Trusts Shortlist (Flemmings) Flashcards
Memorize Approach/Understand Concepts/Memorize Issues
What are the types of trusts?
1) Express/Private, 2) Testamentary, 3) Elements
What is an Inter Vivos Trust?
A trust where the settlor transfers assets during their lifetime.
What is a Testamentary Trust?
A trust that ‘speaks at death’ and passes under a will.
What are the elements of a trust?
a) Intent, b) Purpose, c) Res, d) Ascertainable Beneficiary, e) Trustee
What is required for the settlor’s intent?
Must be express verbally or through conduct at the time of ownership.
What is the purpose of a trust?
May not be for illegal purposes or violate public policy.
What is required for the res of a trust?
Must be identified (real or personal); if a third party is trustee, it must be delivered.
What happens if a trustee is not identified?
The court will appoint one; if the trustee is the only beneficiary, it results in merger.
What is required for a beneficiary?
Must be ascertainable and not violate the Rule Against Perpetuities (RAP).
What is a resulting trust?
Occurs when there is no beneficiary; the res is in favor of the settlor.
What is a charitable trust?
Does not require an ascertainable beneficiary.
What are class gifts?
Must be a sufficiently definite class.
What is a Pour Over Will?
A will that pours over assets into an inter vivos trust.
What is a Secret Trust?
A trust where the settlor’s intent is not named in the will but is based on an oral promise.
What is a Semi-Secret Trust?
A will mentions a trust but does not identify a beneficiary or terms of the trust.
What is a Spendthrift Trust?
Prohibits a beneficiary’s interest from creditors.
What is a Support Trust?
Pays a necessary sum for the beneficiary’s support.
What is a Discretionary Trust?
Gives the trustee discretion to apply or withhold payments to the beneficiary.
What is a Blended Trust?
Created for a group of persons where everyone’s interest is inseparable.
What is a Protective Trust?
Pays out income regularly but becomes a discretionary trust.
What is the Cy Pres Doctrine?
Used when a charitable purpose is impossible; it allows for the next best use.
What is an Honorary Trust?
A non-charitable trust for a specific purpose with no beneficiary having standing to enforce.
What is an Operation of Law Trust?
A court-imposed trust to prevent unjust enrichment.
What are the authorities in trust supervision?
Express Terms and Implied Terms.
What are the obligations of a trustee?
1) Due Care, 2) Loyalty, 3) Preserve Trust Property, 4) Prohibit Commingling, 5) Personal Performance, 6) Obligation to Legally Defend Trust.
What is Due Care in trust obligations?
The care, skill, and prudence expected of a reasonable prudent person.
What does Loyalty entail for a trustee?
No conflicts of interest, no self-dealing, and strict liability for losses.
What are the remedies for beneficiaries?
a) Set Aside, b) Recover Profit, c) Assent.
What is required to Preserve Trust Property?
Funds must be invested within a reasonable time.
What is the Prudent Investor Rule?
Trustees must act in good faith and with reasonable prudence.
What are the liabilities of a trustee?
No offset, liability from others, exculpatory clauses, liability to third persons, resignation.
What remedies do beneficiaries have?
a) Damages, b) Removal, c) Constructive Trust.
What is Third Party Liability?
Includes a) BFP (Bona Fide Purchaser), b) Innocent Donee.
