Wills and Trust - Trust

intent to create a trust, trust property, trust beneficiaries, written instrument

A definite beneficiary. A beneficiary is definite if the beneficiary can by ascertained now or in the future

If the trust doesn't have a def. beneficiary, the trust must be a charitable trust, a trust for the care of an animal, or a trust for a non charitable purpose, to be a valid trust.

NO, the settlor could create a oral trust?

The creator of an oral trust, and it's terms may be established by clear and convincing evidence

It is a remedy and is used as a device for preventing unjust enrichment by moving legal title from a person who has title but should not, to someone who should Constructive trust do not impose duties on the "trustee".

• Mandatory 
• Discretionary 

The trustee must make specified distributions to an identified beneficiary

The trustee has the discretion over who and when to distribute the property under the trust

Not to act in bad faith

NO

It is a clause that excuses the trustee from liability when the trustee fails to follow through under his duties

The creditors CAN get access

EXCEPTION: where creditor can get access is when a spendthrift provision, a discretionary trust, or a protective trust is created 

It is a trust created by imposing a disabling restraint upon the beneficiaries and their creditors.  A beneficiary of a spendthrift trust cannot voluntarily alienate (transfer) her interest. Nor can her creditors reach her interest in the trust.

A protective trust begins with a beneficiary receiving a mandatory interest, but that mandatory interest becomes discretionary if the beneficiary attempts to transfer the interest OR a creditor of the beneficiary seeks to attach the beneficiaries interest, the interest either terminates or becomes discretionary

During the life of the settlor, the property of a revocable trust IS subject to settlor's creditors. 

With respect to an irrevocable trust, a creditor may reach the maximum amount that can be distributed to or for the settlor's benefit

After the death of the settlor, the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors.

A trust is revocable unless declared irrevocable

Modification and Termination of Trust

If continuance of the trust without modification or termination is necessary to carry out a material purpose of the settlor, the beneficiaries cannot compel modification or termination

directs the trustee

Role is to represent the interest of the settlor when the settlor is no longer around to represent his own interest.

Yes, by the court, to conform the terms to the settlors intention if it is proved by clear and convincing evidence that both the settlors intent and the terms of the trust were affected by a mistake of fact or law.

• Donor's create a power of appointment. It is typically created
• in the trust beneficiaries. It gives the person who holds the power the ability to distribute the trust property.

Donor - the one who creates the power

Donee- the one who holds the power and can exercise the power 

Objects - those in whose favor the power could possibly be exercised 

Appointee - the one to whom the property is appointed

Taker in Default - the one who takes the property upon failure of the Donee to exercise the power

Donee's are also known as the powerholders

• Objects are also known as the permissible appointee's
•  

General and Special

Can be exercised in favor of the donee, donee's estate, donee's creditors, OR creditors of donee's estate

CANNOT be exercised in favor of donee, donee's estate, donee's creditors, or creditors of donee's estate.

Future Interest remaining in the grantor who transfers a vested estate of a lesser value than that of the vested estate that he has

Future Interest that remains in the grantor who conveys a fee simple determinable. "for so long as"

Future interest that is retained by the grantor who conveys a fee simple subject to a condition subsequent. "but if"

A remainder is vested if it is given to an ascertained person (alive and can be identified), and is not subject to a condition precedent

It is certain to become possessory?

It is not given to a presently ascertained person OR it is subject to a condition precedent

Divesting interest; divest a preceding estate

Remainder and Executory Interest

interest that naturally follows the expiration of the preceding estate

Shifting - divest another transferee

Springing - divest another transferor

A gift of the entire income to a person (or to a class), with principal to be paid at a designated age, indicates that survival to the time of possession is not required.

 "to be paid to them at the age of __. "  "Payable at" Enjoyment postponed. Each person has an interest, it just doesn’t become possessory until later.

death of designated individual, death of one who's heirs are to receive the property

O > A for life, remainder to heirs of O = O>A for life, reversion to O

Abolished in NC; now you can actually invest a remainder to the heirs of O, without the interest going back to O

O>A for life, remainder to the heirs of A = O>A in fee simple absolute

Abolished in NC; now you can actually invest a future interest to the heirs of A

• Physiological - when all individuals who can feed the class are dead?
•  Ex: the class "to my nieces and nephews" closes physiologically when the donor's siblings and parents die.

Convenience - when any class member has the right to demand possession of the interest. (quicker than physiological) 

An interest MUST vest, if at all, within the lives in being plus 21 years from the time of the creation of the trust.

Ask: During who's life, at who's death, or 21 years after death, can you determine if the interest will vest or fail?

Identify all interest

Identify interest subject to rule

WHEN will interest vest/fail and HOW

During who's life; at who's death OR 21 years after who's death will contingency occur (gives us list)

Valid if : person from list or whole class is certain to be alive at creation of interest  

Invalid If: person from list is not alive OR some of class is not alive

A class gift must be valid for all members of the class, or it is valid for none.

It is unenforceable to the extent that it relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries.