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Trusts Bar Mini Outline

Law Outlines > Wills and Trusts - Bar Exam Outlines

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1. 7 elements for a valid trust a. Private Express Trust Defined b. Settlor c. Delivery from Settlor to trustee d. Trustee e. Present intent f. Trust property (res) g. Beneficiaries h. Valid trust purpose

2. Types of trusts a. Discretionary b. Mandatory c. Spendthrift d. Honorary e. Secret f. Semi-secret g. Revocable h. Totten i. Charitable

3. 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." a. Property of the Trust - any presently existing interest in property that can be transferred can be the corpus of a trust (debt is a liability not property) i. Illusory interests cannot be the property of a trust (i.e. Future Profits / Expectancy) b. Beneficiary - Any ascertainable person or group of people can be beneficiary of a private express trust (Corporations ok) i. Unincorporated associations

1. CL - unincorporated association could not be beneficiary of a private express trust

2. Modern - can be beneficiary ii. Class gifts are valid - but watch out for a class gift that is too big iii. A child conceived when the interest was created and later born - deemed ascertainable

1. Beware of RAP problems c. Trustee - A trust must have a trustee, but court will not allow trust to fail solely because there was no trustee or the trustee refuses to serve. The court will simply appoint a trustee. i. Until trustee is appointed - settlor will hold legal title d. Manifestation of trust Intent i. Present Intent - There must be a present manifestation of trust intent made by the settlor (i.e. No magic words required) ii. Precatory words - by themselves, are not sufficient to create a trust (i.e. wish, hopes)

1. Note - Precatory words + Parol Evidence may create a trust iii. SOF - Trusts of personal property don't have to be in writing - SOF only applies to real property. e. Creation - 2 timeframes are important i. Trust created to take effect at settlor's death - testamentary trust

1. Only way to do this is by complying with statue of wills - settlor is a testator

2. So part of T's will has a provision for a testamentary trust ii. Trust created to take effect during his lifetime - 2 ways to do this 1

1. Transfer in trust - 3rd person is the trustee a. For trust of Real Property - Settlor must execute and deliver a deed transferring title to trustee b. For trust of Personal Property - must be delivery (symbolic / actual /
constructive) to trustee of the trust property at the time settlor manifests the intent to create the trust i. No delivery to trustee - no trust

2. Declaration in trust - Settlor himself is the trustee a. For Real Property - must be writing satisfying SOF indicating that settlor also trustee b. For Personal Property - no issue of delivery - only look to present manifestation of trust intent f. Legal purpose i. Trust may be established for any legal purpose ii. Illegaility

1. Illegality at creation - try to excise the bad from the good, if can - trust will stand a. If not possible to excise illicit condition and sever good from bad - court has 2 options - will do whatever achieves best result - i. Invalidate the trust at its inception - settlor remains owner of property ii. Allow trustee to keep property for himself - as punishment to settlor, because he has unclean hands

2. Illegality after creation - due to change in law - resulting trust is decreed

4. Charitable Trusts a. Defined i. Statute of Elizabeth - CL - trusts for education, alleviation of poverty, alleviation of sickness, to help orphans ii. Restatement - any trust which confers a substantial benefit upon society

1. i.e. help the poor / sick, promote religion / education b. Creation - same way as a private express trust: i. (1) Manifestation of trust intent which can be done, (2) at T's death by will or (3) during S's lifetime by declaration of trust or by transfer in trust (4) of a presently existing interest in property that can be transferred (5) for a legal charitable purpose. c. Beneficiary - NO ascertainable person or group of people who are beneficiaries i. Beneficiary of the trust is society - an individual may receive incidental benefit (endowed chair), focus is on society ii. If beneficiary is a small group of people (help my poor relatives) - 2 views

1. It is a private express trust because only a few people are getting benefit

2. It is a charitable trust because when poverty is eliminated society benefits d. RAP - CL RAP doesn't apply to charitable trusts - can endure for ever e. Cy pre Doctrine - ("as close as possible") - This resolves the issue of the charitable purpose becoming impossible, impractical, or illegal. The court will modify the trust if it has a general charitable purpose (save extinct birds vs. save the dodo bird), that is now become illegal, impractical, impossible. The court will find a purpose that can be carried out and is as close as possible to the trustor's purpose. i. Only the court can invoke Cy Pre - Not the trustee on his own. ii. If court finds that the settlor had a specifc charitable intent - the property goes back to the settor or his estate

1. To determine general or specific - we introduce both intrinsic evidence (trust instrument) and extrinsic evidence to ascertain the settlor's intent 2

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