Requirements for a valid Private Trust?

(1) There is a settlor with a the capacity to make a trust

(2) Intent to create trust

(3) A trustee exists or is ascertainable

(4) Beneficiaries

(5) Property for the trust

(6) Valid and legal trust purpose

Can one person be both the exclusive trustee and exclusive beneficiary?

No.

When is a promise to create a trust in the future valid and actually form a trust?

(1) supported by consideration

OR

(2) re-manifestation of intent for creation

What is a support trust?

The trustee has no discretion and is required to use the trust, both principle and income, as much as is needed, to provide for the support of the trustee.

What is the standard that must be met for a support trust to be terminated?

All beneficiaries must agree, which can be difficult if some of them are not available or unborn.

What is a discretionary trust?

Trustee has discretion on when, how, what trust assets are to be used.

What is the standard that must be met for a discretionary trust to be terminated?

Abuse of power - when the trustee acts in bad faith, to their own benefit (self dealing), or is dishonest.

What is a spendthrift trust?

Spendthrift trusts protect the beneficiary by limiting spending and preventing the squandering of assets.

Beneficiaries cannot voluntarily or involuntarily assign or otherwise transfer their interests.

What is the standard that must be met for a spendthrift trust to be terminated?

(1) all beneficiaries agree

AND

(2) termination does not undermine the intent of the settlor when creating the trust

Appropriate grounds for removing a trustee?

(1) a substantial change in circumstances

(2) dishonesty

(3) inability to work with trustee

(4) trustee fails to act in accordance with duties

Beneficiaries must be definite. What does this mean?

Beneficiaries don’t need to be specifically identified when the trust is created as long as they are ascertainable when their interests vest.

Can beneficiaries be a class instead of individual people?

Yes, as long as sufficiently definite.

Who takes the benefit of the trust when it fails for lack of definite beneficiaries?

Reverts back to the settlor or their successors.

Under what circumstances can creditors of beneficiaries receive payment from a trust?

When . . . .

(1) the beneficiaries are otherwise unable to pay

(2) it is not s spendthrift trust

(3) there is no statutory prohibition to the contrary

(4) the payments do not exceed what is due to the beneficiary (i.e., the interest of the beneficiary is the only thing that can be taken, not the trust res).

When is the Cy Pres Doctrine at issue?

When . . .

(1) the trust has a specific charitable intent, which is no longer possible to satisfy

(2) the settlor had generalized charitable intent when creating the trust

(3) in such cases funds may be allocated to charities that have a similar purpose to the originally indicated charity.

Brief Summary of a support trust?

Trustee must use trust income and principle, to the extent needed, to support the beneficiary.

Brief summary of a discretionary trust?

Trustee has discretion to use or withhold trust assets.

General rule for the termination of a trust?

(1) all beneficiaries must agree

And

(2) termination does not destroy the fundamental intent of the settlor in creating the trust.

What is a trustee?

A trustee receives legal title to property and has a fiduciary obligation to use the trust for the benefit of the beneficiaries.

What is trust merger?

A trust merges and no long exists when the only trustee in some manner becomes the only beneficiary.

What is the common law rule of irrevocability?

Irrevocability of a trust is presumed unless the trust document states otherwise.

What is a revocable trust?

The settlor has the right to amend, cancel, alter the trust.

What is the power of appointment?

The receiver of trust funds has the right to assign benefits / payments to OTHERS as they see fit.

What is the general power of appointment?

The receiver of trust funds has the right to assign benefits / payments to OTHERS OR THEMSELVES (including their estate, creditors, etc.) as they see fit.

What is the special power of appointment?

Receiver of trust funds can only distribute to specific classes of persons which do not include the receiver.

Again, what is an irrevocable trust?

The trustee, settlor, and beneficiaries cannot amend or revoke the trust once settled. The settlor is not allowed to take back the property from the trust.

Who has legal title and equitable title to a trust?

Legal title => trustee

Equitable title => beneficiaries