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Flashcards in Trusts Deck (33):
1

Elements of private express trust

(1) settlor has capacity
(2) manifestation of intent
(3) trust property (rest)
(4) delivery
(5) trustee
(6) ascertainable beneficiary
(7) legal purpose

2

Types of trusts

1. inter vivos trust
2. testamentary trust
3. charitable trust
4. resulting trust
5. constructive trust
6. honorary trust
7. spendthrift trust
8. discretionary trust
9. support trust
10. will substitutes

3

What is an inter vivos trust?

trust created while settlor is alive

legal reqs: 7 trust elements; AND 2 options for inter vivos trust
(1) transfer in trust
(2) declaration of trust

Writing req for real property

Parole evidence admissible if writing ambiguous on its face

4

Legal requirements of an inter vivos trust?

7 trust elements;
AND
2 options for inter vivos trust:
(1) transfer in trust
(2) declaration of trust

Writing req for real property

Parole evidence admissible if writing ambiguous on its face

5

Is parole evidence admissible for an inter vivos trust?

Yes, if the writing is ambiguous on its face

6

Testamentary Trust

= trust contained in a will

legal reqs:
7 trust elements AND
TERMS ASCERTAINABLE BY:
- terms of the will instrument
- existing docs incorporated by reference
- acts having independent significance; OR
- power of appt

7

Legal reqs of testamentary trust

legal reqs:
7 trust elements AND
terms ascertainable by
- terms of the will instrument
- existing docs incorporated by reference
- acts having independent significance; OR
- power of appt

8

Charitable Trust
(and legal reqs)

Trust created for benefit of society

legal reqs:
6 trust elements (all elements except ascertainable beneficiary req)
(7) unascertainable beneficiaries
(8) RAP ≠ apply
(9) Cy pres doctrine - only applies to charitable trusts, not to private express trusts

- reqs (for cy pres doctrine):
(a) general charitable intent
AND
(b) mean impracticable/not possible

- no cy pres if specific charitable intent = resulting trust

9

Which trusts do the cy pres doctrine apply to?

only to charitable trusts

- reqs:
(1) general charitable intent
AND
(2) mean impracticable/not possible

no cy pres if specific charitable intent = resulting trust

10

Resulting Trust

(1) implied in fact trust
(2) private express trust = resulting trust when...
(3) charitable trusts = failure of charitable trusts + cy pres inapplicable
(4) purchase money resulting trusts
(5) semi-secret trusts = gift in trust but beneficiary not name

11

When do Private Express Trusts become Resulting Trusts?

1. Natural termination and no provision for remaining trust corpus

2. Beneficiary Problems
- failure due to lack of ascertainable beneficiary
- beneficiary dead or cannot be found

3. Trust is void/unenforcable

4. Express Corpus

12

When do purchase money resulting trusts occur?

• consideration must be paid before or when trustee takes title

• rebuttable presumption

• burden of proof = beneficiary (clear and convincing evidence)

• exception: close personal relationship = rebuttable presumption of gift

13

When do semi-secret trusts become resulting trusts?

Gift in trust but beneficiary not named

14

Constructive Trusts

Equitable restitutionary remedy designed to prevent unjust enrichment

• Burden of proof = clear and convincing evidence on party seeking constructive trust

• BFP > Beneficiary

• Equitable Defenses Available

15

What are common situations for constructive trusts?

• theft/conversion
• fraud/duress/mistake of fact
• breach of fid. duty
• arising from homicide
• breach of promise = generally no; EXCEPTIONS
º fiduciary relationship
º fraudulent promise
º detrimental reliance
º secret trust = gift absolute on its face but made in reliance of promise (parole evidence admissible) (burden of proof = clear and convincing evidence)

16

What is the burden of proof for a constructive trust?

clear and convincing evidence on party seeking constructive trust

17

Honorary Trust

Trusts w/ neither a charitable purpose nor ascertainable private beneficiary where the trustee is "on her honor" to fulfill her duties and carry out settlor's intent

trustee unwilling = resulting trust

violate RAP

18

RAP and Honorary Trusts

Violate RAP = honorary trusts do not have a measurable life so they violate RAP

COURTS SPLIT
- trust invalidated at inception = resulting trust
- valid for 21 years followed by resulting trust

19

What are some will substitutes?

1. revocable inter vivos trust
2. life insurance trust
3. totten trust (tentative bank account trust)

20

What is a revocable inter vivos trust?

Pour over will

validated by:
(1) incorporation by reference
(2) acts of independent significance
(3) uniform testamentary additions to trusts act

21

What is a totten trust?

Totten Trust - Tentative Bank Account Trust

Revocable by:
(1) withdrawal of funds
(2) act manifesting intent to revoke; OR
(3) contradictory will

22

How is a totten trust (tentative bank acct trust) revocable?

(1) withdrawal of funds
(2) act manifesting intent to revoke; OR
(3) contradictory will

23

What are the EXCEPTIONS to when a breach of promise can create a constructive trust?

• breach of promise = generally no; EXCEPTIONS
º fiduciary relationship
º fraudulent promise
º detrimental reliance
º secret trust = gift absolute on its face but made in reliance of promise (parole evidence admissible) (burden of proof = clear and convincing evidence)

24

What types of delivery are there?

• actual
• symbolic
• constructive

25

What is actual delivery?

hand-to-hand delivery of property (personal property only)

26

What is symbolic delivery?

some item representing ownership, including a writing (required for real property)

27

What is constructive delivery?

presenting the means to access the property, or modernly, doing everything reasonably possible to put the trustee in possession, without raising suspicion of fraud/mistake

CL: settlor gives trustee access to a place where the property is located b/c property is too large/otherwise unavailable (e.g., a key)

Modern view: settlor has done "everything possible to effectuate a delivery" and there is no fraud or mistake

28

What is a trustee?

A trustee who owes fiduciary duties to the beneficiary is necessary for a trust?

• capacity
• must have duties (no "passive trusts")
• lack of trustee = cts will appoint unless settlor intended otherwise

29

What is an ascertainable beneficiary

Any ascertainable person/group of people can be the beneficiary of a private express trust.

If the beneficiary is too indefinite, no trust comes into being.

By the remedy of resulting trust, the trust property returns to the settlor/settlor's estate.

30

What is capacity?

trust capacity = donative capacity = testamentary capacity

(this is a lesser level of capacity than K capacity)

31

What is the manifestation of intent?

the settlor must clearly manifest that deliver of the property is made with the present intention to create a trust

32

What is trust property (res)?

The corpus of a trust must be a valid currently existing interest in property and may not be a mere expectancy or any other illusory property

(1) validly presently existing interest in property
(2) must be identifiable and segregated
(3) exception: unfunded life insurance trust - in most jxns, a valid trust can be created of the proceeds of a life insurance policy on a still-living person

33

What are some prohibited interest (for trust property (res))?

• no illusory property - e.g., future profits of business
• no mere expectancies - e.g., prospective inheritance/gifts
• settlor's own debt - a debtor may not hold her debt in trust b/c it's not a property interest, it is a liability