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Estates/Probate 5
- 2. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.2
Trust
Property placed in the care of one person
(trustee) for the benefit of another
(beneficiary)
* Settlor – creator of the trust
- AKA grantor or trustor
- 3. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.3
4 Essential Elements
1. A designated beneficiary;
2. A designated trustee;
3. A fund sufficiently identified to enable
title to pass to the trustee; and
4. Actual delivery by the settlor to the
trustee with the intention of passing
title
- 4. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.4
1. A designated beneficiary
Beneficiary the person who receives the
benefit of the property placed in a trust
AKA – cestui que trust
- May be any legal entity that has the right to
own property
- A person
- A class of persons
- A charitable organization
- A business entity
- 5. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.5
Equitable Title - Beneficiary
A beneficiary to a trust has equitable
title to the trust
Equitable title the interest a beneficiary
has in property contained in a trust. The
rights to benefit from the property but not
manage it.
- 6. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.6
2. A designated trustee
The trustee has legal title to the trust.
Legal title the interest a trustee has in
the property contained in the trust. The
rights to manage the trust but not benefit
from it.
- 7. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.7
Letters of trust
A document issued by the court
confirming the appointment of a trustee
to a trust.
- 8. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.8
Fiduciary Duty of Trustee
Fiduciary duty of trustee includes:
Duty of loyalty
Duty to use reasonable skill in performance
Duty to provide an accounting to the
beneficiaries
- 9. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.9
3. A fund sufficiently identified to
enable title to pass to the trustee
Trust fund – AKA trust corpus, trust res,
trust principal
Any property that has a transferable
interest may be placed in a trust
Real estate
Money
Investments
Patents & Copyrights
- 10. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.10
4. Actual delivery
Settlor must actually deliver the
property to the trustee with the intent of
passing title.
Relinquish full ownership of property or
money to the trustee
- 11. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.11
Express vs. Implied Trusts
Express trust a trust that is communicated
usually in written terms and not inferred by
the conduct of the parties or by the court to
prevent unjust enrichment
Implied trust a trust not expressly
communicated but implied based on the
conduct of the parties or to prevent unjust
enrichment
- 12. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.12
Resulting Trust
An implied trust based on the
circumstances or conduct of the parties.
• One person possess the property for
the benefit of another.
• No unjust enrichment or fraud
- 13. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.13
Constructive trust
An implied trust created by law to prevent
fraud or unjust enrichment.
• Court rules one party acted fraudulently
or that a party was unjustly enriched.
- 14. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.14
Private vs. Public Trusts
Private Trust a trust created to benefit
a designated individual or class of
individuals
Public Trust a trust created to benefit
the public at large
* aka Charitable Trust
- 15. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.15
Cy-pres doctrine
Translation -- As near as possible
If the intention of a settlor can not be
carried out because it would be illegal
or impractical, the court will carry out
the trust provisions as near as possible
to the settlor’s initial intention
- 16. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.16
Inter vivos vs. Testamentary
Trusts
Inter vivos trust a trust created to take
effect while the person is living and not
upon the death of a person
aka – Living Trust
Testamentary trust a trust created to
take effect upon the death of a person
- 17. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.17
Revocable vs. Irrevocable
Trusts
Revocable trust a trust that can be
terminated by the settlor
Irrevocable trust a trust that can not be
terminated or changed by the settlor
- All control is relinquished.
- 18. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.18
Spendthrift Trust
A trust created to protect the beneficiary
from his own inability to spend wisely.
- The property cannot be reached by
creditors.
- It may be created to protect minors or
mentally incompetent individuals.
- 19. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.19
Totten Trust
A trust created by one person depositing
money in a bank in his name which
becomes payable to another upon the
depositor’s death.
- 20. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.20
Termination of Trusts
1. Revocation of the trust by the settlor
2. Rescission or reformation of the trust
3. Expiration of the period for which the
trust has been created
4. The purposes for which the trust was
created become impossible or illegal
to perform
5. Merger
- 21. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.21
1. Revocation of the trust by
the settlor
May revoke or cancel if such a power
was reserved or intended by the settlor
in the trust agreement
If written agreement, power must be
explicitly stated.
If oral trust, irrevocability is inferred.
- 22. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.22
2. Rescission and reformation
Rescission completely terminating the trust
Reformation the trust agreement is
rewritten or redefined
Common situations
Undue influence
Fraud
Duress
Mistake
- 23. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.23
3. Expiration of the Period
If the terms of the trust specify a time in
which the trust is terminated the trust
will no longer be in existence when that
time occurs.
- 24. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.24
4. Purpose becomes
impossible or illegal
Impossibility could be caused by:
Destruction of the subject matter
Lack of necessity of trust purpose
- 25. Wills, Trusts, and Probate Law for Paralegals
Gibson
© 2009 Pearson Education, Upper Saddle River, NJ 07458.
All Rights Reserved.25
5. Merger
If one party has both the equitable and
legal interest, the trust is terminated.