Trusts

Front 1

Private express trust

Back 1

A fiduciary relationship with respect to property whereby one person, the trustee, holds legal title for the benefit of another, the beneficiary, and which arises out of a manifestation of intent to create it for a legal purpose.

Front 2

Beneficiary-private express trust

Back 2

Any ascertainable person or group of people can be the beneficiary of a private express trust.

Front 3

Trustee-private express trust

Back 3

A trust must have a trusteee, bu the court will not allow the trust to fail solely because there is no trustee or a trustee refuses to serve.

Front 4

Trust during lifetime

Back 4

two options
1. Transfer in trust, a third person is the trustee

2. Declaration in trust: Settlor himself is the trustee

Front 5

Legal purpose

Back 5

A trust may be established for any legal purpose.

Illegality at creation: If it not possible to excise the illicit condition and sever good from bad. 1. invalidate the trust. 2. allow trustee to keep property.

Illegality after creation: If a trust becomes illegal after creation, a resulting trust is decreed. Trustee has one obligation to transfer the property back to the settlor.

Front 6

creation at charitable trust

Back 6

1. manifestation of trust intent
2. at testator's death by will or 3. during settlor's lifetime by declaration of trust or by transfer in trust
4. presently existing interest in property that can be transferred.
5. for a legal charitable purpose

Front 7

Beneficiary of charitable trust

Back 7

No ascertainable person or group of people who are the beneficiaries

Front 8

Cy Pres

Back 8

If settlor manifests a general chartiable intent, but the mechanism for effectuating that intent is not possible or practicable, the court can modify the mechanism cy pres, as nearly as possible, to effectuate S's general charitable intent.

Front 9

Honorary trust

Back 9

A trust which has no ascertainable beneficiary and confers no substantial benefit upon society.

Trustee may refuse to carry out wishes. The trust fails, resulting trust.

RAP problems

Front 10

Totten trust

Back 10

The name d beneficiary takes whatever is left in the account at death of the owner.

Depositor/trustee owes the named beneficiary no fiduciary duties whatsoever.

Front 11

Private express trust alienation

Back 11

The beneficary can voluntary alientate his interest in property and creditors can involuntarily alinate a B's interest in property.

Front 12

Spendthrift trust

Back 12

The beneficiary cannot transfer his right to future payments of income or principal and creditors cannot attach the beneficiaries right to future payments of income or principal.

exception: preferred creditors can attach

1. gov.
2. those who provide necessitties
3. child for child support
4. spouse for spousal support
5. alimony

exception: right to attach surplus

Front 13

Support trust

Back 13

The trustee is required to use only so much of the income or principal as is necessary for the beneficiary's wealth, support, maintenance, or education

No voluntary alienation

rules for the rest are the same as for spendthrift

Front 14

Discretionary trusts

Back 14

The trustee is given sole and absolute discretion in determining how much to pay the beneficiary if anything and when to pay the beneficiary if ever.

Front 15

Discretionary trusts - voluntary alienation

Back 15

Beneficariary cannot transfer his right to future bayments because the beneficiary may not get anything. But if there was an assignment , the the assignee steps into the shoes of the beneficiary. If the trustee has notice of the assignment and does not pay, the the trustee must pay the assigned or be held personally liable.

Front 16

Discretionary trusts- involuntary alienation

Back 16

On one had, creditors cannot attch the beneficiary's right to future payments because there is nothing to attach. One the other hand, if the trustee has notice of the debt and the judgement against the beneficiary, and the trustee does does decide to pay, he must pay the creditors or be held personally liable.

Front 17

Resulting trust

Back 17

A resulting trust is an implied in fact trust and is based upon the presumed intent of the parties. If a resulting trust is decreed by the court, the resulting trustee will transfer the property to the settlor is alive, and if not, to the settlor's estate, i.e. to the residuary devisees if any, and if non, to the intstate takes (the heirs).

Front 18

How a resulting trust arises

Back 18

1. private express trust ends by its own terms and no provision for what happens next
2. PET fails because there is no beneficiary
3. Charitable trust ends because impossible/impracticable and no Cy Pres
4. PET fails because after creation the trust becomes illegal
5. Excess corpus in PET
6. purchase money resulting trust
7. semi-secret trusts, will makes a fit to a person to hold as trustee but does not name the beneficiary.

Front 19

how a constructive trust arises

Back 19

1. trustee of a PET or charitable trust or charitable trust makes a profit because of self dealing
2. with respect to the law of wills, when there is fraud in the inducement or undue influence
3. secret trusts in the law of wills
4. oral real estate trust

Front 20

trustee implied powers

Back 20

Helpful and appropriate to carry out the trust purpose

1. power to sell trust property
2. the power to incur expenses
3. the power to lease
4. the power to borrow

Front 21

Trustee duties

Back 21

1. duty of loyalty
2. duty to invest
a. state lists
b. prudent person trest
c. univform prudent investor act - looks at whole portfolio
3. duty to earmark
4. duty to segregate
5. duty not to delegate.
6. duty to account

Front 22

Liability of trustee to third persons

Back 22

1. contact: sued in his personal capacity, personal assets are at statke, can get idemnificaiton from trust if acted within power and not personally at fault. Morderm rule: if third party knew was contracting in rep capacity, then sued in rep capacity

2. tort: personal capacity. Mordern: personally liable only if personally liable (nelgient or committed a tort)

Front 23

Modificaiton of trust by court - deviation pwoer

Back 23

elements must be established to use power:
1. unforseen circumstances on the part of settlor
2. necessity to perserve the trust

Front 24

termination of revocablle trusts

Back 24

maj rule" to retian the power to revoke the settlor must reserve the power in the trust instrument
minority rule: power to revoke unless made expressly irrevocable

Front 25

Termination of irrevocable trust:

Back 25

1. settlor and all the beneficiaries agree to terminate
2. all beneficiaries agree to termiante and all the material purposes have been accomplished
3. by operation of law: passive trusts and statute of sues.

Front 26

statute of uses

Back 26

Comes into play when you have PET with a corpus of real proepry and the trust is passive ( the trustee has no active duties and is just holding the bare legal title), beneficiaries get legal title by operation of law, and the trust temriantes