Trusts Flashcards
(18 cards)
Purchase price paid by other than transferee
Unless a contrary intention is manifested a resulting trust will also arise where property is transferred to one person while the purchase price is paid by another an no express trust is declared. The inference is that the transferee is intended to have no beneficial interest and that he holds the property in trust for the person who paid the purchase price.
Burden of proof:
The party seeking to establish the resulting trust will bear the burden of proof by clear and convincing evidence.
- If the payer intended to make a gift or loan to the transferee or to discharge a debt, then the presumption is rebutted.
Presumption of gift: A gift is presumed where transferee is the natural object of the payor’s bounty, such as spouse or child, unless transferer manifests otherwise.
Trust concerning real property
1) Must be in writing
2) signed by the settlor
3) describing the property w/ reasonable definiteness
4) naming the beneficiaries
5) purpose of the trust
6) must vest w/in period in compliance w/ rule against perpetuities
Which constitutional provisions has congress applied to the VI?
1) 4th amendment search & seizure
2) 5th - self incrimination
3) 6th - Right to fair trial and counsel
4) 8th
5) Ex post facto bill
6) Bill of attainder clauses @ Article 1 section 9
Constructive Trust
Used by courts to prevent unjust environment and is remedial in nature
When transferor transfers property being induced by fraud, duress, or undue influence of the transferee, the transferee holds the property in a constructive trust for the transferor
Duties of trustee
1) Duty of loyalty
2) Duty of care
3) Duty to make/keep trust productive
4) Duty to pay beneficiary income
5) Duty to keep accurate accounts
6) Duty to file accurate inventory w/ court periodically
7) Duty to keep beneficiary/settlor informed
8) Not to delegate trustee powers.
9) Duty to enforce/defend claims against trust
Prudent investor rule
The duty to invest and manage the funds of the the trust as a prudent investor would in light of the purposes, terms, distribution requirements, and other circumstances of the trust
Strictly prohibited activities by VI code
1) Trustee cannot lend trust funds to self, relative, or affiliate
2) Trustee cannot sell trust property to self, relative, or affiliate
3) Trustee cannot sell trust property to self as trustee of another trust
4) in the case of a corp trustee purchasing its securities or an affiliate securities for the trust
Liability of trustee
Not liable if:
1) The trustee has not joined in exercising a power
OR
2) The trustee joins in an act at the direction of the majority but he dissents in writing to any of his co-trustees @ or before the time of the joinder
Contract liability of trustee
Contract liability of trustee to be paid out of trust property as long as contractual obligation was entered into under trustee’s trustee capacity
“Liz as trustee”
Tort liability
Tort liability to be paid out of trust property where tort was committed in the administration of the trust and:
1) The tort is a common incident of the kind of business activity in which the trustee was properly engaged
2) Trustee was not personally at fault in incurring liability
Trustee not otherwise entitiled to exoneration
Value of rest - if tort increases value of res-trust property - The trustee is entitled to be reimbursed only to the extent the trust property increased
Settlor to create a trust
Must have:
Capacity
intention
to impose affirmative duties for some purpose
Beneficiary powers
Must have full capacity and be acting on full information
1) Deliver to trustee in writing:
a) Relieve trustee from statutory restrictions w/ respect to that beneficiary
b) may release trustee from past statutory violations w/ respect to that beneficiary
Beneficiary may sue to:
1) Compel trustee to act
2) prohibit trustee to act
3) have trustee removed
4) have a receiver appt
5) sue for damages
6) compel trustee to redress breach of trust
Spendthrift provision exceptions
1) Alimony
2) child support
3) creditor who provided essentials (food, water, medical services)
4) Services provided to protect beneficiaries interest in trust
5) Gov
Rule against perpetuities
Valid trust
1) beneficiaries must be definitely ascertained at time of cration or ascertainable
2) w/in period of lives in being +21 years
3) Affirmative duties in trustee
4) Trust purpose - legal
5) Trust property must exist (and be definite or definitely ascertainable)
Intervivos trust revoked by a will
The restatement explicitly prohibits this - an inter vivos trust must be revoked or modified during the settlors lifetime or an explicit act as called for by the document
Termination of trust
1) Specified event
2) Merger
3) Trustree transfers property to beneficiaries
4) beneficiaries transfer trust property to trustee
5) purpose of trust becomes impossible or illegal
6) continuance of trust will defeat its purpose
7) settlor who is sole beneficiary and is not under any incapacity may compel to terminate
8) beneficiaries consent so long as not under incapacity and will not defeat purpose
9) consent of settlor and beneficiaries
