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62 Cards in this Set
- Front
- Back
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1.
Private Express Trust @@ |
Fiduciary relations with respect to propm where a trustee holds legal title for bene of another, the bene, and which arisits out of a manifestation of intent to create it for a legal purpose.
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2.
Private Express Trust - Prop |
- Any presently exisiting interest in prop that can be txrd to corpus of a trust
- Fee Simple Absolute - Future interest in real prop - Life ins - Bonds - Stocks - Not illusory interests- future biz income, debt (liabilty not prop), mere expectancy |
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3.
Private Expres Trusts - Bene |
Any ascertainable legal person or group of people
- Unincorp Assoc.- CL cane bene Mod allows - Class gifts invalid if too big to administer, unless poss charitable. - CChild conceived and later born is ascertanibale. |
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4.
Private Expres Trusts - RAP |
- If FSSCS, that coudl vest within 21 years, Stricken if such.
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5.
Trustee |
- Trust must have trustee, but will not fail for lack.
- Court will apoint - Until appointed, settlor or settlor estate holds legal title. |
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6.
Manifestation of Trust Intent |
- There msut be a present manifestation of trust inten made by settlor.
- Cant have itnetn for trust to arise in future. - No express words needed. - Precatory words not suff- (words of wish hope or desire). x- Precatory words plus parol evi may equal a trust. - SOF applies only to real prop |
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7.
Trust To Take Effect at Time of Death |
- Must comply with statute of wills.
- Therefore really a testator. thus creating a testamentary trust. |
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8.
Trust to take Effect During Settlor Life |
- Txr in trust- 3rd person trustee, for real prop must execute deed suff for SOF. for personal prop must be delviery to trusttee. (actual symbolic or constructive)
x- If no delivery, no trust. |
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9.
Decelaration in Trust |
- Where setllor is trustee
- real prop req SOF - Personal Prop, no issue of delviery. therefore trust created upon present manifestation of trust intent. |
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10.
Purpose of Trust |
- Can be created for any legal purpose.
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10.
Purpose of Trust - Illegality at Creation |
- If can excise illegal ilicit condition from good, trust will stand.
- If not possible to excise, court can invalidate trust at inception and settlor retains prop or - Allow trustee to keep prop for himself. (as punishment to the settlor to does not come with clean hands.) |
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12.
Charitable Trusts - Purpose |
- Trsut for education, poverty m sickness, orphans.
- Restatemetn- confers substnatial bene upon a society. - Help poor - Advance education - Help Sick - Promote religion - RAP doesn't apply to charitable trust. |
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13.
Charitable Trust - Creation |
- Created same as private turst
- Manifestion of intent by will or during life, of presently existing interest in prop that can be txrd, for purpose of charity. |
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14.
Charitable Trust - Bene |
- No ascertainable person because society is bene.
- While individual may recieve incidental bene, focus is on society. (prof recieing chair est by trust). - Small group- Maj- private express because only a few get a benefit. - Maj- Charitable becuase whenever poverty eliminated society benefits. |
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15.
Charitable Trust - Cy Pres |
- "As nearly as poss"
- If settlor had gen charitable intent to help but mechanism is not possible or practical court can modify mechanism to give effect to settlors intent. - Cy pres can only be used for Gen chritable intent, not specifc intent. x- Det via intrinsic(trust inst.) and extrinsic evi to det settlor intent. - Otherwise corpus will go back to settlor or his estate. |
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16.
Pour Over Will |
- Settlor creates intervivos trust with provision in will devising all or part of esate to trustee.
- Validation covered in wills. |
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17.
Honorary Trust |
- Trust with no ascertainable bene. and confers no substantial bene upon society.
- Only a goal of setllor, trustte may carry out goal but can.(Only on trustees honor.) ("further fox hunting," "to take care of pet," (trust for many animals may be charitable)., "unusual politcal ideology" - Were trsutee refuses to serve, trust fails and goes back to settlor. |
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18.
Totten Trust/Account |
- Named bene takes whatever in bank acct at death of T.
- Not a true trust. - Because depositor owns acct and owes bene no duties whatsoever and may exhaust acct. - Bene takes amount at death of T. - Will elevate to private express trust if trustee manifest trust intent. |
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19.
Alienation - Voluntary - Involuntary |
- Vol- Where bene txrs his property interest in trust, right to future payements.
- Invol- Where benes creditors attach to money owed directly from trustee. |
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20
Restrain on Alienation - Spendthrift Provision - Define |
- Bene CANNOT txr his right to future payments of income or principal and creditors cannnot attach the benes right to future payments of income or principal.
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20
Restrain on Alienation - Spendthrift Provision - Abilities to Txr |
- Bene may be able to txr if only has given trustee a durection or order to pay bene agent or rep. (when bene would have right to revoke. )
- Invol alientation gen not allowed unless preferrred creditor. |
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20
Restrain on Alienation - Spendthrift Provision - Self- Settlor |
- Invol Alienation-
maj- Trust will be valid , bt spendthrift provision not recognized. min- Will protect settlor bene from creditor attachment. - Vol Alienation Maj- Ignore spendthrift provision Min- Will not allow settlor to txr right of future payments to protect from oneself. |
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21.
Support Trust/Provision |
- Trustee req to use onyl so muhc income or principle as is necc. for bene. health, support, maintenance, or education.
- Bene can never voluntarily alienate or txr right. - Invol alienation same as spendthrift trust. - Self -Settlor rules same as spendthrift. |
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22.
Discretionary Trust/Provision - Define - Vol Alienation |
- Trustee given sole and absolute discretion in determining when and how much to pay bene, if anything.
- Vol Alienation- Gen bene cant vol txr because he doesnt have anything to assign, BUT if there was assignment assignee steps into shoe of bene. If trustee has notice of assignment and decides to pay, must pay assignee otherwise is personally liable. |
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22.
Resulting Trust |
- Implied in fact trust based on presumed intent of parties.
- If decreed, trust will txr prop to settlor or his estate (residuary or heirs) |
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23
Resulting Trust - Creation |
- Private trust end by it own terms and no provision for corpus.
- When private express trust fails because no bene. - Charitable trust ends due to impossiblity or impracticability and Cy Pres not available. - When priate express trsut fails becasue illegality after creation - Excess Corpus in private express trust. |
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24
Constructive Trust |
- Remedy to prevent fraud or unjust enrichment.
- When decreed, wrongdoes will have the on obligation of txring prop to intended bene as det by court. |
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25
Constructive Trust - 4 Situations |
1. Trustee of private expres trust or charitable trust makes a profit becasue of self dealing
2. Where Undue Influnec or Fraud Inducment 3. Secret trusts in the law will 4. Oral Real Estate Trusts (Breach of Promise) |
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26.
Trust Powers |
- all enummerated powers and
- All implied plowers x- Power helpful and appropriate to carry out trust purpose (sell trust prop, incur expenses, leaf, borrow(mod only)) - |
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27.
Trustee Duties Own to Bene |
- Loyalty
- to Invest - Earmark - Segregate - Account - Due Care |
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28.
Duty of Loyalty |
- Trustee must admin trust dor benefit of bene with no other consideration in mind(must be impartial. No self-dealing.
x- Trustee prefered one bene over another, Sell trusts prop to spouse, trustee atty hires himself. - Consequence - If loss, trustt surcharged x- Const trust est if any profit. |
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29
Duty to Invest - 3 Rules |
- State lists-
- Common law Prudent Person Test - Uniform Prudent Investor |
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30
Duty to Invest - Misc |
-Trustee has duty to diversify, so if loss, loss doesnt destroy entire portfolio.
- If Duty to Invest breached, t'ee must make good on loss. If profit, bene affirm trans. If both, t;ee surcharged for loss and bene affirm profit, no netting allowed by t'ee |
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31.
Duty to Earmark |
- T'ee req to label trust prop as such.
- If breached: CL- T'ee personaly liable and no causation req. Mod.- T'ee personally liable only if loss caused by failure to earmark. |
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32.
Duty to Segregate |
- T'ee cant co mingle personal and trust funds.
- T'ee can comingle funds of trust a with funds of trust b. - If breach t'ee can be removed and held personally liable for any loss. |
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33.
Duty not to Delegate |
- T;ee can rely on prof advisor, but cant delgare decision-making authority to these advisor.
- CL- Cant delgeate duty to invest, Mod can. - Also cant delegate to another 'ee x- CL T'ees must act unanimously, mod- maj. rule. |
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34.
Duty to Account |
- T'ee req, on regular basis, to give bene a statement of income and expenses of trust.
- If breached, bene can file an action for accting |
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35.
Duty of due Care |
- T'ee must act as RPP, dealing with his own affairs.
- Almost always discussable upon breach. |
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36
Duty of T'ee - Remeduies |
- Damages
- Const Trust - Tracing and equitable lien on prop - Ratify trans if good for bene - Remove T'ee |
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37.
Liability of T'ee to 3rd Person - Under K |
- T'ee is sued in personal cpacity, can get indemnification from trust assets if t'ee acting withing his rep powers and was not personally at fault.
CL- T'ee can be sued in rep capacity only if k provided that if sued for breach would be in rep capacity. Mod- If other person to k knows t'ee entering the k in rep capacity, then t'ee must be sued as such. |
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38.
Liability of T'ee to 3rd Person - In tort |
CL- T'ee sued in personal cpaacity. Indemnification if t'ee is without personal fault (agent act, or SL)
Mod- T'eecna be sued in personal capacity only if personally at fault. If agent commited act or SL, must be sued in rep capacity. |
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39.
Modification By Settlor |
- S can mod trust if S expressly reserve power to do so.
- Power to revoke also inc power to mod. |
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40
Modification by Court |
- Applies to charitable trust, cy pres.
- Court can also change in re deviation power (Doctrine of changed circs) x- Court changes administrative or mngmt provisions of trust, not change benes. x- Must est Unforeseen circs on part of settlor and neccesity (deviation necc to preserve trust) |
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41.
Term of Revocable Trust |
Maj- To Retain power to revoke, S must expressly reserve power to revoke in trust inst.
Min- S has power to revoke unless trust is expressly made irrevocable. |
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42.
Term of Irrevocable Trust |
- Allowed were S and all bene agree to term
x- Must acct for contingent remaindermen,(guardian ad litem appointed for thos incapacitated by infancy or otherwise.) - All bene agree to term and all material purposes have bene accomplished. ( may set aside assets to accomplish minor purposes) |
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43.
Income and Expenses Allocated to Life Tenant |
Income:
- Cash dividends - Interest income - Net biz income Expenses: - Interest on loan indebtedness - Taxes - Minor Repairs |
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44.
Income and Expenses Allocated to Remainderman |
Income
- Stock dividends. - Stock splits - Net proceeds on sale of trust asset Expenses - Principal of loan indebtedness - Major repairs or improvements |
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45.
Adjustment Power of T'ee |
- T'ee can disregard allocation rules for life tenat and remainderman if diff allocation is necc to administer trust fairly.
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10.1
Purpose of Trust - Illegality After Creation |
- After Creation- Resulting trust decreed. (implied in fact trust based on intent of the parties.
- Resulting trust- trustee has only one duty, must txr prop back to settlor or settlor's estate. |
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20.1
Restrain on Alienation - Spendthrift Provision- - Abilities to Txr - Invol alientation |
gen not allowed unless preferrred creditor
x- govt creditor, x- those who provide necc of life, x- child or child support, x- spouse or spousal support, ex-spouse for alimony x- Tort judgment creditor. x- Any creditor for "surplus funds"(as needed to support lifestyle) considering bene "station in life"(subjective test) |
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22.1
Discretionary Trust/Provision - Define - Invol Alienation |
- Gen cant because there is nothing to attach. BUT if trustee has notice of debt and creditor judgment and trustee decides to pay, must ay creditor or be personally liable.
- Self-settlor- same as spendthrift. |
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23.1
Resulting Trust - Creation 1. "Purchase money resulting" 2. Semi- Secret Trust |
1. A pays consideration to B, to have title to prop txrd to C)
x- If NO close relation between A and C rebuttable presumption tath C holding as purchase money trsut, if closely related, rebuttable preseumption of gift 2. Semi- Secret Trust- When gift to a person to hold as trustee but no bene named. x- If secret trust parol evi allowed to est id of bene. (const trust) |
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25.1
Const Trust - Self Dealing |
1. Trustee of private expres trust or charitable trust makes a profit becasue of self dealing.(will beomce const trustee of ill gotten profits, and have to turn over to benes.
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25.2
Const Trust - Fraud in inducement |
2. Where Undue Influnec or Fraud Inducment, can deny probate of will and make heir constructive trustee to convey to appropraite benes.
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25.3
Const Trust - Secret Trusts |
3. Secret trusts in the law will- Will on face makes gift outright to A, but is based on oral promsie of A to prop for bene of B. (parol evi allwoed to show B as bene, and A will become const trustee to txr to B.)(N/A to semi-secret trust)
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25.4
Const Trust - Oral Real Prop Trusts |
4. Oral Real Estate Trusts (Breach of Promise) A agrees to hold trust fromS for bene of B. SOF not a defense where, and const trust where x- There is fiduciary relationship between S and A,
x- Fraud in inducment on A's part, x- Detrimental reliance by bene.(poss plus improvements, not just possession) |
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29.1
Duty to Invest - State List |
- List that trustee much follow in absence of direction
- Gen inc fed govt bonds, fed ins cert of deposit, first deeds of trust in real prop, sometimes stock of public traded corp. Never new biz or 2nd deed of trust. - No speculating allowed. |
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29.2
Duty to Invest - CL Prudent Person Test |
- T'ee must act as reasonably prudent person would in investing his own prop.
- Transactions individually scrutinized. - Must excercise greater skill if holds out as having such. - Good invest include fed govt bond, first deed of trust in real prop, fed ins. cert of deposit, blue chip stocks, mutual funds(depends on jxd). Never new biz or 2nd deed or trust in real prop. - No Speculating Allowed |
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29.3
Duty to Invest - Uniform Prudent Investor |
- Uniform Prudent Investor- Must invest as "prudent investor." Performance measured in context of entire trust portfolio.
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42.1
Term of Irrevocable Trust - Operation of Law |
- Passive trusts and Statute of Uses.
x- SOU- Where private express trust with corpus of real prop and trust is passive (t'ee has no active duties). Bene will get legal title. |
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17.1
Honorary Trust - RAP |
- Gen always violate RAP.
- soem courts strike as inception and have resulting trust, - some courts allow trust ot endure 21 years before turning into a resulting trust. |
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20.1
Restrain on Alienation - Spendthrift Provision - Preferred Creditors |
x- govt creditor,
x- those who provide necc of life, x- child or child support, x- spouse or spousal support, ex-spouse for alimony x- Tort judgment creditor. x- Any creditor for "surplus funds"(as needed to support lifestyle) considering bene "station in life"(subjective test |
