Trusts

Question 1

2 Types of Trusts (each has 2 subtypes)

Answer 1

(1) Express trusts (express private trusts & charitable trusts)
(2) implied trusts (resulting trusts & constructive trusts)

Question 2

General requirements for a trust (8)

Answer 2

(1) settlor with capacity
(2) delivers legal title of
(3) trust property (the res)
(4) to competent trustee with duties
(5) for the benefit of beneficiaries
(6) with present intent to create a T
(7) for valid purpose

+ (8) in IN, T must be in writing

Question 3

Delivery requirement does not apply to

Answer 3

Self-declarations of trust OR testamentary trusts

Question 4

Present intent to create a trust rules

Answer 4

No magic words required; we intent to create a T when we intend the consequences of a T (put legal title in persons name with a duty to manage that property for others)

Precatory language (“hope” “wish” “desire”) - general rule: PL does not create a T; can be overcome by: definite & precise instructions, directions addressed to a fiduciary, a resulting unnatural disposition of property if T not imposed, or extrinsic evidence shows settlor previously supported the intended beneficiary

Question 5

For proper purpose - rules

Answer 5

Not illegal or contrary to public policy (induce others to engage in criminal activity, limit religious freedom, encourages divorce, unreasonably restrains right to procreate or marry)

+ a T will be invalid if it was create to defraud S’s creditors or based on illegal consideration

Question 6

Trustee requirements

Answer 6

In IN, T’ee must be: (1) at least 18 y/o, )2_ pf sound mind & (3) of good moral character

S must intend to impose enforceable duties on T’ee - any duty suffices, even if its just to xfer property to beneficiary when T terminates —— in IN, if Trustee has no powers or duties related to trust administration, the title to the T property will be treated as having vested directly in beneficiary on date of delivery to trustee

Sole trustee of a T CANNOT be sole beneficiary of a T (if so, titles merge & T terminates)
—- IN rule: there is no merger of legal and equitable title if the beneficiary is protected under a spendthrift trust –> instead, ct will appoint a new trustee