TRUSTS: CREATION, TYPES, AND CHARACTERISTICS

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TRUSTS CREATION, TYPES, AND CHARACTERISTICS
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Definition of a Trust

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

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Basic Paradigm of a Trust
Trustee
A Life Estate
B Remainder
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Trust as Gift

• Intent
• Delivery
• Acceptance

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THREE REQUIREMENTS FOR EVERY TRUST

• Settlor
• Trustee
• One or more beneficiaries

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SETTLOR

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

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TRUSTEE

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

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Basic Paradigm of a Trust
A Trustee
D Trustee
A Life Estate
R
B Remainder
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Basic Paridigm of a Trust
A Trustee
D Trustee
B sells remainder to A
A Life Estate
R
A Remainder
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Basic Paradigm of a Trust
A Trustee
A Life Estate
R
A Remainder
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Trust Will Not Fail for Want of A Trustee
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Beneficiaries

• Income beneficiaries
• Beneficiaries of Corpus
• Mixed beneficiaries

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

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Language of Intent

• Use of word trust
• Precatory language

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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?

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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

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Equitable Remedy Trusts

• Resulting Trusts
• Reversions
• Purchase money resulting trusts

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Equitable Remedy Trusts

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

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Necessity of Trust Property
Brainard v. Commissioner
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Intent to Create a Trust
Speelman v. Pascal
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Clark v. Campbell

• What did Ts will provide?
• What was the first argument to sustain the
  provision?
• The second?
• How might T have accomplished the goal today?

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In re Searights 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 settlors
  death is valid. It terminates when no living
  animal is covered by its terms

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Hieble v. Hieble

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

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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

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Mandatory vs. Discretionary Trusts
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Discretionary Trusts
Marsman v. Nasca
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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 isnt Farr personally liable?

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Protective Trusts

• Discretionary trusts
• Spendthrift Trusts
• Support Trusts

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Creditors Rights
A creditor can have no greater rights in trust
property than the creditors debtor had in the
property
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Spendthrift Trusts
Shelley v. Shelley
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US v. OShaughnessy
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Modification and Termination of Trusts
In re Trust of Stuchell
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Modification and Termination of Trusts
In re Estate of Brown
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Modification and Termination of Trusts
In re Estate of Brown
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Charitable Trusts
Shenandoah Valley National Bank v. Taylor
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Charitable Trusts
Shenandoah Valley National Bank v. Taylor
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Charitable Trusts
Shenandoah Valley National Bank v. Taylor
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Charitable Trusts-Cy Pres
In re Neher
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Charitable Trusts-Cy Pres
In re Estate of Buck
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Charitable Trusts-Cy Pres
In re Wilson