Trusts

Question 1

Private Express Trust

Answer 1

A fiduciary relationship involving property whereby a party (the trustee) holds legal title for the benefit of another party (the beneficiary), which arises out of a settlor’s intent to create a trust.

Question 2

Elements of a Valid Private Express Trust

Answer 2

1. A settlor
2. Delivery of trust instrument
3. The trustee
4. Intent by the settlor
5. Trust property
6. A beneficiary
7. A valid trust purpose

Question 3

Revocation of an Irrevocable Trust

Answer 3

Rule: usually an irrevocable trust cannot be revoked, however, under some state laws, a settlor may revoke a trust with the written consent of all parties with vested or contingent interests in the trust.

Question 4

Revocation or Modification of Trust by Beneficiaries

Answer 4

Rule: beneficiaries may revoke or modify a trust if:

1. All benenficiaries agree,
2. All beneficiaries are legally competent, and
3. The intent of the settlor is not frustrated (either the settlor consents, or modification or termination wouldn’t impair the trust’s purpose).

Question 5

Charitable Trust

Definition

Answer 5

Any trust which confers a substantial benefit upon society.

Question 6

Charitable Trust Creation Elements

Answer 6

A valid charitable trust requires:
1. Settlor’s intent to establish the trust,
2. By will, or by inter vivos trust
3. That the settlor’s propety be transferred,
4. For a legal charitable purpose.

Question 7

Cy Pres Doctrine

Answer 7

As Nearly As Possible

Rule: if there is not enough property in the trust to achieve its charitable purpose, the court will modify the trust to achieve the settlor’s charitable intent to the extent that it can.

• If achieving the purpose is impossible … the charitable trust finds will be returned to the settlor’s estate as a resulting trust.

Question 8

Honorary Trust

Definition

Answer 8

Trust that has no ascertainable beneficiary and confers no substantial benefit on society (e.g., trust to take care of settlor’s pet).

• Termination: an honorary trust will terminate if the trustee doesn’t carry out the trust purpose, in which case, there’s a resulting trust.