“Any real estate . . . shall be maintained for the benefit of said grandchildren and shall not be sold until the youngest of said grandchildren has reached twenty-one years of age.”

issue of whether she used the correct words to manifest an intent to create a trust

Answer 14

No magic words to create a trust; just need to see intent to not outright give the gift to beneficiary but to have someone hold onto it

here the words “maintained for the benefit of” points to the fact that a trustee would be holding on to it and mainaitning it

Question 15

in lux, was it an issue that she did not name a specific trustee?

Answer 15

You don’t have to name a trustee in order to create a trust

If you fail to do so, the court will appoint the trustee; they will most likely name the executor of the will since the lang was in the will

Question 16

jimenez v lee

Elizabeth Jimenez sued her father, Jason Lee, to compel him to account for funds intended for her education, which she claimed were held in trust.

Jason was using the gift as if he was the donee and not the trustee

But what about the gifts show that it wasn’t a gift made to benefit jason

Answer 16

Jason is a lawyer! He knows that the law is and should have read it to see that it was meant for him to be trustee

Also, grandma tells him to use the money for the kids edu benefit

Question 17

in jimenez, the granny tells him to use the money for the kids educational benefit – is this indicative of a trust creation?

Answer 17

yes! Ie sets limitations! You are describing a trust whether you know it or not

Question 18

what is a declaration of trust

Answer 18

when a settlor simply declares himself to be trustee of certain property

Question 19

what is needed to have a valid trust under a declaration of trust (ie where a settlor simply declares himself to be trustee of certain property)

Answer 19

the trustee must owe fiduciary duties to someone other than herself

Question 20

does a declaration of trust of personal property require particular formalities

Answer 20

no; The settlor only need manifest an intention to hold certain of the settlor’s property in trust for an ascertainable benefit
Also need to state with certainty the items in the trust

Question 21

hebrew uni v nye

Ethel S. Yahuda, after her husband’s death, announced her intention to donate his library to the Hebrew University in Jerusalem. The University sued the executors of her estate for ownership of the library after she died without delivering the materials.

Where a person declares her intention to make a donation but does not expressly state her intention to hold the property in trust for the intended donee, does the donor hold the property in trust for the intended donee?

Answer 21

a person who says they are going to make a gift is not holding that gift in trust unless they also declare themselves the trustee; ie the intention to create the trust!

A person who declares herself a donor does not make herself a trustee unless she expressly assumes the obligations of a trustee.

Question 22

unthank

C.P. Craft wrote a letter to Iva Rippstein (plaintiff) three days before he died. His letter stated that he had decided to send Rippstein $200 monthly for five years “provided I live that long.” In the margin next to this statement, Craft wrote that he had stricken “provided I live that long” intending to “hereby and herewith bind my estate to make the $200.00 monthly payments.”

Is a donor’s promise to make payments and bind his estate to continue making the payments after his death a declaration of trust that binds the estate?

Answer 22

a donor’s promise to make payments and bind his estate does not create a trust unless the donor expressly identifies property as being held in trust for that purpose.

Question 23

after unthank, what three things must be shown before a court will declare a trust to exist and enforce it

Answer 23

1. Testator must state his or her intentions to create a trust and impose an obligation on a trustee (ie gen donative intent)
2. The property to which the trust relates must be certain
3. The trust beneficiary must be certain