Trusts
Creation
Types
Trustee
Powers (originate from terms of the trust together with powers appropriate to achieve the proper investment, management, and distribution of trust property)
Duties
Settlor's capacity
Intent
Trustee
Res-trust property
Identifiable beneficiary
Proper purpose
Statute of Frauds
Termination/Modification
Spendthrift provision: beneficiary cannot voluntarily or involuntarily transfer his interests
Discretionary provision: Vests additional power in the trustee to decide when to distribute income of the trust
Express
Charitable
Constructive
Resulting
Arise from the intention of the property owner
Can be created by a) an inter vivos trust created by a declaration of trust by the property owner; b) an inter vivos trust created by transfer of property during settlor's lifetime; or c) a testamentary trust created by will
Liberally construed to effectuate the purpose of the settlor
Indefinite beneficiaries
Charitable purpose (e.g., relief of poverty, advancement of education, advancement of religion, etc.)
Purpose can be broad
Objective m must be to benefit the public
Cy pres doctrine applies
If charitable trust cannot be performed as intended, charitable trust terminates
An equitable remedy in cases involving wrongful conduct and unjust enrichment
May arise from theft, conversion, fraud, duress, or other situations requiring an equitable remedy such as breach of fiduciary duty
Arises upon the failure of an express trust, from a purchase money resulting trust or from an incomplete disposition of trust assets
Beneficiary is responsible for supplying trust property, and trustee holds title, but did not give consideration for the trust property
Settle or abandon trust claims
Exercise all rights and powers an unmarried individual has over his own property
Borrow money
Sell or lease trust assets
Apportion trust income
Incur reasonable expenses necessary to maintain trust property
Duty of loyalty and good faith
No self-dealing, unless trust permits specific acts
No personal benefit other than official compensation
No apparent conflict of interest
Keep trust assets segregated from personal assets
Duty to preserve trust property and make it productive
Duty to dispose of wasting or non-productive assets
Duty to maintain accounting of transactions
Duty to enforce claims and defend trust from attack
Objective standard of care unless superior skills warrant a higher standard of care
Prudent investor rule governs
Trustee permitted to invest trust assets as would a prudent investor, considering both interests of life beneficiaries and remaindermen
Trustee must seek to diversify the investments
Standard is reasonable care, skill, and caution
Some states maintain "legal list" approach of approved types of investments
Liability
Was trustee authorized to perform the act?
Did the trustee perform the required standard fo care?
Remedies: compelling trustee to convey property back to trust; recovering profits made by trustee; returning appreciation or profits from commingled funds; punitive damages; removal of trustee