Hot Topics Flashcards
(25 cards)
Does Settlor Have Capacity and Present Intent to Create Trust?
Valid trust must have a settlor with capacity and intent to split legal and equitable title.
What is the capacity required for an inter vivos trust?
Inter vivos trust requires same capacity as for inter vivos transfer of property; testamentary trust requires same capacity as needed for will.
What prevents a trust from arising?
Lack of legal capacity to convey prevents trust from arising.
What renders a trust unenforceable?
Undue influence, fraud, or duress renders trust unenforceable.
What is required for present intent in creating a trust?
Must intend trust to take effect immediately and express intent by words or conduct while settlor owns the property.
What are precatory expressions and their implications?
Precatory expressions (hope, wish) result in inference that no trust was intended, but inference may be overcome by other evidence.
What is required for a valid trustee?
Valid trust needs a trustee who can hold legal title to the trust property.
What is the capacity requirement for a trustee?
Trustee must have capacity to acquire and hold property for own benefit and capacity to administer that property.
Can a settlor declare themselves as trustee?
Yes, settlor may declare self as trustee.
What happens if a trustee fails to accept trusteeship?
Failure to name trustee does not defeat testamentary trust; court will appoint.
What is required for definite beneficiaries in a trust?
Valid trust must have beneficiaries because there must be someone to enforce the trust.
What is the Rule Against Perpetuities in relation to beneficiaries?
Must be definite beneficiary, or ascertainable within the period when all interests must vest under the Rule Against Perpetuities.
What is required for trust property (Res)?
Valid trust must have trust property; no trust property, no trust!
What type of property is required for a trust?
Must be existing interest in existing property—but future interests are OK.
What is a valid purpose for a trust?
Trust must have a valid purpose; generally, a settlor can create a trust for any purpose, except illegal, impossible, or contrary to public policy.
What is the Rule Against Perpetuities (RAP)?
Watch for compliance with the Rule Against Perpetuities when interests in a trust are created.
What are the requirements for charitable trusts?
Charitable purpose must benefit the public; indefinite beneficiaries; may be perpetual.
What is an honorary trust?
Honorary trust is not for charitable purpose and has no private beneficiaries.
Is a beneficiary’s interest generally transferable?
Absent restrictions, a beneficiary may voluntarily transfer interest in trust, and creditors may levy on the beneficiary’s interest.
What is a spendthrift trust?
A trust with a spendthrift provision that precludes beneficiary from transferring their interest.
What happens if a trustee commits a breach of duties?
Court can order specific performance, issue injunction, compel payment, or suspend/remove trustee.
What is a revocable trust?
Interest passes during life but becomes possessory at death; may be amendable and revocable.
What is a Totten trust?
A bank account in depositor’s name ‘as trustee’ for named beneficiary; revoked by withdrawals or will.
What is a resulting trust?
A reversionary interest that may be implied in certain situations, such as purchase money resulting trusts.
