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43 Cards in this Set

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Express trusts
Created by settlor on purposes, must be in writing
Implied trusts
1. Resulting trust--when an express trust fails
2. Constructive trust--to avoid unjust enrichment
What capacity is required to create a trust
1. Testamentary trust--capacity to make a will
2. Inter vivos--greater capacity to hold and transfer property
How can an inter vivos trust be created
1. Declaration of trust--settlor declares herfelf trustee
2. Deed of trust--settlro transfers property to 3rd party to serve as trustee
Requirements for a valid trust
1. Intent + a valid purpose
2. Trust property (res)
3. Indentifiable or ascertainable beneficiaries
Can precatory language create a trust
Only if there are extensive instructions showing the intent to create a trust
What is the only acceptable forfeiture provision
That a surviving spouse only get support until remarried
What can be trust property
Anything you have an identifiable property interest in (can be intangible)
--Can't be an expectancy
--value of the interest is irrelevant
When can a promise to create a trust turn into a trust
1. For gratuitous promises (no consideration), only if after all elements are met the settlor manifests an intent to create it
2. If supported by consideration, arises automatically when settlor gets the trust property
Will a trust fail for lack of a trustee
No unless the powers in the trust are so personal that only the person named in the trust may perform them
Doctrine of Merger
When the sole trustee is also the sole beneficiary title to the property is merged
When must beneficiaries be ascertainable
Only when payment is due to them, not at S's death
What if a trust fails for want of ascertainable beneficiaries
Court imposes a resulting trust that causes title to revert back to settlor or settlor's sii
What is an honorary trust
In favor of an animal
--Can't do this in GA but will be ok if nobody challenges
--no human bene, no life in being for RAP
--If trust fails, resulting trust imposed
When is a trust revocable
Only if it expressly reserves the power to amend or revoke
Uniform Testamentary Additions to Trusts Acts
Can add property to a trust through a will if the trust terms are identified in a writing that is executed before or concurrent with the will
(Pourover will)
What is a Totten trust
Bank account that someone deposits money in in trust for beneficiary
-revocable (can withdraw all money)
--Creditors can reach while depositor is alive and at death
Does a trustee have discretion on whether to give $ to beneficiary
Only if trust instrument says so
--creditors can get whatever beneficiary can get
What is a spendthrift clause
Protects the money from beneficiaries creditors (settlor cannot protect his own money this way)
--Completely protects from k claims
What is the effect of a spendthrift clause if bene is disabled
If bene is disabled mentally or physically, spendthrift clause protects thier interest completely
What is a QUADRO
Qualified domestic relations order--if spouse gets an interest in a retirement plan, can enforce the right even if plan has a spendthrift clause
Who can be a bene of a charitable trust
Must be members of the general public, not a private person
--Not subject to RAP
--enforceable by AG
What is cy pres
A doctrine that allows courts to fulfill a charitable purpose if the actual charity is gone
(cy pres = as near)
What is equitable approximation
A doctrine that will allow the court to deviate from the administrative terms of the trust if necessitated by changed circumstances
When may the court terminate a trust
1. High costs of administration are defeating the trust purposes
2. Trust purposes have been fulfilled or are impossible
3. Due to unanticipated circumstances continutation would defeat the trust purpose
Can the beneficiaries terminate a trust
If they are sui juris (of age and competent) if:
1. Termination is not contrary to the settlor's intent AND
2. There is no further trust purpose to be fulfilled
Can a settlor ever terminate an irrevocable trust
If all beneficiaries and the court consent
What is a Purchase Money Resulting Trust
Presumed to arise when consideration for purchase of property is paid by person other than the one that accpets title
--law presumes a gift if parties are married
Who are the beneficiaries of a constructive trust
The persons who would have been the beneficiaries absent the wrongdoing by the "trustee"
What is a secret trust
No mention of a trust at all
-If bene can prove fraud on the part of trusee, can get a constructive trust
What is a semi-secret trust
Will indicates a trust but beneficiaries are secret
-Trust fails
-resulting trsut in favor of S's sii
Can a trustee resign?
Yes with court permission
What are the trustees duties
1. Duty of loyalty--no self dealing
--commercial banks may use consolidated trust funds
2. Avoid conflicts of interest with beneficiaries
3. Annual accounting and annual distribution
4. Duty to use reasonable business judgment
If a trustee is also a beneficiary when may she invade principal for herself
If it is for her health, support, maintenance or education
May a trustee delgate investment or management duties
Only if she uses reasonable care, skill and caution in selecting the agent and in supervising his activities
What is the standard of care for a trustee
Prudent Trustee Standard
--the standard that would be observed by a prudent person dealing with the property of another acting in like capacity and familiar with such matters
--Duty to use speicial skills or expertise if possessed
What are a trustees investment duties
1. Don't speculate
2. Maintain marketability
3. Keep trust productive
4. Diversify as to industry not just company
5. Don't delegate without meeting standard
6. Don't commingle
7. Duty of impartiality
May a provision in the trust relieve a trustee from liability for a breach
Not if it is committed
1. Intentionally
2. In bad faith
3. With Reckless indifference
What are the requirements for a valid gift
1. Donor with donative intent
2. Delivery
3. Acceptance by the donee
When is delivery of a gift accomplished
When the donor relinquishes dominion and control over the property
What are the types of gift delivery
1. Actual
2. Constructive (car keys)
3. Symbolic (deed)
Requirements for gift causa mortis
1. Constructive delivery usually not allowed
2. Only for personal property
3. At least one W
4. If donor does not die, must give it back
Will estate tax be imposed on the holder of a power of appointment
Yes if it is a general power of appointment
To make it a special power by limiting his ability to appoint to himself, his estate, or the creditors of his estate or by limiting his ablilty to appoint to himself to the 4 ascertainable standards (health, support, maintenance, education)