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34 Cards in this Set

  • Front
  • Back
Private Express Trust - def
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
Corpus - what can it include?
any presently existing interest in property that can be transferred
includes any ascertainable person or grouf of people

IF NOT listed, then look to:
1. Integration
2. Facts of ind. significance
Manifestation of Intent - requirements
it must be a PRESENT intent (precatory words won't suffice)
Transfer in trust - 3rd person is trustee

Declaration in trust - settlor is trustee (no delivery of personal property needed)
Legal Purpose
can't be illegal
- illegal at creation - excise bad from the good
- illegal after creation - resulting trust is decreed
Charitable Trust - def
trust created to help the poor, sick, educate, promote religion
Society as a whole (as opposed to individuals) benefit
Rule of perpetuities
does NOT apply to charitable
Cy Pres
"as nearly as possible"
- court can modify the will to achieve the general intent if mechanism for effectuating intent (e.g. not enough money) is not possible
- Determining intent - through intrinsic or extrinsic evidence
Pour Over wills/trusts
part or all of testator's estate is devised to be the trustee of the inter-vivos trust (trust in place before execution of will)

3 ways of proving pour-over:
1. Incorporation by reference
2. Facts of independent significance
3. UTATA - valid trust just had to exist before will execution
Honorary Trust
trust with no ascertainable benefit and confers no benefit to society
- Trustee may refuse to carry out settlor's wishes
Totten Trust
named beneficiary takes what is left in the account at death of the owner (tentative bank account trust)
Spendthrift Trust
Def - B can't transfer his right to future income or principal; creditors can't attach to B's right to future payments
- Exception - preferred creditors (IRS, child support, tort judgment)
Support Trust
trustee can only use so much income or principal as is necessary for the B's health, support, maintenance, or education
- Same restrictions on alienation as spendthrift
Discretionary Trust
trustee has sole discretion in determining how much to pay beneficiary
- Vol Alienation - no, but if assignment and trustee knows about it, then assignee steps in shoes of B
- Invol Alientation - can't attach, but if trustee has notice of debt and doesn't pay, then personally liable
Resulting Trust
implied-in-fact trust based upon presumed intent of the parties

- trust ends on own
- fails
- excess corpus
- Illegal
- Semi Secret - will makes a gift to a person to hold as trustee but doesn't name a B
Constructive Trust
Remedy to prevent unjust enrichment or fraud
- Self dealing of trustee
- Secret trusts
Trustee Powers
- Enumerated powers
- Implied powers
Duty of Loyalty
must administer trust for the benefit of B, not himself
Duty to Invest
- Make reasonably prudent decisions
Duty to Earmark
Trustee must label the trust property
Duty to Segregate
trustee can't comingle funds
Duty not to delegate
Trustee can't delegate decision making authority to others
- Modern - can use money managers
Duty to Account
Must issue financial statements to B
Duty of Due Care
Trustee must act as a reaonably prudent person dealing with own affairs
Remedies - for breach of trustee duties
1. Damages
2. Constructive Trust
3. Equitable Lien
4. Ratify the transaction if it's good
5. Removal
Modification by Settlor
1. If expressly reserves
2. If retained power to revoke
Modification by Court
1. Cy pres (charitable trust)
2. Deviation Power - changes in administration or management provisions
Termination of Revocable Trust
Maj - settlor must expressly reserve power
Min - always has power (unless irrevocable)
Termination of Irrevocable
1. Settlor and B's agree
2. All B's agree AND all material purpose have been accomplished
3. Operation of Law
Income/Expenses to Life Tenant
1. Cash dividends
2. Interest Income
3. Net Biz income
1. Interest on loans
2. Taxes
3. Minor repairs
Principal/Expenses to Remainderman
1. Stock Dividends
2. Stock splits
3. Net proceeds from sale of trust asset
1. Principal on loans
2. Major repairs
Adjustment Power
Trustee retains power to allocate income if different allocation is necessary to administer the trust fairly