FIRST CONCEPT: PRIVATE EXPRESS TRUST

Question 1

Define a private express trust (You need to memorize)

Answer 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.

Question 2

What is the corpus of the trust?

Answer 2

Any presently existing interest in property that can be transferred

Question 3

What are 5 examples of what can be part of the corpus of a trust?

Answer 3

fee simple
a future interest such as a contingent remainder
a life insurance policy
bonds
stocks

Question 4

What kind of interests cannot be the subject matter of a trust?

Answer 4

Illusory interests cannot be the subject matter of a trust.

Question 5

What kinds of interests are illusory?

Answer 5

[a] Future profits to a business.
[b] A debt that settler owes beneficiary is not property and cannot be the corpus of a trust; a debt is a liability, not property.
[c] A mere expectancy: what settlor expects to inherit or receive as a gift because a mere expectancy is not property.

Question 6

Who Can Be the Beneficiary of a Private Express Trust?

Answer 6

Any ascertainable person or group of people can be the beneficiary of a private express trust. Person includes a legal person

Question 7

Is a corporation a legal person?

Answer 7

Yes

Question 8

Is a unincorporated association a legal person?
Under common law?
Under Modern Law?

Answer 8

[a] Common law: unincorporated associations could not be the beneficiary of a private express trust.
[b] Modern law: an unincorporated association can be the beneficiary of a private express trust.

Question 9

Are class gifts valid for a trust?

Answer 9

Yes

Question 10

Are class gifts that are too big valid? Why or why not?

Answer 10

No, it is not valid if it cannot be administered

Question 11

Is a a child conceived when the interest was created and later born an ascertainable person?

Answer 11

Yes

Question 12

O conveys to bank and trust to A, but if liquor is ever sold, then to B. What result?

Answer 12

B’s interest is stricken, because of the RAP. A has a fee simple

Question 13

Does a trust need to have a trustee?

Answer 13

Yes

Question 14

Will a court allow a trust to fail if the trust does not have a trustee or a trustee refuses to serve?

Answer 14

No, The court will appoint a trustee

Question 15

Who holds legal title when the trust does not yet have a trustee appointed by the court?

Answer 15

The settlor or the settlor’s estate will hold legal title.

Question 16

There must be _________ intent made by the settlor.

Answer 16

present

Question 17

Does the settlor need to use the words trust, trustee or beneficiary to make a trust?

Answer 17

No

Question 18

are precatory words( words of wish or hope) sufficient to create a trust?

Answer 18

No

Question 19

S gives $100,000 to his brother, with “the direction and order that he use it for my sister.” Is there a trust here?

Answer 19

Yes

Question 20

S gives $100,000 to his brother, with “the hope and desire that he use it for my sister.” is there a trust here?

Answer 20

No, precatory words (hope or wish) by themselves are not sufficient to create a trust.

Question 21

S gives $100,000 to his brother, with “the hope that he use it for my sister.” S was supporting his sister before transferring the money to the brother, but stopped supporting his sister after the money was transferred to the brother. is there a trust here? Why or why not?

Answer 21

Maybe, precatory words and parol evidence may equal a trust.

Here, because S stopped supporting sister after the transfer to the brother would be probative to show that S intended the money to be used in trust for the benefit of the sister, and that S was merely using his words imprecisely and did intend to create a trust.

Question 22

If you conclude that the words are precatory and the parol evidence is not sufficient to cause a trust to be created, then then who owns the property?

Answer 22

the transferee in fee simple

Question 23

Do trust of personal property have to be in writing?

Answer 23

No

Question 24

Do trusts of real property have to be in writing?

Answer 24

Yes, because of the statute of frauds

Question 25

If a settlor wants to createa trust upon his death, what is needed?

Answer 25

He must comply with the local probate code and a part of his will must ave a provision for a testamentary trust.

Question 26

I devise blackacre to bank to hold in trust for the benefit of my son for his life. What is this an example of?

Answer 26

A testamentary trust.

Question 27

If settlor wants to create a trust to take effect during his lifetime, there are two ways to accomplish this What are they called?

Answer 27

Transfer in Trust and Declaration in Trust.

Question 28

What must the settlor do to create a transfer in trust of real property?

Answer 28

the settlor must execute and deliver a deed transferring title to the trustee.

Question 29

What must the settlor do to create a transfer in trust of real property?

Answer 29

For a trust of personal property, there must be delivery to the trustee of the trust property at the time settlor manifests the intent to create the trust. The delivery can be actual, symbolic or constructive

Question 30

Is the promise to deliver the corpus in the future a delivery?

Answer 30

No

Question 31

Who is the trustee in a transfer in trust?

Answer 31

A third party.

Question 32

Who is the trustee in a Declaration in Trust?

Answer 32

The settlor herself.

Question 33

What must the settlor do to create a declaration in trust of real property?

Answer 33

there must be some writing satisfying the Statute of Frauds indicating that settlor also is the trustee

Question 34

In a declaration in trust of personal property is there any issue of delivery? Why or why not?

Answer 34

No, because the settlor herself is the trustee.

Question 35

What do you need to look to for a declaration in trust of personal property?

Answer 35

the only thing we have to look to is the present manifestation of trust intent

Question 36

"I declare myself as trustee for this 100K for the benefit of Able during Able's lifetime." What is this an example of?

Answer 36

a declaration in trust of personal property

Question 37

A trust may be established for any ________ purpose.

Answer 37

legal

Question 38

Will a trust stand if it's purpose is illegal or against public policy at creation?

Answer 38

Maybe, if the court can get rid of the illegal part

Question 39

Settler creates a trust for Able on the condition that Able divorce his spouse. Is this trust illegal or against public policy?

Answer 39

Yes

Question 40

Settler creates a trust for Able on the condition that Able divorce his spouse. What will the court do with this trust? Also, what result?

Answer 40

The court will get rid of the condition against public policy. Able will will take the trust free of the condition.

Question 41

What if it is not possible to get rid of the illegal (or against public policy) part of the trust at creation. What are the two options for the court? Which one will the court choose?

Answer 41

1. invalidate the trust at its inception 2. Allow the trustee to keep the property for himself. The court will choose the option with the best result.

Question 42

If the court invalidates the trust at inception who owns the property of the trust?

Answer 42

The settlor owns the property

Question 43

Settler creates a trust to defraud settler's creditors. What will the court do? Why would they do this?

Answer 43

The court will invalidate the trust, so that settlor’s creditors can attach the assets.

Question 44

Why would the court allow a trustee to keep the property in the trust?

Answer 44

to punish the settler who does not come with clean hands.

Question 45

What happens if the trust becomes illegal after creation?

Answer 45

The trust will be decreed

Question 46

Once a court decrees a resulting trust, the resulting trustee has only one obligation, what is that obligation?

Answer 46

to transfer the property back to the settlor if the settlor is alive, and if not, to the settlor’s estate