Trust overview Flashcards Preview

Trusts and Estates > Trust overview > Flashcards

Flashcards in Trust overview Deck (27)
Loading flashcards...


Creator of Trust



Person who holds legal title to the trust property and manages it for the beneficiaries



Person who holds equitable title to trust property and to whom TT owes the fiduciary duties


T. Instrument

document that embodies the Trust's terms



the property that is held in trust for the beneficiary.


Methods of creating trusts

Testamentary or intervivos (either by deed of trust or declaration of trust)


Deed of trust

mechanism to create the trust inter vivos
Settlor transfers propert to another person as TT;
There must be deliver to TT


Declaration of trust

the Settlor declared that he holds certain property in trusts (names himself as TT).


If there's no trustee

under common law a trust will not fail for want of a trustee. but trustee must accept office and have active duty. Otherwise courts will assign trustee


Creation of trust under the UTC

Trust is created only if:
-> Settlor has capacity (same capacity as in wills, higher than getting married drunk in vegas, less than K) to create a Trust;
->Settlor indicates an intention to create the Trust;
-->Trust has a definite beneficiary or is:
---------->> a charitable Trust,
---------->> Trust for care of an animal (Toby will be Safe!) (UTC §408), or
---------->> Trust for a noncharitable purpose (UTC §409);
-> Trustee has duties to perform; and
->Same person is not the sole TT and sole beneficiary.


Precatory language

language that expresses a moral obligation is not sufficient to create a trust.


Language needed for trust

No specific language to create trust, but do need to show
settlor’s intention to create a Trust relationship; and possibly make it clear that one person holds title as trustee

ex. Jiminex case the words, "shall be maintained for the benefit and not be sold" =trust.


Equitable charge

language that creates a security interest in property, is not a trust, This will be signaled by a lack of a fiduciary relationship


Failed gift

Also not trusts. see Hebrew university case, tried to construe this as a trust but it didn't work


Trust creation need to be in writing?

under UTC 402, no. However most States require writing.


Necessity of Trust Property ("Res")

Future profits dont constitute a property interest for trusts purposes. Need some kind of tangible property for creation of trust.


4 ways to distinguish Trusts from Debts

1). Trust beneficiary has equitable interest property; creditor generally has no interest in specific property
2). Trust beneficiary receives increase/decrease in value of Trust property; if debt, amount owed remains constant
3).If Trust, creditors of TT can’t reach Trust property
4). Statute of limitations differences


Resulting Trust

equitable reversionary interest that arises when by operation go law either
1). an express trust fails
2). when there is a purchase money resulting trust--->consideration for purchase of property is paid by one person, but title is taken in name of another who is not natural object of purchaser’s bounty
○ In both situations – transferee not entitled to beneficial interest, so interest is said “to result” (revert) to transferor or transferor’s estate


Constructive trust

○ Equitable remedy in circumstances in which fraud, mistake, duress, &/or unjust enrichment have occurred
---->§ By operation of law, the wrongdoer never owned the property gained through malfeasance. But if the will is changed and cant ascertain the true owner, intestacy
○ Simply moves title from person with title (unjustly) to someone who should have title


Revocable Inter vivos Trusts

-> fiduciary relationship b/w fiduc. and benef.
-> need 1 or mor ascertainable beneficiaries ("friends" not a specific class--Clark case).
--> formed by a declaration of trust or deed of trust


Revocable v. Irrevocable intervivos Trust

UTC 602(a) presumes inter-vivos trusts are revocable unless declared to be irrevocable. This is also the majority view.


How to revoke a revocable trust

1) follow instructions proscribed by trust itself.
2). if not method dicta bled above, by a later will or codicil, or any other method manifesting intent to revoke.... (so maybe you could pee on this too).


Private trust

Trust must be for benefit of its beneficiary(ies); need not be ascertained at Trust creation


Charitable trust

no ascertainable beneficiary required; must be for the benefit of the general public


Trusts for Pets & Other Noncharitable Purposes

So you can't will to Toby bc he's not a person and can't have property rights, however, can make bequest to a human TT to use $ for the benefit of him.
See also: Common law Honorary Trusts and Statutory Trusts


Common Law Honorary Trust

transferee under no legal oblig. (only “honor”) to carry out settlor’s stated purpose to care for S’s pet animal; if transferee declines or neglects to do so, resulting trust arises in favor of T’s residuary/kin
EX. § Bequeathed to his dog allowable bc testator was willing. UTC 408 and 409 details pet stuff.


Common Law Statutory Trusts

Statutory purpose trust: permits trusts for a pet animal or other non-charitable purposes (preserve grave site, monument)