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Flashcards in Bar Prep - PA Trusts Deck (20)

Types of trusts

Express, resulting (presumed intent of prop owner), and constructive (not intent but constitute equitable remedy).


Categories of express trusts

Private or charitable.


Express trusts in PA governed by the Uniform Trust Act, which requires

Trust meet statutory requirements, trustee acts in good faith, purpose of trust lawful, power of court to modify/terminate, effect of spendthrift provision.


Elements of express trust

Settlor; signed writing with present intent; to create trust in competent trustee; definite beneficiary; and sole trustee and sole beneficiary are NOT same person.


How May settlor demonstrate present intent to create trust?

Manifested in writing (essential). Oral trusts are unenforceable.

Delivery of deed may manifest intent.

Must be manifested while settlor owns property.


What is effect of precatory language in trust?

"It is my hope that..."

Default no trust created. But may be overcome if directions are definite and precise, failure to impose trust results in unnatural disposition.


Beneficiaries of trusts

Necessary to validity of trust; beneficiary must be definite.


What is a disclaimer?

Beneficiary may disclaim interest in trust by filing written instrument.

No official time period, but to avoid taxes must be made within 9 months.


How does divorce effect trust?

Unless contrary to intent, it will revoke all gifts and fiduciary appointments in favor of former spouse.


What result of trust made for interest in property?

Interest must be in legal existence.


How can a settlor create an express trust?

Transfer of property during lifetime (inter vivos); by will (testamentary); by written declaration or written exercise of power of appointment.


What are three benefits of charitable trusts (how are they more liberal)?

1. Must have indefinite beneficiaries
2. Cy pres doctrine applicable
3. May be perpetual


What is required to form a testamentary trust?

To create trust by will, need formalities, true intent and essential terms of trust must be ascertained in TERMS OF WILL. Or incorporated by reference.


What is the rule regarding indefinite beneficiaries and charitable trusts?

They must be formed with indefinite beneficiaries, unlike default rule.


How can one transfer a beneficiary interest?

Voluntary assignment; involuntary assignment


Is a trust freely alien able?

Yes, to extent the beneficiary can transfer other property.


Do creditors have rights to property in trust?

Yes, interest of insolvent trust beneficiary can generally be reached in appropriate proceedings to satisfy claims of creditors.

However, creditor can only reach debtors interest and not the trust property.


What are spendthrift trusts?

Trust where beneficiary is unable voluntarily or involuntarily transfer his interest in the trust. (Typically maintenance payments).


What are the exceptions to spendthrift clauses?

Cannot create spendthrift trust for settlor; spendthrifts do not preclude claims for support/alimony/necessities; do not preclude claims by the government.


General modification rule of trusts?

Trust terminates automatically at expiration of trust term.

Settlor can revoke or amend a trust unless terms expressly state irrevocable.