W&T: Trusts: Basics Flashcards
definition
a trust is a fiduciary relationship concerning specific property where one part holds legal title to property for the benefit of another
creation
trusts are created when someone transfers legal title to property to a trustee, who administers the trust in accordance with the instructions
Express trusts
those which arise directly from the intention of the settlor
Capacity of trustee
a trustee cannot be a minor, incompetent, a felon, or one guilty of substance abuse or dishonesty.
Duties of trustee
the duties of the trustee are expressed in the terms of the trust, but also include implied duties of:
(1) preserve property
(2) making trust property protective
(3) prudently investing
(4) paying income to beneficiaries
(5) keeping accurate accounts
(6) segregating accounts
(7) exercising fairness with respect to all beneficiaries
List the general requirements of a trust
(1) intent
(2) trust property
(3) beneficiaries
(4) valid purpose
Intent is
expressed through words or conduct; a present intention to create a trust relationship (not just precatory language)
Acceptable beneficiaries . . .
usually, a trust must have a definite and ascertainable beneficiary (not the case with charities).
creation of testamentary trusts
one created by the testator’s will. must be part of a document that complies with the requirements for wills.
pour over provisions
wills frequently contain provisions that direct the transfer of the decedents’ property into a trust. Under NY law, these are valid as long as
(1) the trusts was executed prior to or contemporaneously with will
(2) trust is identified by will
(3) will assets that pour over will pass according to the trust as it exists at testator’s death.
Finally, the provision will fail if the trust is revoked prior to T’s death
Totten trusts
when a preso opens a bank account in his own name as trustee for another. Can be revoked by withdrawal of the money or by writing.
