| I. Express Trusts |
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A. The Settlor Funds the Trust and Must Have Legal Capacity |
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1. Settlor can also be trustee; or |
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2. Settlor can be a beneficiary |
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B. Relationship of Trustee & Beneficiary |
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1. Fiduciary relationship between trustee and beneficiary |
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2. Trustee has legal title of the trust property and holds the property for the benefit of the beneficiary |
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3. The beneficiary holds equitable title |
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4. MUST HAVE SEPARATION OF LEGAL AND EQUITABLE TITLE, THE SOLE TRUSTEE CANNOT BE THE SOLE BENEFICIARY |
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C. Essential Elements of a Trust |
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1. INTENTION TO CREATE TRUST BY A SETTLOR |
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a. Intention to create a trust must be manifested by written or spoken works, or by conduct. Oral trust of personal property is valid |
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2. TRUSTEE |
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a. Trustee must have duties or trust fails; |
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b. Trustee must have capacity to hold title ot particular property; |
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c. Trustee may be removed if his continuation will be detrimental to interest of beneficiaries; and |
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d. Trustee can not resign unless authorized by the trust terms or consent is given by beneficiaries or the court; and |
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e. Trust will no fail for want of a trustee |
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3. TRUSTEE PROPERTY |
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a. The interest can not be an expectancy there must be specific assets. Trust res must go to the trustee to hold for the benefit of the beneficiary |
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b. Settlor must have a present property interest in the trust res at the time of creation of the trust |
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4. BENEFICIARIES |
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a. The beneficiearies must be defined and ascertainable |
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b. If the beneficiaries are not identifiable, the trust fails and reverts back to settlor |
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5. TRUST PURPOSE |
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a. A trust may be established for any purpose that is not; |
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1. Illegal; |
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2. Contingent on the commission of criminal or tortuous act by the trustee; or |
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3. Contrary to public policy |
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D. Creation of Express Trust |
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1. INTER VIVOS TRUST |
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a. Present transfer or declaration of the trust. Party can contract for future trust consideration |
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b. Requirements |
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1. Oral Trust: personal property |
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2. Statute of Frauds: writing for real property but equity court may create if no writing |
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a. Exceptions for the Statute of Frauds: |
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i. Constructive Trust: where trustee failed to perform oral trust of land through fraud and confidential relationship with settlor; |
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ii. Part Performance: (detrimental reliance); |
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iii. Oral Agreement: land sold and money held in trust; or |
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iv. Trusts as Will substitutes i.e., life insurance, bank arrangements may defeat a spouses forced share if assets placed in trust before January 23, 1984. Creditors may reach a revocable trust |
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2. TESTAMENTARY TRUST |
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a. Must be a valid will |
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b. Formalities |
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1. Trust intent and essential terms may be ascertained from: |
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a. Terms of will; |
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b. Existing writing incorporated by reference into the will; |
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2. Pour over; Will assets can go into a valid existing trust which has been identified in Testator's will |
| II. TRUST ADMINISTRATION |
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A. Trustee Duties |
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1. Keep trust productive; |
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2. To take title to property; |
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3. May not delegate her fiduciary responsibilities; |
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4. To make periodic accounting; |
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5. To keep trust property separate and distinct; |
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6. Duty to fairness; |
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7. No self dealing; and |
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8. To act as a prudent businessman would to protect his assets |
