5. Code II: Trusts Flashcards
(101 cards)
Trust Definition
the relationship resulting from the transfer of title to property to a person
to be administered by him as a fiduciary
for the benefit of another
Formation of Trust
no magic language, just must be clearly intended to be a trust
Revocability of Trusts
irrevocable by default
can reserve the right to modify/ make it revocable
If revoked, trust returns to ______.
Settlor
Settlor
person conveying the property (can have more than one for IVT)
Trustee
person receiving the property from the settlor as a FIDUCIARY for the benefit of a 3P (beneficiary)
- can be named OR chosen by direction of the instrument
(can have more than 1)
Testamentary Trust
= created by donation mortis causa
FORM:
- olographic
- notarial
Existence of Testamentary Trust
on date of settlor’s death
Inter Vivos Trust
one that is not testamentary
FORM:
- authentic act
- act under private signature executed in presence of two witnesses and duly acknowledged by the settlor or by affidavit of one of the attesting witnesses
Existence of IVT
at execution of the instrument
Recordation Requirement for Movables
no recordation requirement
Recordation Requirement for Immovables
must be recorded to affect 3P
unrecorded only effects immediate parties
File Requirements for Trusts
in parish where property is located file ONE of:
- trust itself
- extract of trust
- a copy of trust or extract certified by clerk of court
Settlor Capacity
- capacity to k onerous title = capacity for onerous IVT
- capacity to k gratuitous title = capacity for gratuitous IVT
- capacity for DMC = capacity for testamentary
Qualifications of Trustee
a. natural persons
b. FDIC institutions
c. financial institutions/ trust company
d. nonprofit organizations
Natural Person Trustee Requirements
- capacity to K
- US citizen or resident alien
Nonprofit Organization Trustee Requirements
- designated as income/ primary beneficiary
- for mixed and charitable purposes
Exercise of Trust
- if 2+ trustees = each must participate in administration of trust
- if 2 = unanimous
- if 3+ = majority
Acceptance by Trustee
- as part of trust instrument (join in signing) OR in separate writing within a reasonable time
- constitutes acceptance of jurisdiction
- if acceptance by appointment = relates back to creation of the trust
Vacancy in Trustee Role
does not invalidate the trust (court will appoint)
Default Powers of the Trustee
- lease trust property
- sell trust property
- mortgage trust property
- borrow money on debit of trust estate
- compromise/ arbitrate/ abandon trust claims
Duties of Trustee
FIDUCIARY
- take reasonable steps to take/ keep control/ preserve
- keep trust property separate
- in dealing with own account = deal fairly with beneficiary and communicate material facts
- refrain from LENDING property to itself/ affiliate/ family/ ER/ EE
- refrain from BUYING property to itself/ affiliate/ family/ ER/ EE
- refrain from SELLING property to itself/ affiliate/ family/ ER/ EE
Breach of Duties by Trustee
= breach of duty of trust
Termination of Trust Types
- by default
- by terms of the trust
- by the court
- by the trustee
- by divorce