Estates/Probate 5

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

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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

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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

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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.

Gibson
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.

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Letters of trust
A document issued by the court
confirming the appointment of a trustee
to a trust.

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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

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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

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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

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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

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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

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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.

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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

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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

Gibson
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

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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.

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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.

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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.

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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

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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.

Gibson
2. Rescission and reformation
 Rescission completely terminating the trust
 Reformation the trust agreement is
rewritten or redefined
 Common situations
 Undue influence
 Fraud
 Duress
 Mistake

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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.

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4. Purpose becomes
impossible or illegal
 Impossibility could be caused by:
 Destruction of the subject matter
 Lack of necessity of trust purpose

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5. Merger
 If one party has both the equitable and
legal interest, the trust is terminated.

Estates/Probate 5

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