Week 13 Flashcards
What is Estate of Fournier about?
Facts?
Issue?
Holding?
Rationale?
Why no statute of frauds problem?
Trust creation
The settlor, the late brother of the prospective beneficiary, gave money to a couple and told them that the money was to be held by them and given to the prospective beneficiary upon his death.
After he died, the couple gave the money to her.
Another sister of the settlor claimed that the settlor meant that the prospective beneficiary was to take the money as the estate’s personal representative.
The probate court agreed and entered judgment denying the prospective beneficiary’s declaratory judgment action.
Proper oral trust?
Yes
Intent, property, and a beneficiary
It’s cash
What was Oliffe v. Wells about?
Facts?
Issue?
Holding?
Rationale?
Is this the law in CA?
Trust creation
Donovan created a will leaving the residuary estate to the defendant and wrote, “to distribute the same in such manner as in his discretion shall appear best calculated to carry out wishes which I have expressed to him or may express to him. The defendant was also named as executor. The defendant stated in his answer to the lawsuit that Donovan had orally expressed to him before and after the execution of the will that her estate be used for charitable purposes. He also stated that he desired and intended to distribute the residue of the estate for those purposes.
Whether extrinsic evidence may be admitted to show that a testator intended to create a trust and the document does not show any evidence of a trust but only an outright gift?
No, it cannot
Extrinsic evidence may not be admitted to show that the testator intended to create a trust because it would defeat the rights of the heirs at law. The document must have been expressed in the form that the law makes essential to every testamentary disposition in order to defeat the rights of the heirs at law. The defendant holds the property in a resulting trust for the testator’s heirs at law.
No; but it is the majority view in the U.S. (Semi-secret trusts are not permitted)
What is a semi-secret trust?
?
Can property be conveyed orally?
According to what?
No
Statute of Frauds
What happens when the legal part is in writing and the equity part is not in writing?
Where O conveys land to X upon an oral trust to pay the income to A for life and upon A’s death to convey the land to B, the Statute of Frauds in virtually every state prevents the enforcement of the express trust.
Is X permitted to keep the land?
Legally, but not equitably
Equity part fails (b/c it needs to be in writing), but X would be unjustly enriched if he got the equity as well as the legal part, so court will impose a constructive trust on X
So, Statute of Frauds prevents oral trusts but constructive trust can be made to fix it
O orally declares to A: “I give you five percent of the profits of a musical play based upon Shaw’s Pygmalion, if I produce it and if there are any profits.”
Has there been an effective transfer?
Why or why not? (2)
No;
- needs to say I’m putting the rights to the musical in a trust (for the benefit of another), and
- doesn’t have any current res; needs to be funded with something (like a penny)
O orally declares himself trustee for one year of all stocks he owns, with any profits from stock trading to go to A.
Effective transfer?
Why or why not?
Yes
Funded with the stocks
In a notarized writing, O declares himself trustee for the benefit of A of any profits O makes from stock trading during the next calendar year.
Effective transfer?
Why or why not?
No
Not funded with anything
O orally declares himself trustee for the benefit of A of five
percent of the profits, if there are any, of a musical play that O is
writing, based upon Shaw’s Pygmalion.
Effective transfer?
Why or why not?
No
Not funded; restatement doesn’t allow this promise of future earning
What are the two types of trusts?
Mandatory and Discretionary
What is a mandatory trust?
What is a discretionary trust?
Everything is set for what the trustee is supposed to do
Can let the trustee determine as to how much to give out and to when (but not to whom)
What is Marsman v. Nasca about?
Facts?
Issue?
Holding?
Rationale?
What is the law about exculpatory clauses now?
Rights to Distribution (Trusts)
Marsman created a testamentary trust for the maintenance, comfort, and support of the plaintiff. The principal of the trust was $65,000. For approximately ten years, the trustee never inquired into the plaintiff’s financial state and only paid him $300 during the nearly 10 year time span. The plaintiff experienced financial difficulty due to his failing business during the nearly 10 year period.
Whether a trustee that holds discretionary power to pay principal for the “comfortable support and maintenance” of a beneficiary, has a duty to inquire into the financial resources of the beneficiary to determine his needs?
Yes.
Trustees have the duty of inquiry, especially when the trust is very discretionary
Burden on trustee to show that they informed beneficiaries of exculpatory clause
When can a discretionary trust be ordered to pay out to a creditor?
when you’re an involuntary creditor, like a child who is owed child support
What is a Hamilton order?
What kind(s) of creditors is this relevant to?
Is it an abuse of discretion for a trustee to avoid payment to someone with a Hamilton order?
Can a trustee still transfer money to the beneficiary, while avoiding payment to a creditor and there is a Hamilton order?
when you choose to make payments, pay it to this person rather than the beneficiary
this person can be either a voluntary or involuntary creditor
No; with regard to a voluntary creditor
No; not until the debt is paid off
T devises a fund in trust to X to pay or to apply for the benefit of A so much of the income as X determines in X’s uncontrolled discretion, and then on A’s death to pay to remainder to B. C, a creditor of A, obtains a Hamilton v. Drogo style order directing X to pay C before paying A.
In CA, can X make use of the “apply for the benefit of” language of the trust to circumvent the order by paying directly for goods and services rendered to A?
No; violates the Hamilton order
