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