what is a trust
a trust is a fiduciary relationship in which a trustee holds legal title to specific property under a fiduciary duty to manage, invest, safeguard, and administered the trust assets and income for the benefit for the designated beneficiaries, who hold equitable title
what is a trustee
a fiduciary who has the responsibility of ownership but receives no benefit from the legal title
property in an inter vivos trust passes outside of probate
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5 main elements of a trust
- intent
- identifiable corpus
- ascertainable Bs
- proper/legal purpose (for creating the trust)
- compliance with requisite mechanics and formalities
5 elements for an express trust
IOW: how to create a valid trust
- settlor
- settlor (grantor, donor) with capacity to convey
- present intent
- settlor has present intent to create trust for a valid purpose
- deliver to trustee
- settlor delivers trust property to a competent trustee with duty to hold/manage for beneficiaries
- definite beneficiaries
- split of title
- same person is not the sole trustee and sole beneficiary
does a trust need consideraton
no
list (6)
present intent to create trust relationship
The Yes’s
- intent manifested at time property is owned
- must intend to take effect immediately
The No’s
- NO formal words required
- NO communication to B that B will gain from trust required (aka not necessary)
- mere hope, wish, suggestion do NOT create trust
- CANNOT change character of gift
split of title
split of tile ok as long as same person does not own legal and equitable title
identifiable corpus
need trust property (res)
what type of property can be held in trust
any property that the settelor can transfer!
what type of property cannot be held in trust
any property that the settelor has no right to transfer!
ie expectancy you have to be someone’s heir, your spouses ½ in a community property states, future income
who is a B
one (person or corporation) who can take title and hold title
- current B
- first-line remainder man - person who will receive B’s interest if B does something to not receive it
Anti-lapse statutes can be applied to future interests created in trusts
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divorce
benefits are voided for spouse who was originally a beneficiary
list (5)
trust purposes are invalid if
- illegal
- contrary to public policy
- impossible to achieve
- intent is to defraud the settelor’s creditors
- based on illegal consideration
wait and see period
90 year vesting period to save interest
list (5)
how does a person accept trusteeship
- Writing- signing trust or separate written acceptance
- Compliance - substantially comply with accepted terms in trust instrument
- Delivery - accept delivery of trust property
- Performance - exercise powers or performing duties of trust
- Acceptance - indicate acceptance
list (4)
removal of trustee
- serious breach of trust
- serious lack of cooperation among co-trustees
- unfit, unwilling, or persistent failure to administer
- substantial change in circumstances
SOF applies to
trusts for land
PER in trust formation allowed?
most states allow extrinsic evidence where there is an ambiguity
pour-over gift from will to trust
trust has to be clearly ID’d in the will
testamentary secret trust
- Settlor agrees with a will beneficiary that the WB will hold the property for intended B in a trust.
- Settlor relies on WB’s promise BUT the will does not state the nature of the trust (holding property for the IB)
- The intended B can present extrinsic evidence of the WB’s promise to hold property in a trust.
- If promise can be proven through clear and convicting evidence, a constructive trust will be created in favour of the intended B
testamentary semi-secret trust
makes gift in trust but fails to name B
