Trusts Mee 2013

Front 1

Trust

Back 1

An arrangement under which the trustee holds legal title to property for the benefit of the beneficiaries.

Created by the creator (i) delivering legal title of trust assets to the trustee for the benefit of the ascertainable beneficiaries (ii) with intent to create a trust (precatory language of suggested not enough unless sufficient detail (iii) for a valid purpose (doesn’t violate pub policy, like restraint on marriage)

Front 2

Res

Back 2

Must be a specific interest in property (rights, not duties/debt) to which trustee’s duties relate. Expectancies do not count.

An otherwise empty trust is valid if direct beneficiary of life insurance policy, pension plan, or will

Front 3

Trustee

Back 3

No trust fails for want of a trustee. Court will appoint unless power personal to named trustee.

Front 4

Revocable Trust

Back 4

Settlor retains the right to revoke, alter, or amend the trust.

Includes Totten Trust.

Front 5

Oral Trusts

Back 5

Oral trusts of personalty are enforceable provided its terms can be established by clear and convincing evidence.

Front 6

Oral Promise to Devise

Back 6

Contract to make a will can only be shown if (i) terms are in will itself (ii) terms are in a written contract, or (iii) the will refers to the contract and extrinsic evidence proves the terms.

Front 7

Charitable Trusts

Back 7

Must be:
For a charitable purpose (religion, medicine, science, government, research, education).
In favor of a reasonably large number of unidentified beneficiaries.
Enforced by state AG’s office.
Cy Pres: reform trust when purpose no longer able to be accomplished.

Front 8

Spendthrift

Back 8

Precludes the beneficiary from voluntarily or involuntarily transferring his interest in the trust, and his creditors are precluded from reaching it to satisfy their claims.

If trust is for the benefit of the settlor, spendthrift clauses are unenforceable.

Front 9

Trustee’s Duties

Back 9

Loyalty: No self dealing, no personal gain.
Invest Prudently: Productive, balance risk, diversify, do not commingle (portfolio view), protect trust property, impartiality with beneficiaries, account and inform.

On Breach: Beneficiary may ratify, sue for loss, trace and recover property for the trust. K or Tort in trustees representative capacity.

Front 10

Early Termination

Back 10

If all beneficiaries consent, and there is no further trust purpose to be served.

Front 11

Fraudulent Transfer Doctrine

Back 11

If the trust was created for the purpose of defeating known creditors, the trust can be set aside. This is true of any transfer.