Valid Trust

SPIT BSPVT

1. Settlor- capacity to convey

2. Present Intent- no precatory language(wishes, hopes, desires). MUST BE: DEFINITE AND PRECISE

3. Trustee- 18, competent and capacity to enter into K. Intent to impose enforceable duties. No TRUSTEE, COURT WILL APPOINT. If trustee decides to resign, MUST GIVE 30 DAY NOTICE TO ben, settlor, or co-trustee

• TRUSTEE CANNOT be sole trustee and sole BEN...okay if more than one and okay if sole BEN, but more than 1 trustee

4. beneficiary- intended

5. specific property

6. valid trust

18, competent and capacity to enter into K. Intent to impose enforceable duties. No TRUSTEE, COURT WILL APPOINT. If trustee decides to resign, MUST GIVE 30 DAY NOTICE TO ben, settlor, or co-trustee

• TRUSTEE CANNOT be sole trustee and sole BEN...okay if more than one and okay if sole BEN, but more than 1 trustee

MUST BE DEFINITE AND ASCERTAINABLE by time interests are to come into enjoyment. 

• Not REQUIRED FOR HONORARY TRUST OR CHARITABLE TRUST.
• if lack of BEN, presume resulting trust(goes back to settlor).

Must be certain and indentifiable. FUTURE INTERETS are okay if exisitng k or property that settlor has assignable interest in. 

• Personal Property:valid if clear and establishing evidence
• Real property: not valid if violates SOF...must be in writing or constructive trust. 

invalid if illegal, avoids creditors, impossible to achieve. 

if condition attached to it: 

Condition subsequent: eliminate condition and hold trust valid.

Condition precedent: hold interest valid unless evidence to void entire interest. 

CREATION OF EXPRESS TRUST

INTER VTD

WILL(TESTAMENTARY)

1. Inter vivos transfer or Declaration

present intent by conduct or declaring yourself trustee when prop received. 

2. Will(testamentary)--> ascertained from will itself, incorporated by reference, independent legal significance, meet statute of wills.

Semi-secret trust

CHARITABLE TRUST 

- IndefBEN perp cy

1. INDEFINITIE BEN

2. PERPETUAL

3. CY PRES

Charitable purpose: benefit the pulic

unascertainable BEN: individual BEN has no standing. 

CY Pres: when settlor chose charity and no longer practical, will choose another that is similar to the original the settlor intended to give the benefits to. 

RAP

(rule against perpetuities)

Honorary Trust

Animals

freely transferrable if voluntary.

if transfer involuntary, creditors can reach the trust interest, not the property. Will be able to satisfy debt. 

• SPENDTHRIFT PROVISION: prohibits voluntarily or involuntarily transfer BENS interest in the trust before distribution, thus, preventing creditors from reaching trust. 
• Once the trust is distributed, the creditors will be able to get it to cover what is owed to them. 
• NOTE: cannot use a spendthrift to shield itself from creditors. Will be invalid (BEN is the settlor who created it, alimony, government claims, support claims)

Settlor can amend a trust unless it is irrevocable

can modify also if settlor and BEN consent

terminate if prop is less than 50k 

May be modified or terminated when:

not inconsistent with settlor's purpose

best interest of BEN

reformation necessary to correct a mistake

Administer in good faith

Duty of loyalty- no self-dealing

Duty of impartiality- act for the benefit of all BENs

adjustment power: ability to characterize assets as income or principal.

income: money; everything else: principal

CANNOT COMMINGLE FUNDS

CAN delegate investment and management decisions as long as use reasonable care. 

Exculpatory clause: TRUSTEE NOT LIABLE if acted with reasonable reliance or BEN consented and released Trustee from liability. 

Will Substitutes

Pour over gift

Totten trust

Pour over gift from will to trust: settlor can make gifts by will to a trust during his lifetime.

REQ: 1. TRUST MUST BE IN EXISTENCE BEFORE OR CREATED CONCURRENTLY WITH THE WILL.

2. TRUST IS REVOCABLE

3. GIFT IS VALID

totten trust: settlor is trustee of bank account to be paid to BEN upon settlor's death. Will MUST SAY "TOTTEN TRUST". Can be revoked by withdrawal of funds; or if BEN dies before trustee, will automatically be revoked. 

reversionary interests back to settlor. 

will happen from a failure of an express trust because void or uneforceable or trust purpose is fully satisfied.