TRUSTS: CREATION, TYPES, AND CHARACTERISTICS

TRUSTS: CREATION, TYPES, AND CHARACTERISTICS

Definition of a Trust A trust is a legal device that separates the benefits of property ownership from the burdens of property ownership

Basic Paradigm of a Trust Trustee A Life Estate B Remainder

Trust as Gift • Intent • Delivery • Acceptance

THREE REQUIREMENTS FOR EVERY TRUST • Settlor • Trustee • One or more beneficiaries

SETTLOR • Declaration of trust • Transfer in trust • 18 years or older

TRUSTEE • 18 years or older • Bank or trust company with trust powers • Other institutions granted trust powers by statute

Basic Paradigm of a Trust A Trustee D Trustee A Life Estate R B Remainder

Basic Paridigm of a Trust A Trustee D Trustee B sells remainder to A A Life Estate R A Remainder

Basic Paradigm of a Trust A Trustee A Life Estate R A Remainder

Trust Will Not Fail for Want of A Trustee

Beneficiaries • Income beneficiaries • Beneficiaries of Corpus • Mixed beneficiaries

Given a choice between being a trustee or a beneficiary, be a beneficiary

Jimenez v. Lee • What are the facts of this case? • Why might father prefer to be a custodian, rather than a trustee? • What does the court hold?

Language of Intent • Use of word “trust” • Precatory language

Hebrew University v. Nye • What are the facts of this case? • In Hebrew #1, why does the court find the trust fails • In Hebrew #2, why does the court find there was a gift • Court was willing to fudge the gift rules, but not the trust rules. Why?

Unthank v. Rippstein • What are the facts of this case? • What does the court hold? • Review the words in the letter. What argument could you make that: • He did intend letter to be a holographic will? • He intended to declare a trust

Equitable Remedy Trusts • Resulting Trusts • Reversions • Purchase money resulting trusts

Equitable Remedy Trusts • Constructive Trusts • Fraud • Mistake • Undue influence • Breach of a confidential relationship

Necessity of Trust Property Brainard v. Commissioner

Intent to Create a Trust Speelman v. Pascal

Clark v. Campbell • What did T’s will provide? • What was the first argument to sustain the provision? • The second? • How might T have accomplished the goal today?

In re Searight’s Estate • What are the facts of this case? • What does the court hold? • Is the court correct? • UPC 2-907 • For up to 21 years or life of animal, whichever is shorter • Iowa Code 633.2105 • Trust for care of animal living at settlor’s death is valid. It terminates when no living animal is covered by its terms

Hieble v. Hieble • What are the facts of this case? • What does the court hold? • If mom’s purpose in making the transfer was to avoid probate, what else might she have done?

Olliffe v. Wells • What are the facts of this case? • To A to distribute in such manner as in his discretion appears best calculated to carry out my wishes • Desire to create trust and not create beneficial interest in A • Since terms of trust undisclosed it is a void semisecret trust. • What if testator left her entire estate outright to A but A had promised to hold the property for the benefit of B? • This is a “secret trust”

Mandatory vs. Discretionary Trusts

Discretionary Trusts • Marsman v. Nasca

Marsman v. Nasca • What are the facts of this case? • What lessons do you learn from this case? • Why was the conveyance to Sally and Richard upheld? • Why isn’t Farr personally liable?

Protective Trusts • Discretionary trusts • Spendthrift Trusts • Support Trusts

Creditors’ Rights A creditor can have no greater rights in trust property than the creditor’s debtor had in the property

Spendthrift Trusts • Shelley v. Shelley

US v. O’Shaughnessy

Modification and Termination of Trusts In re Trust of Stuchell

Modification and Termination of Trusts In re Estate of Brown

Charitable Trusts Shenandoah Valley National Bank v. Taylor

Charitable Trusts-Cy Pres In re Neher

Charitable Trusts-Cy Pres In re Estate of Buck

Charitable Trusts-Cy Pres In re Wilson

TRUSTS: CREATION, TYPES, AND CHARACTERISTICS