private express trust
a fiduciary relationship with respect to property whereby one person, the trustee, holds legal title for the benefit of another, the beneficiary, and which arises out of a manifestation of intent to create it for a legal purpose
trust property (rule)
any presently existing interest in property that can be transferred can be the corpus of a trust
beneficiaries (rule)
any ascertainable person or group of people can be the beneficiary of a private express trust
trustee (rule)
a trust must have a trustee, but the court will not allow the trust to fail solely because there is no trustee or a trustee refuses to serve, and the court will appoint one
precatory words
words of wish, or hope, or desire
manifestation of trust intent
there must be present manifestation of trust intent made by the trustor
statute of frauds (applicability to trusts)
a writing is required if the transfer itself would require a writing (like the equal dignities doctrine in agency)
testamentary trust
a trust that takes effect at T's death due to a provision in T's will
inter vivos trust (ways to achieve)
1. Declaration of trust by property owner that he holds in trust
2. Or transfer of property by the settlor to the trustee
purpose of a trust (rule)
a trust may be established for any legal purpose that does not violate public policy
improper purpose (remedies)
1. excise the illicit condition if possible
2. invalidate the trust and trustor remains the owner of the property
3. allow the trustee to keep the property to punish the trustor who does not come with clean hands
4. for illegality after creation, decree a
resulting trust
an implied in fact trust based upon the presumed intent of the parties where the resulting trustee's only obligation is to transfer the property back to the settlor or settlor's estate
charitable trust (definition)
any trust which confers a substantial benefit upon society
private express trust (elements)
1. settlor with capacity and manifestation of present intent
2. a trustee
3. trust property (res)
4. beneficiaries
5. valid trust purpose
6. meets the formalities
rule against perpetuities (applicability to trutsts)
trusts must satisfy the rule against perpetuities, unless it is a charitable trust
cy pres (meaning)
as nearly as possible
a charitable trust is impossible to carry out (options)
1. a resulting trust
2. cy pres
cy pres (rule)
if trustor manifests a general charitable intent based on evidence, but the mechanism for effectuating that intent is not possible or practicable, the court can modify the mechanism cy pres to effectuate the trustor's general intent as nearly as possible
pour over will
a provision in a will devising part or all of the estate to trustee of an established inter vivos trust
honorary trust
a trust which has no ascertainable B and confers no substantial benefit upon society, that the trustee may decide to carry out
totten trust or account
a will substitue where the named beneficiary takes whatever is left in the account at the death of the owner of the account
alienation of a trust (general rule)
the beneficiary can voluntarily alienate her trust and creditors can involuntarily alienate a beneficiary's interest in the trust
spendthrift provision of a trust
Provides that B may not voluntarily or involuntarily transfer his interest
preferred creditors (examples)
1. a government creditor
2. those providing the necessities of life to B
3. a child for child support
4. a spouse for spousal support
5. an ex-spouse for alimony
6. a tort judgment creditor
support provision of a trust
a provision where the trustee is required to use only so much of the income or principal as is necessary for the B's health, support, maintenance, or education
discretionary provision of a trust
provision where the trustee is given sole and absolute discretion in determining how much to pay the B, if anything, and when to pay the B if ever
where a resulting trust arises (situations)
1. a private express trust ends by its own terms, and there is no provision for what happens to the corpus after
2. a private express trust fails because there is no beneficiary
3. a charitable trust ends because of impossibility or impracticability and c
semi-secret trusts
arises when the will makes a gift to a person to hold as trustee, but does not name the beneficiary
constructive trust
a remedy to prevent fraud or unjust enrichment where the wrongdoer's sole obligation is to transfer the property to the intedned beneficiary as determined by the court
constructive trust (situations)
1. where a trustee makes a profit because of self-dealing
2. when there is fraud in the inducement of a will or undue inflence
3. secret trusts in the law of wills
4. oral real estate trusts
secret trust
the will on its face makes a gift outright to someone, but the gift is given on the basis of an oral promise to use the property for the benefit of a third party
oral real estate trusts violate the statute of frauds (exceptions)
1. there is a fiduciary relationship between the settlor and the fiduciary
2. there was fraud in the inducement of the receiver
3. there was detrimental reliance by the beneficiary
trustee powers
all enumerated powers and implied powers helpful and appropriate to carry out the trust purpose
implied trustee powers (examples)
1. power to sell trust property
2. power to incur expenses
3. power to lease
4. power to borrow
trustee duties owed to beneficiaries
1. duty of loyalty
2. duty to invest
3. duty to earmark
4. duty to segregate
5. duty not to delegate
6. duty to account
7. duty of care
duty of loyalty (trustee)
to administer the trust for the benefit of the beneficiaries, with no other consideration in mind; or, no self dealing
duty to invest (trustee)
to follow the state investment list, act as a prudent or reasonably prudent investor, and to diversify so that if there is a loss, the entire portfolio is not wiped out
duty to earmark (trustee)
a duty for the trustee to label trust property as trust property
duty to earmark (trustee liability)
at common law for any loss, and at modern law for any loss caused by the failure to earmark
duty to segregate (trustee)
the trustee cannot comingle his own personal property or other trust property with trust funds
duty to account (trustee)
the trustee on a regular basis must give the beneficiaries a statement of income and expenses on the trust
duty of due care (trustee)
the trustee msut act as a reasonably prudent person dealing with his own affairs
breach of trustee duties (remedies)
1. damages
2. constructive trusst
3. tracing and equitable lien on property
4. ratify the transaction if good for beneficiary
5. remove the trustee (always)
indemnification of trustee
if the trustee acted within his or her powers and the trustee was not personally liable
modification by settlor allowed (rule)
if the settlor expressly reserves the power to modify the trust or reserves the pwoer to revoke the trust
deviation power or doctrine of changed circumstances
the court changes the administrative or management provisions of the trust
deviation power or doctrine of changed circumstances (requirements)
1. unforeseen circumstances on the part of the trustor or settlor
2. necessity or the need to do so to preserve the trust
termination of revocable trust (majority and minority rules)
majority is that the settlor has to expressly retain the power; the minority is that the settlor has the power to revoke unless expressly made irrevocable
termination of irrevocable trust (ways)
1. settlor and all the beneficiaries agree to terminate, including contingent remaindermen
2. all the beneficiares agree to termiante and all the material purposes have been accomplished
3. by operation of law (passive trusts and statute of uses)
statute of uses
the trust terminates and beneficiares get legal title by operation of law when the trustee is simply holding bare legal title to property
inter vivos trust
trust created during settlor's life