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50 Cards in this Set
- Front
- Back
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Define "Express Trust"
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Allow property owner to make transfers of property have those assets managed on behalf of someone else
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What are the two types of express trusts?
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Lifetime trusts
Testamentary trusts |
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What are the elements of a valid trust?
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1. Settlor (creator) who makes a
2. Delivery of legal title to 3. Property to a 4. Trustee who holds legal title for the benefit of a 5. Beneficiary with 6. Intent to create a trust for 7. A lawful purpose 8. In a validly executed document |
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Who may be a settlor?
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Anyone 18 or older with the capacity to enter into contracts
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What is necessary for valid delivery?
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Title assets must be formally transferred to the trustee
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Define "property" for the purposes of trusts
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Almost anything that the settlor owns (cant be mere expectation of ownership in the future)
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Who can be a trustee for an lifetime trust?
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Almost anyone since there is no court involvement.
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Who CAN'T be a trustee for a testamentary trust?
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1. Minors
2. Judicially declared incompetents 3. Convicted Felons 4. Those incapable because of drunkeness, dishonesty, want of understanding, or improvidence. |
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Can a non-resident alien be a fiduciary?
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Yes if ...
1. They are related to the decedent AND 2. A NY resident is a co-fiduciary |
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What are two requirements for a valid beneficiary of a trust?
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Must be ascertainable and definite (groups of family members OK)
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What are the elements of valid intent to create a trust?
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1. Settlor must manifest intend to create a trust through definite (non-precatory) language
2. trustee must be given duties to perform |
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What conditions must a trust NOT have in order to have a lawful purpose?
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1. Cannot call for commission of a crime
2. Cannot call for destruction of property 3. Cannot have conditions against public policy |
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What are the elements of valid execution of a will?
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1. Must be in writing and signed by settlor and trustee
2. acknowledged by notary 3. Signed by two witnesses |
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Name 4 characteristics of a revocable lifetime trust.
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1. Settlor can be a trustee
2. Settlor can be an income beneficiary for life 3. Settlor's estate can be a beneficiary as long as there is at least one other beneficiary 4. Settlor can retain the right to terminate or amend the trust |
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What is a pour-over gift?
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A transfer of a testamentary gift into a trust.
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What must be true for a pour-over gift to be valid?
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Trust must be in existence at the time of the gift's execution or created contemporaneously.
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What is a Totten Trust?
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Bank account in the depositor's name "as trustee for" a named beneficiary.
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In the context of Totten Trusts, what is the beneficiaries interest in the account during the depositor's lifetime?
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Nothing but upon the depositor's death, the beneficiary takes whatever is in the account.
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Are Totten trusts revocable
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Yes.
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What are the 3 ways a totten trust can be revoked?
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1. Depositor withdraws all the money
2. Express Revocation 3. Death of beneficiary |
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What are the elements of valid express revocation of a Totten Trust?
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1. During lifetime
2. by depositor 3. Writing naming the beneficiary and the financial institution 4. having the writing notarized and delivered to the bank |
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How can a totten trust be modified?
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1. During lifetime
2. by depositor 3. Writing naming the beneficiary and the financial institution 4. having the writing nota |
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What particular words are needed to create a Totten Trust?
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None in particular.
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Can the depositor's creditors reach the totten trust before or after the depositor's death?
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Yes.
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What is the main characteristic of a joint (non-totten) bank account?
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1. Each joint holder has title to half the money regardless of who deposited it.
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What does the Uniform Transfer to Minors Act provide?
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That gifts made under it must be made to a custodian and not to a trustee and must specify that its made under the UTMA.
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How can survivorship rights in joint bank account be set aside?
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Must be shown by clear and convincing evidence that survivorship was not intended when the account was created
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What are the duties of a UTMA custodian?
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1. Hold manage and invest under a prudent person standard
2. Pay over to the minor r for the minor's needs what part of the property the custodian deems advisable. 3. Pay over what's left of the property when the minor turns 21 |
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What are 4 elements of a valid charitable trust?
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1. Must have indefinite beneficiaries
2. Must be for charitable purpose 3. Must be of perpetual duration 4. Cy Pres can be used to modify the trust |
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What is Cy pres?
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If the stated purpose of a charitable trust can no longer be met, then a judge an use this doctrine to make the trust s near as possible to its intent.
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What is the role of the state AG with respect to charitable trusts?
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AG has the duty to represent beneficiaries and is an indispensable party.
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What is an honorary trust?
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Trust where trustee is on their honor to perform. Not an actual trust.
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What is the definition and purpose of a constructive trust?
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Equitable remedy used to disgorge unjust enrichment that results from wrongful conduct -- trustee's only responsibility is to transfer property to beneficiary once.
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Under what circumstances might a Purchase Money Resulting trust be recognized?
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Purchaser buys property and puts it in the name of a person (non-relative) nd the purchaser later claims that no gift was intended.
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What is the NY rule for Purchase Money Resulting Trusts?
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PMRT is not recognized unless ...
The purchaser shows through clear and convincing evidence that the grantee expressly or impliedly promised to re-convey the land to the purchaser |
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What is the function of the statutory spendthrift rule?
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Protects beneficiaries interest from creditors by prohibiting voluntary or involuntary transfer of the beneficiaries interest with the effect of keeping creditors at bey until disbursement
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Under NY law spendthrift provisions are automatically added to trusts, True/False?
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True. For income but not principle beneficiaries.
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What is the general rule for modification or termination of a trust by a trustee or beneficiary?
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Only allowed where purpose of the trust would be defeated or substantially impaired without modification
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What test must a court apply when modifying a trust at the behest of a trustee or beneficiary?
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1. Find out the primary intent of the settlor regarding the purpose of the trust
2. Look at specific direction in the trust instrument to determine whether , b/c of change in circumstances, directions would frustrate the purpose of the trust |
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What is the general rule for termination of a trust by the settlor?
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Trusts are generally irrevocable unless power to do so is specifically reserved in the trust instrument.
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What is the exception to the general rule that trusts are irrevocable by the settlor?
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If all beneficiaries in being consent.
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What are three things a trustee cannot do?
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1. Engage in self dealing
2. Borrow money on behalf of the trust 3. Continue a business placed in trust without court approval |
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To comport with the prohibition on self dealing, a trustee must not ________.
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1. Buy or sell trust assets to himself
2. Borrow trust funds 3. Lend money to the trust 4. Profit from serving as trustee 5. Buy own stick as investment (bank) |
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Under its affirmative duties, a trustee must ______.
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1. Segregate its finances from those of the trust
2. Earmark trust assets |
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Exculpatory clauses shielding trustees from liability are allowed in lifetime trusts but NOT in testamentary trusts, True/False
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True
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What are a beneficiaries options for remedies when a trustee breaches their fiduciary duty?
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1. Sue to remove the trustee
2. Waive the breach 3. Sue for damages |
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Under what circumstances will a trustee be personally liable for a trust's breach of contract?
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Where the trustee signed the contract personally and merely mentioned the trust.
Can still be reimbursed if trustee's actions were consistent with fiduciary duty. |
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Under what circumstances will a trustee NOT be personally liable for a trust's breach of contract?
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Where the trustee signed the contract on behalf of the trust.
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Under what circumstances will a trustee be liable for his torts in connection with the trust.
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Always. Trustee will be liable personally for his torts and those of his employees.
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What are the trustee's investment powers?
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Trustee must manage the trust property on behalf of beneficiary and this means the investment of the corpus trust
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