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Flashcards in Trusts Deck (30)
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1

Duties of Trustee

  1. Impartiality
    • Creates principal/income problem
  2. Loyalty & good faith
  3. Segregate funds
  4. Prudence (sound investing)
  5. Disclose/Account for trust assets

2

Constructive Trusts

*prevents unjust enrichment in the event of some unlawful conduct

  1. Confidential/Fiduciary Relationship
  2. Promise
  3. Transfer of property in reliance on that promise
  4. Resulting unjust enrichment

2

Termination w/o consent

  • When purpose has been accomplished
  • Cannot be terminated if material purpose remains
    • spendthrift trust has material purpose of asset protection 

3

Remedial Trusts

  1. Honorary (failed charitable purpose)
  2. Resulting (failed trust)
  3. Constructive 

3

Spendthrift Trusts

NY presumptively assumed spendthrift trusts. 

  • expressly restricts the beneficiary’s power to voluntarily or involuntarily transfer his equitable interest

Exceptions:

  • Children/spouses seeking family support
  • People providing necessities
  • Government 
  • Income beyond that needed to provide beneficiary according to his station in life

4

Cy Pres

Allows terms of charitable trust to be modified if illegal, impossible or impracticable 

5

Support Trust

Trustee must pay out in accordance w/ some pre-specified objective standard

5

Creditor access to trust property

  • Mandatory --> only mandatory payments
  • Discretoinary --> can't access trust property

6

Removing trustee

  1. incapacity
  2. breach
  3. conflict of interest (not apparent at time of creation)
  4. serious disagreement 
  5. poor performance 

8

Saving statute

creates a presumption that grantor intended to require that a condition be met w/n perpetuities period

9

Trusts

Dividing legal and equitable title to the property. 

10

Intent

No special language

- just intent to separate equitable interest 

11

No Further Inquiry Rule

A self-dealing trustee is auto liable

12

Suspension statute

prevents fragmentation of an estate beyond perpetuities period -- requires that some combinition of people be able to convey a FSA w/n perpetuities period 

13

Express Trust Requirements

  1. Intent
  2. Trust Property
  3. Valid trust purpose
  4. Beneficiaries 
  5. In writing 

Lifetime trust:

- writing

- signed by settlor and trustee

- notarized or executed in presence of 2 Ws + signed

14

Legit charitable purposes

  1. Relief of poverty
  2. Advance education/religion
  3. Promotion of good health
  4. Gov purposes
  5. Other purposes benefitting community at large or particular segments of community

GHOPE

Gov,

Health,

Other

Povertu.

Education/religion 

15

Terminating Trust

  • Revocable trust --> pursuant to terms of trust
  • Irrevocable trust --> via settlor and beneficiary agreement 

16

Discretionary Trust

Discretion as to how much trustee pays out

- beneficiary has no claim but trustee cannot abuse discretion

17

Trust purpose 

Any purpose so long as not illegal or against public policy

18

Trust formation (interests)

Require separation of agreement. Even a contingent remainder beneficiary suffices --

O puts property in trust for O for life w/ O as trustee, remainder to O's kids

20

NY Trust Presumption

Presumption of irrevocability and non-amendability

22

Trust beneficiaries

Must be ascertained at time they will TAKE not at time of will's creation

23

Pet trusts

OK but expire after 21 years

24

Pour Over trusts

Created inter vivos but funded at death

25

Mandatory Trust

Trustee must pay out pre-specified money

26

Methods of making of trusts

1. Inter Vivos

2. Testamentary 

27

RAP

Requires that all equitable interests in a trust become certain w/n the prepetuities period

(21 years w/n the death of a life in being at the time of conveyance)

28

Modification of Trust

If an unanticipated change in conditions frustrates the terms or purpose of trust

29

Totten Trusts

joint bank account in which the depositor deposits money in trust for a beneficiary 

Depositor:

- retains control

- can use money for own benefit 

- can revoke at any time

30

Charitable Trusts

1. RAP doesn't apply

2. Charitable purpose supplants "beneficiary"