Trusts

Question 1

Trusts: What is a Trust?

Answer 1

• A legal from that divides the benefits from the burdens of property between 2 people or groups.

Question 2

Trusts: What does a trustee do?

Answer 2

Trustees have legal title and manage the property (one person or a group or people)

Question 3

Trusts: What do beneficiaries do?

Answer 3

Beneficiaries receive benefits of ownership (a different person or group of people from the trustee.)

Question 4

Trusts: What do trust do, generally?

Answer 4

Trusts split title to property, and simultaneously imposes duty on trustees.

Question 5

Trusts: 3 uses of a trust:

Answer 5

1) Avoid probate and leave everything to wife easily.
2) Benefit a new wife and poor kids from marriage with ease.
3) Leave money to someone who is not responsible and ensure it won’t get blown in a year.

Question 6

Trusts: What to examine to determine if something is a trust?

Answer 6

• Language of Document
• Extrinsic Evidence of Trust
• Identity of Beneficiary receiving property.
  Degree of Specificity a Settlor used?

Question 7

Trusts: Who is the settlor?

Answer 7

Person establishing a trust.

Question 8

Trusts: What to really look out for when it is not clearly a trust?

Answer 8

Someone things may just be GIFTS rather than TRUSTS.

Question 9

Trusts: Oral Trust: What evidence is needed?

Answer 9

Clear and Convincing evidence an oral trust was made.

Question 10

Trusts: Oral Trust: When can a trust not be oral?

Answer 10

• Best practice is to put it in writing.
• Can not be an oral trust when it involves land, a trust through will, or the statute of frauds.

Question 11

Trusts: The revocable trust: What is it?

Answer 11

A revocable trust is one where the settlor retains complete control over assets while alive, then dispenses without court supervision at death.

Question 12

Trusts: Revocable Trust: When the settlor is the trustee:

Answer 12

Settlor may revoke at any time and get it back.

Question 13

Trusts: Revocable Trust: What happens when settlor dies?

Answer 13

Successor trustee is named and given instructions as to what to do upon death of settlor.

Question 14

Trusts: Revocable trust: What usually accompanies a revocable trust?

Answer 14

Revocable trusts are accompanied by “pour over” wills?

Question 15

What is a pour over will?

Answer 15

A section in the will that provides anything not given in a will pours over to a trust.

Question 16

Trusts: What is a Private Express Trust?

Answer 16

Enforced by beneficiaries.

Question 17

Trusts: Charitable Trusts, generally:

Answer 17

Rule against perpetuities does not apply, Attorney General Enforces.

Question 18

Trusts: Inter Vivios Trusts generally:

Answer 18

Set up during the creator’s lifetime.

Question 19

Trusts: Testamentary Trusts generally

Answer 19

Set up in a will.

Question 20

Trusts: Revocable Trusts generally

Answer 20

Gives settlor power to modify and revoke, most states presume a trust is revocable.

Question 21

Trusts: Irrevocable trusts generally:

Answer 21

It is irrevocable.

Question 22

Trusts: 7 Requirements

Answer 22

1) Parties
2) Intent
3) Property
4) Capacity
5) Legal Purpose
6) Writing
7) Rule Against Perpetuities

Question 23

Trust: What has more formalities, a will or a trust?

Answer 23

Trusts have less formalities.

Question 24

Trusts: Why can trusts have less formalities?

Answer 24

Settlor turn over property when alive, so they typically feel the tang of loss.

Question 25

Trusts: (4) Capacity: What is it the same as?

Answer 25

Same rules for capacity as Wills.

Question 26

Trusts: (5) Legal Purpose: What Can a trust not be?

Answer 26

A trust can not be illegal or promote an illegal purpose.

Question 27

Trusts: (6) Writing: When is a writing required?

Answer 27

- Statute of Frauds (Land being transferred) - Testamentary Trust (Must meet Will Formalities)

Question 28

Trusts: (1) Parties: Who are the 3 parties?

Answer 28

Settlor Trustee Beneficiary

Question 29

Trusts: (1) Parties: Settlor: Who are they and what must they do?

Answer 29

- Person who creates the trust. - If settlor is not also the trustee then the settlor must deliver the property to trustee.

Question 30

Trusts: (1) Parties: Trustee: general rules

Answer 30

- A trust will not fail for want of a trustee (court will appoint one) - Elected trustees may refuse to accept. - People often use banks but it is expensive. - A trust is a legally separate entity from a trustee.

Question 31

Trusts: (1) Parties: Trustees: What do they do (3 things):

Answer 31

1) Administer the Trust 2) Invest the Property 3) Administer assets to beneficiaries when appropriate.

Question 32

Trusts: (1) Parties: Trustees: When do fiduciary duties kick in?

Answer 32

When the property is delivered and accepted by the trustee. (same for legal obligations)

Question 33

Trusts: (1) Parties: Trustees: What are their fiduciary duties?

Answer 33

1) Duty of Loyalty 2) Duty of Prudence (care) 3) Duty of Impartiality 4) Duty to account

Question 34

Trusts: (1) Parties: Beneficiaries: What do they need to know?

Answer 34

Need to know who trustee is so they can call them into account.

Question 35

Trusts: (1) Parties: Beneficiaries: What can't they be?

Answer 35

Can't be trustee and sole beneficiary.

Question 36

Trusts: (1) Parties: Beneficiaries: What if there is a group of beneficiaries?

Answer 36

- Need a definite group. ("Friends" is too broad). ("My relatives" may work due to intestacy)

Question 37

Trusts: (1) Parties: Beneficiaries: What if no beneficiary present/named?

Answer 37

Plop everything back in the estate.

Question 38

Trusts: (1) Parties: Beneficiaries: Animals

Answer 38

generally can not be beneficiaries

Question 39

Trusts: Honorary Trusts: what is is?

Answer 39

- A specific non-capricious purpose when there is no beneficiary. - Trustee acts on their honor. - Judicially made. - usually for pets and graves

Question 40

Trusts: pet trusts

Answer 40

- Animal given to someone in care. - Trustee named (and doles out money for pet) - Has to be a reasonable amount left to pet.

Question 41

Trusts: (1) Parties: Beneficiaries: General Rule

Answer 41

The same person can be settlor, trustee, and beneficiary. - Just not the trustee and SOLE beneficiary (legal title would not be split in a meaningful way).

Question 42

Trusts: (2) Intent: Does the word "trust" being present matter?

Answer 42

No, there is no magic formula for establishing a trust.

Question 43

Trusts: (2) Intent: What is language is too broad?

Answer 43

it could end up being a gift.

Question 44

Trusts: (2) Intent: Good evidence of intent to be a trust?

Answer 44

- More specific the gift = more it looks like a trust. - If a lawyer or financial advisor gets the gift = looks like a trust.

Question 45

Trusts: (2) Intent: Test

Answer 45

Is the settlor intending to split the burdens from the benefit of ownership?

Question 46

Trusts: What is the legal term for non-specific language?

Answer 46

Precatory Language (it expresses something like "desire", "hope", or "request")

Question 47

Trusts: (2) Intent: Is it usually clear?

Answer 47

Intent is usually pretty clear from the settlor, just watch out for precatory language.

Question 48

Trusts: (3) Property: Blackletter law:

Answer 48

Property must be Ascertainable and In Existence.

Question 49

Trusts: (3) Property: What does it mean to be Ascertainable?

Answer 49

It means the property is described with sufficient certainty.

Question 50

Trusts: (3) Property: What does it mean to be In Existence.

Answer 50

The property has to be available.

Question 51

Trusts: (3) Property: What is best practice?

Answer 51

Always retitle assets in the name of the trust.

Question 52

Trusts: (3) Property: Are IP rights property?

Answer 52

yep, IP rights are property because they are in existence.

Question 53

Trusts: (3) Property: Statutory Exception for the "In Existence" Requirement:

Answer 53

-Pour over trust (remember the pour over clause must be in the will when it is executed).

Question 54

Trusts: (3) Property: Can future interests be property?

Answer 54

No.

Question 55

Outright Gifts: Definiton

Answer 55

Gratuitous transfer of property from donee by donor. Donee must accept. Donor perfects the gift through delivery.

Question 56

Gift Through Trust: Definition

Answer 56

Can be done through imposing fiduciary duties on the holder of property.

Question 57

What can litigants do when a defective gift is present?

Answer 57

They may try to turn it into a trust.

Question 58

3 types of delivery of property?

Answer 58

1) Actual 2) Symbolic 3) Constructive

Question 59

Who came up with honorary trusts?

Answer 59

Peter Singer