Trusts

Front 1

Private Express Trust - def

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

Corpus - what can it include?

Back 2

any presently existing interest in property that can be transferred

Front 3

Beneficiary

Back 3

includes any ascertainable person or grouf of people

IF NOT listed, then look to:
1. Integration
2. Facts of ind. significance

Front 4

Manifestation of Intent - requirements

Back 4

it must be a PRESENT intent (precatory words won't suffice)

Front 5

Creation

Back 5

Transfer in trust - 3rd person is trustee

Declaration in trust - settlor is trustee (no delivery of personal property needed)

Front 6

Legal Purpose

Back 6

can't be illegal
- illegal at creation - excise bad from the good
- illegal after creation - resulting trust is decreed

Front 7

Charitable Trust - def

Back 7

trust created to help the poor, sick, educate, promote religion

Front 8

Beneficiary

Back 8

Society as a whole (as opposed to individuals) benefit

Front 9

Rule of perpetuities

Back 9

does NOT apply to charitable

Front 10

Cy Pres

Back 10

"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

Front 11

Pour Over wills/trusts

Back 11

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

Front 12

Honorary Trust

Back 12

trust with no ascertainable benefit and confers no benefit to society
- Trustee may refuse to carry out settlor's wishes

Front 13

Totten Trust

Back 13

named beneficiary takes what is left in the account at death of the owner (tentative bank account trust)

Front 14

Spendthrift Trust

Back 14

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)

Front 15

Support Trust

Back 15

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

Front 16

Discretionary Trust

Back 16

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

Front 17

Resulting Trust

Back 17

implied-in-fact trust based upon presumed intent of the parties

Situations
- 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

Front 18

Constructive Trust

Back 18

Remedy to prevent unjust enrichment or fraud
- Self dealing of trustee
- Secret trusts

Front 19

Trustee Powers

Back 19

- Enumerated powers
- Implied powers

Front 20

Duty of Loyalty

Back 20

must administer trust for the benefit of B, not himself

Front 21

Duty to Invest

Back 21

Diversify
- Make reasonably prudent decisions

Front 22

Duty to Earmark

Back 22

Trustee must label the trust property

Front 23

Duty to Segregate

Back 23

trustee can't comingle funds

Front 24

Duty not to delegate

Back 24

Trustee can't delegate decision making authority to others
- Modern - can use money managers

Front 25

Duty to Account

Back 25

Must issue financial statements to B

Front 26

Duty of Due Care

Back 26

Trustee must act as a reaonably prudent person dealing with own affairs

Front 27

Remedies - for breach of trustee duties

Back 27

1. Damages
2. Constructive Trust
3. Equitable Lien
4. Ratify the transaction if it's good
5. Removal

Front 28

Modification by Settlor

Back 28

1. If expressly reserves
2. If retained power to revoke

Front 29

Modification by Court

Back 29

1. Cy pres (charitable trust)
2. Deviation Power - changes in administration or management provisions

Front 30

Termination of Revocable Trust

Back 30

Maj - settlor must expressly reserve power
Min - always has power (unless irrevocable)

Front 31

Termination of Irrevocable

Back 31

1. Settlor and B's agree
2. All B's agree AND all material purpose have been accomplished
3. Operation of Law

Front 32

Income/Expenses to Life Tenant

Back 32

1. Cash dividends
2. Interest Income
3. Net Biz income
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1. Interest on loans
2. Taxes
3. Minor repairs

Front 33

Principal/Expenses to Remainderman

Back 33

1. Stock Dividends
2. Stock splits
3. Net proceeds from sale of trust asset
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1. Principal on loans
2. Major repairs

Front 34

Adjustment Power

Back 34

Trustee retains power to allocate income if different allocation is necessary to administer the trust fairly