Trust - Barbri & Elder Care.txt

1. Trustee: legal title - all burdens of ownership

2. Ben: equitable title - benefits of ownership

1. Settlor (over 1, capacity, higher test than cap for Will)

2. Delivery (not necessary for declaration)

• 3. Res: Certain and identifiable; includes future event
• - X for life; Y thereafter - Y can convey in trust during X life

4. Trustee (but Trust doesn't fail for lack of Trustee; court appoints)

5. Beneficiaries - no oral test to ID ben?

6. Intent

consideration is not a requirement

trust property

a promise to give property later is not res, unless supported by consideration b/c K law applies and trust attaches when X receives property

1. capacity to K and execute deed

2. entity - only banks w/ trust powers

3. post fiduciary bond unless settlor waives (corp never required to post bond)

4. reasonable compensation and reimbursement (not 5% in/out rule)

- can't force to serve

- don't need to accept in writing (can accept by conduct)

- bank resigns w/ court upon showing can no longer appropriately serve; must give accounting (received/distributed/now on hand) - unless trust agreement specifies otherwise

then it is not a trust

must owe duty to someone

1. definite and ascertainable

2. interest must vest no later than lives in being + 21 years

- can't be identifiable individual

- not subject to ROP

Term court applies when trust fails

"to friend for life, then to Sam"

Resulting trust for Sam (but actually receives outright)

"hope that, desire that"

- not binding

= valid trust

no need to state "in trust" or "as trustee"

• 1. commision of crime (run drug operation)
• - trust can be created, but heirs of defrauded party can bring action to recover

2. destruction of property (knock down house)

• 3. unlawful condition against public policy
• - encourage divorce
• - complete restraint on marriage (can cut off at 2nd marriage though b/c intent was to support while SS was a widow)?
• - if case, then beneficiary takes outright

personal property - not necessary if

1. transfer to Trustee other than settlor or beneficiary; and

2. coupled with declaration of intent w/ or prior to transfer

Yes, must be in writing

1. all trusts revocable unless state otherwise

2. any revocation/amendment must be in writing (even to oral trust)

3. Guardian can't revoke/amend (only court)

4. divorce revokes all in favor of divorce spouse unless re-executed or part of k/divorce proceeding

- don't need to fund during life; not even $1

- exception to incorporation by reference

1. don't need W

2. trust law controls

3. had intent and is in writing

to:

1. trustee under my will; and

2. also authorizes employee benfits to Trustee under will or revocable trust

Only the decedent needs to sign, unless

CP account between H/W

Also, during life, ownership of joint account is proportionate to contributions

must survive 120 hrs

1. signed and acknowledged

2. no affected by later disability if contains that language

3. third party w/o knowledge of revocation or dead is protected

4. divorce revokes x spouse powers (but not bankruptcy)

5. G' revokes

1. no RAP, but cy pres reformed if individual if ssecondary beneficiary - "to charity while charitable, then to X -> if not charitable during X's lifetime, then...

2. purpose: "for charitable purpose" "for arts" is enough

3. reasonably large segment of population: (no individuals)

4. cy pres: judicial proceeding if charitable purpose can no longer be served to modify

"to cure polio"

Once cured, cy pres or dissolve and give to heirs?

AG argues still other diseases and go w/ INTENT

- if charitable organization is no longer in existence or not a 501

- but must give AG notice

$25k to take care of my car

- not a real trust (no enforceable duty)

- Trustee decides whether to enforce; also only lasts 21 years

if Truste doesn't want to perform, then resulting trust

$25k to use for my cat

- enforceable trust; enforceable by person named (or court appointed)

- only animals alive at Testator's lifetime

- use individual in instrument as measuring life

- terminates at animal's death

- remainder to estate/will (or settlor if alive)

• A pays $ for land to X
• B takes title to land

A can compel conveyance at any time

But: evidence admissable to show gift/loan

If A&B related, assumed a gift (can rebut)

Equitable result (not really a trust)

- wrongful conduct; and

- unjust enrichment

- treated as though killer predeceased (by statute)

- Life Insurance: goes to named successor beneficiary on policy - by statute (no constructive trust).

- if no successor, then to estate

- Estate assets: B treat as predecased; in constructive trust for successor

• W1: all to A&B
• W2: all to X (but never signed due to A&B preventing it)

= constructive trust for X held by A&B (though A&B never really hold funds)

1. K for necessities

2. child support

3. interest retained by settlor (including rev trust)

4. fed tax liens

(normally creditor can't reach, even if settlor assigns)

made with intent to defeat, delay or defraud creditors

Creditor of G:

• - can reach G's 1/2 income
• - can't reach principal
• - can't reach any interest of S

all Trustee needs to say is "this is spendthrift trust"

as little as "this is a spendthrift trust" is enough

Creditor of G can attach up to amount Trustee could distribute to G

here, 100%

even if purely discretionary (in TX at least)

"may distribute for support at discretion of T, without challenge by any person"

Ben can compel distributions (abuse of discretion to not make distributions)

purpose of trust is for support, not to give Trustee discretion (even if purely discretionary as to support!)

if distributions in excess of support, remainderman can sue

so, can her creditors reach support amount?! since she can compel!?

Not HEMS standard

Can not compel and creditors can not reach

B can compel distributions for support

can creditor for non-necessities?

Creditor who provided necessities? YES

JX: DC and statutory probate courts over intervivor and testamentary trusts

• venue:
• Ind Trustee: county residency or situs

2 ind Trustees: situs

corp: situs of T office

if FS owners could do it, so can Trustee, unless expanded or restricted by Trust terms

• except:
• - self-dealing
• - imprudent investments

1. Trustee can't borrow funds (except: corp trustee interim deposits; and settlor can allow investment in corps own CDs)

2. Trustee can't buy/sell to itself (exc: corp can w/ court order)

3. Trustee can't loan to Trust

4. can't profit from serving as Trustee (confidential info)

5. corp Trustee can't buy own securities (can retain though)

6. Can't commingle w/ own assets (if do, then if goes up, used T funds; if goes down, used own funds)

Settlor can't waive above as to corp Trustee

• - ratify
• - sue for Losses (surcharge)
• - sue for constructive trust

SOL: 4 yrs, but doesn't begin until resignation/dies, accounting or repudiates trust

Modern Portfolio Theory:

• - look at total return
• - prudence of act measured at conduct, not hindsight

- maintain custom tailed investment strategy w/ regard to purpose of trust

- role of each investment and expected total return

- duty to diversify (can't just keep all 1 stock)

"where appropriate" look at:

• - purpose of Trust
• - intent of settlor w/ respect to B's
• - net amount of p/i available
• - increase/decrease of value of assets
• - does trust even allow distribution of p?
• - tax consequences

- delay rental: income

- royalty bonus: allocate equitably (15% p)

- production payments: any "interest" = income, rest is p

- IRA: weird

- liquidating assets: 10% income / 90% p

- from entity: income, unless cap gains

- stock dividend : P

- Trustee's commission: 50/50

Ordinary Expenses (every year): from income

Capital Expenditures: from P

Trustee's commission: 50/50%

K: no personal liability unless fails to disclose acting as Trustee

Tort: liable, but reimbursed if acting in business action for Trust

doesn't relieve for bad faith, gross neg, or fraud

• 1. compel to perform duties
• 2. enjoy from committing breach
• 3 copel to redress / restore assets
• 4. order accounting
• 5. appoint receiver / administrator
• 6. removal
• 7. reducy / deny compensation
• 8. impose constructive trust
• 9. trace and recover trust property and void act
• 10. any other appropriate relief

1. no, b/c B holds legal title

2. exceptions:

- Trustee unable or unwilling

- 3rd party participated w/ Trustee in committing breach of trust

Trustee or Beneficiary:

1. if purposes of Trust have been / can't be / illegal to fulfill

2. . changed circumstances, then modify/terminate will further purpose

3. achievement of tax purposes

4. if continuiation of Truste not necessary to achieve material purposes

for any reason, but usually tax purposes

reasonable time after termination to:

- wind up

- make distributions

doesn't affect HEMS standard

doesn't include in estate/expose to creditors

doesn't qualify for marital deduction

• - QTIP able
• - if no QTIP election made, it is still terminable interest

Can be QTIP or Bypass based upon planning elections

no, must use CRT

- unlimited, but must pay directly to provider

- paying off tuition debt does NOT qualify

- $100k to irev trust for kids, but G keeps income for life

- at death, $110k in trust

= gift of 100k, but $110k is included in estate

(just explain on 706 and get exclusion back)

142 trust

protect medicaid applicant under age of 65

not for income test

protects "Assets" and qualifies due to excessive assets

no look-back or waiting period

anything remaining at end to state to pay back medicaid

Miller Trust

passes Income Test

Pension, SS, other payments

distributes as much income as would not disqualify applicant from medicaid benefits

at death, remaining is payable to state in reiumbsement for medical expenses paid by medicaid

Pooled Supp Needs Trust

implemented and managed by non-profit

remaining asests to State to reimburse for medicaid expenses

for disabled beneficiary

typically for inheritance/gifts

distribute to B as much income and principal as will not disqualify B from medicaid

Distributions limited to distributions in favor of disabled B's special needs

pay back to Gov't?

36 months to anyone but trust

60 months to trust

amount transferred divided by average monthly cost for care in area = months won't receive benefits