Trusts - Requirements of a Valid Trust Flashcards
What are the general requirements for a valid Trust?
To have a valid trust, a SETTLOR…DELIVER… TRUST PROPERTY… TO TRUSTEE…fro the benefit of BENEFICIARIES with INTENT TO CREATE A TRUST.
**Trust must be for a lawful purpose. No consideration required*
What are the requirements of the Settlor?
Must have legal capacity (Age 18 or over, must have capacity to convey title to the trustee, a higher test for capacity than for wills)
What are the requirement for Delivery?
Does not apply to a self-declaration trust or testamentary trust.
For an inter vivos trust that names 3P as trustee, the mere intent to create a trust, or a gratutious promise to crease, is not sufficient. Must deliver the subject matter of the trust, with the intent to convey legal title to the trustee.
What are the requirement for Trust Property?
To have at rust, legal title to a specific interest in property must be conveyed to the trustee.
Subject matter must be certain and identifiable.
Expectancy is not an interest in property.
If trust is supported by consideration, under contract law, trust automatically attaches when property is received.
What are the requirements for a Trustee?
Individual - Must have legal capacity to deal with property
Corporation - Only banks and trust companies given trust powers in their charters can serve as trustees.
Trustee must give notice to current beneficiaries within 30 days after accepting the trust or after a revocable trust becomes irrevocable and must keep beneficiaries reasonably informed and give annual accounting.
NO TRUST FAILS FOR LACK OF A TRUSTEE. Can be appointed.
Can beneficiaries remove a trustee?
NO unless hostility prevents trustee from carrying out his duty.
What about if trustee has no power or active duties to perform?
No trust arise when trustee has no power unless its a nominee trust.
Nominee trust is an entity created to hold legal title to real estate and the trustee has only nominal duties and no power to act without beneficiary direction.
To have a spendthift trust, you have to have a trustee.
What are the requirements for Beneficiaries?
If noncharitable trust, must be DEFINITE AND ASCERTAINABLE and interest must vest if at all within RAP.
Can’t be vague.
If Charitable - RAP doesn’t apply.
Remember MA – Allows for alternative 90 years vesting period.
What is the standard for intent?
Is the language PRECATORY (a non-binding suggestino) or does it impose an enforceable obligation?
Precatory words: Request, Hope, “I would like”
What is a lawful purpose?
Trust to further commission of a crime, or calling for destruction of property is INVALID as against public policy.
Unlawful condition: encourage divorce or TOTAL restraints on marriage are void (partial restraints OK)
Are oral trusts of real property valid?
NO - all trusts of real estate must be evidenced by a writing that satisfied the Statute of Frauds.
