TRUSTS

Creation

Types

Trustee

Powers

Duties

Settlor's Capacity - analyzed similar to a testator's capacity to form a will

Intent - must be present (not future) intent

Trustee - must have mental capacity to administer the trust

Res (trust property) - settlor places title to the trust property and delivers to the trustee by (1) an inter vivid transfer OR (2) a testamentary trust

Identifiable Beneficiary - except for charitable trusts, trust must have definite or ascertainable beneficiaries

Proper Purpose - virtually any purpose is allowed except those for an illegal purpose, a purpose that violates the Rule Against Perpetuities, or a purpose contrary to public policy

Statute of Frauds and *Statute of Wills apply, if necessary

Express
arises from property' owner's intent; may be created by (1) inter vivos trust created by a declaration of trust by the property owner, (2) inter vivos trust created by transfer of property during settlor's lifetime, or (3) in a testamentary trust created by a will

Charitable
liberally construed to effectuate the purpose of the settlor: (1) indefinite beneficiaries, (2) charitable purpose, (3) Rule Against Perpetuities, (4) Cy pres doctrine, (5) termination

Constructive
equitable remedy for cases involving wrongful conduct and unjust enrichment

Resulting
arises upon failure of an express trust

settle or abandon trust claims

borrow money

sell or lease trust assets

apportion trust income

incur reasonable expenses necessary to maintain trust property

Duty of loyal and good faith to beneficiaries

Duty to preserve trust property and make it productive

Duty to dispose of wasting or non-productive assets

Duty to earmark assets

Duty to collect/protect trust property

Duty to maintain accounting of transactions

Duty to enforce claims and defend trust from attack

Duty not to delegate, but reasonable use of professional advisors is permitted

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

Objective standard of care UNLESS higher standard is warranted

Prudent investor rule governs

trustee is permitted to invest trust assets as would a prudent investor

Trustee must seek to diversity investments

Standard is reasonable care, skill and caution