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Trusts

Barbri Review

QuestionAnswer
Introduction- Trust defined Fiduciary relationship in which trustee holds legal title to specific property under fiduciary duty to manage, invest, safeguard & administer trust assets and income for benefit of designated beneficiary who hold equitable title; Testator= tustor/settlor
Introduction- Trust defined; Uniform trust code In WY, express trusts governed by UTC, provides rules relating to creation, modification, and termination of trusts, Duties and powers of trustee, Relations among co-trustees, and rights and interest of beneficiaries
Introduction- Trust defined; Uniform trust code: Mandatory rules Terms of trust govern obligations of trustee and rights of beneficiaries, but UTC does prescribe certain mandatory rules that cannot be overridden in terms of trust
Introduction- Trust defined; Uniform trust code: Mandatory rules include 1-3 1. Requirements for creating a trust; 2. Trustee's duty to act in good faith and in accordance w/terms and purposes of trust and beneficiaries' interests; 3. Requirement trust purpose not be unlawful, contrary to public policy, and impossible to achieve
Introduction- Trust defined; Uniform trust code: Mandatory rules include 4-7 4. Power of ct modify/terminate trust, 5. Effect of spendthrift provisions, 6. Trustee's duty to keep qualfiied beneficiaries informed of trust administration, & 7. Rights of third parties (bona fide purchasers) engaged in commercial transaction w/trustee
Express Private Trusts- Elements of express trust 1. A settlor w/capacity to convey, 2. Clear and unequivocal present intent relationship, 3. Competent trustee w/duties, 4. Definite beneficiary, and 5. Same person not sole trustee and sole beneficiary
Express Private Trusts- Elements of express trust, plus Present and unequivocal disposition in trust of specific property then owned by settlor, and valid trust purposes; Consideration not required
Express Private Trusts- Elements of express trust; Settlor must have capacity Capacity required to create revocable or testamentary trust is same as required to make will
Express Private Trusts- Elements of express trust; Settlor must have capacity: Undue influence if P show- 1. Relation b/w person charged w/exercising UI & settlor afforded person opportunity to control act, 2. Settlor's condition permitted subversion of freedom of will, 3. Activity by person charged w/exercising UI, 4. Person unduly profited as beneficiary
Express Private Trusts- Elements of express trust; Present intention to create trust: Manifested by words/writing/conduct Settlor's manifestation of intention to create trust essential to existence of express trust; Can be by written/spoken words or conduct (no particular language), limited by Statute of wills or SoF; Oral trust of personal property valid in all jurisdicti
Express Private Trusts- Elements of express trust; Present intention to create trust: Manifested by words/writing/conduct, Future interest may be trust res Presently declared trust can have as trust res a future interest in property
Express Private Trusts- Elements of express trust; Present intention to create trust: Manifested by words/writing/conduct, Effect of promise to create trust If settlor promises gratuitously to create trust in future, arise only if at time, settlor manifest anew intention to create trust; Promise to hold property in trust when acquired, OR if supported by consideration can arise in future w/o further intent
Express Private Trusts- Elements of express trust; Trustee Once trust established will not fail merely b/c of trustee's death/incapacity/resignation/removal; Successor trustee appointed in order to carry out testator's intention, except where clearly appear trust is to continue only if original designated truste
Express Private Trusts- Elements of express trust; Trustee: Compensation and reimbursement entitled to additional compensation on agreement of all qualified beneficiaries
Express Private Trusts- Elements of express trust; Trustee: Removal of trustee Ct may remove on its own motion or upon request by settlor, a beneficiary (unless trust revocable and settlor has capacity) or a co-trustee
Express Private Trusts- Elements of express trust; Trustee: Removal of trustee, Ground for removal Ct may remove trustee if continuation in office detrimental to trust (taking into account settlors intent/interest of beneficiaries)
Express Private Trusts- Elements of express trust; Trustee: Removal of trustee, Ground for removal include- 1. Commits serious breach, 2. Lack of cooperation among co-trustees substantially impairs trust administration, 3. Unfitness/unwillingness/persistent failure to administer, or 4. Substantial change of circumstances so all beneficiaries best interest
Express Private Trusts- Elements of express trust; Trustee: Resignation Once trustee accepted appointment, can resign by- 1. Giving 30 days' notice to qualified beneficiaries, settlor (if living, and co-trustee, or 2. Obtaining ct approval
Express Private Trusts- Elements of express trust; Beneficiaries: Beneficiary Necessary to validity of every trust except charitable trusts and so-called honorary trusts
Express Private Trusts- Elements of express trust; Beneficiaries: Private trust Requires that there be definite beneficiaries (or at least that beneficiaries will be ascertainable w/in period when all interests must vest under Rule Against Perpetuities)
Express Private Trusts- Elements of express trust; Beneficiaries: Qualified Beneficiary who is currently entitled to distributiosn of income or principal from trust or has vested remainder interest in residuary of trust that not subject to divestment [4-10-103(a)(xv)]
Express Private Trusts- Elements of express trust; Beneficiaries: Qualified, Demanding and receiving info Only qualified beneficiaries can demand and receive info regarding extent or holding of trust, unless trust provides otherwise
Express Private Trusts- Elements of express trust; Beneficiaries: Definiteness of beneficiaries under private trust, Unascertained beneficiaries Beneficiaries need not be identified at time trust is created, but they must be susceptible of identification by time their interest are to come into enjoyment
Express Private Trusts- Elements of express trust; Beneficiaries: Definiteness of beneficiaries under private trust, Unascertained beneficiaries- Unborn beneficiaries May be described in instrument and trust will be valid even as to interest
Express Private Trusts- Elements of express trust; Beneficiaries: Definiteness of beneficiaries under private trust, Class gift Private trust may exist for benefit of members of class
Express Private Trusts- Elements of express trust; Beneficiaries: Definiteness of beneficiaries under private trust, Class gift- Trustee must be given power of selection UTC departs from common law by providing settlor may empower trustee to select beneficiaries from indefinite class
Express Private Trusts- Elements of express trust; Beneficiaries: Resulting trust remedy where express trust invalid If trust fails for lack of beneficiary, a resulting trust in favor of settlor or his successors is presumed
Express Private Trusts- Elements of express trust; Beneficiaries: Charitable trusts need not have definite beneficiary Requirement of definite beneficiaries does not apply to charitable trusts, where charitable purpose may be quite board and beneficiaries left for determination of trustee (scholarship for needy students)
Express Private Trusts- Elements of express trust; Trust property: No res-no trust Where no trust property, trust fails b/c trustee has not property to manage
Express Private Trusts- Elements of express trust; Trust property: Property may be of any type Property may be real or personal, tangible or intangible, legal or equitable, and it may be either present interest or future interest, whether vested or contingent
Express Private Trusts- Elements of express trust; Trust purposes Trusts may be created for any purpose that is not deemed illegal, contrary to public policy, or impossible to achieve
Express Private Trusts- Elements of express trust; Trust purposes: Rules against perpetuities (Wyoming) RAP not apply to trust created after July 1, 2003 if- 1. Instrument states Rule not apply & trust terminate no later than 1000 yrs after creation, 2. Trust governed by laws of WY & trustee maintains place of business in/administers trust in/resident of
Express Private Trusts- Elements of express trust; Trust advisor Trust advisor is settlor of trust or another party appointed in trust instrument
Express Private Trusts- Elements of express trust; Trust advisor, Fiduciaries who have power to- 1-3 1. Perform specific duty or function that normally performed by (co)trustee/protector, 2. Advise (co)trustee on matters concerning any beneficiary, 3. Direct/consent/disapprove (co)trustee action/inaction relating to investment of trust assets
Express Private Trusts- Elements of express trust; Trust advisor, Fiduciaries who have power to- 4-5 4. Direct acquisition/transfer/retention of any trust investment, and 5. Direct/consent/disapprove (co)trustee action/inaction in making distribution to beneficiaries
Express Private Trusts- Elements of express trust; Trust protector Any disinterested party appointed in trust instrument or by ct
Express Private Trusts- Elements of express trust; Trust protector, Fiduciaries who have power to- 1-3 1. Modify/amend trust instrument to achieve favorable tax status, 2. Modify/amend trust instrument to take advantage of changes in laws restricting terms of trust/distribution of property/administration of trust, 3. Appoint successor trust protector
Express Private Trusts- Elements of express trust; Trust protector, Fiduciaries who have power to- 4-6 4. Change governing law or principal place of administration of trust, 5. Remove and replace any trustee/cotrustee/successor trustee/trust advisor for reasons state in trust instrument, 6. Interpret terms of trust instrument at trustee's request
Express Private Trusts- Elements of express trust; Trust protector, Fiduciaries who have power to- 7-8 7. Advise (co)trustee action/inaction in making distribution to beneficiaries, 8. Increase/decrease any beneficiary's interest, grant power of appoitnment to one or more beneficiairies, terminate/amend power of appointed granted by trust, &
Express Private Trusts- Elements of express trust; Trust protector, Fiduciaries who have power to- 9 9. Elect trust to become qualified spendthrift trust
Express Private Trusts- Creation of express trusts; Inter vivos trust (living trust) Created by declaration of trust by property owner, stating he holds property as trustee in trust, OR Created by transfer of property by settlor during his lifetime
Express Private Trusts- Creation of express trusts; Testamentary trust Created by will
Express Private Trusts- Creation of express trusts; Other ways Created by exercise of power of appointment, OR by promise enforceable under contract law
Express Private Trusts- Creation of express trusts; WY trust Created by ct or agent under power of atty
Express Private Trusts- Creation of express trusts; WY trust: Inter vivos trusts, Present declaration/transfer of trust required 1. Declaration of trust, 2. Transfer of property, 3. Delivery required, 4. Must manifest intent when trust res exists
Express Private Trusts- Creation of express trusts; WY trust: Inter vivos trusts, Formal requirements (SoF) Exceptions- Writing required for trusts of land
Express Private Trusts- Creation of express trusts; WY trust: Testamentary trusts, Formalities Create trust by will, the intention to create a trust and other essential of trust must be ascertainable in one of ways permissible under applicable Statute of Wills
Charitable and Honorary Trusts- Distinctive rules apply to charitable trusts Charitable trusts, b/c of substantial benefit to society, are granted some special exemptions from rules that apply to private trusts and liberally construed
Charitable and Honorary Trusts- Distinctive rules apply to charitable trusts; Construed 1. Must have indefinite beneficiaries, 2. Cy pres doctrine applicable, 3. May be perpetual
Charitable and Honorary Trusts- Trust must be for charitable purposes Purpose considered to benefit the public
Charitable and Honorary Trusts- Trust must be for charitable purposes; General terms acceptable Charitable purpose may be express in very general terms
Charitable and Honorary Trusts- Trust must be for charitable purposes; Effect of gift controlling factor It is effect of gift to public or portion thereof, not motive of settlor that controls
Charitable and Honorary Trusts- Trust must be for charitable purposes; Mixed trust Where beneficiaries of single trust are both charitable and non-charitable, the trust is "mixed trust," and special rules for charitable trust does not apply
Charitable and Honorary Trusts- Indefinite beneficiaries Ruel requiring private trust to have definite beneficiaries does not apply to charitable trust; Beneficiaries of charitable trust must be indefinite
Charitable and Honorary Trusts- Rule against perpetuities Does not apply
Charitable and Honorary Trusts- Cy pres B/c trust for charitable purposes may be perpetual, it often happens that specific charitable purpose indicated by settlor is accomplished or becomes impracticable/unlawful/impossible to achieve/wasteful
Charitable and Honorary Trusts- Cy pres; Impracticable/unlawful/impossible/wasteful purpose In such case, ct may direct trust property be applied to another charitable purpose as close as possible to original one, rather than permit trust to fail or become resulting trust
Charitable and Honorary Trusts- Honorary trusts Examples- Trust for maintenance of cemetery plot and trusts for pets
Charitable and Honorary Trusts- Honorary trusts; WY's UTC does not limit honorary trust to 21 WY does not limit duration of honorary trust to "lives in being plus 21 yrs" perpetuities period
Charitable and Honorary Trusts- Honorary trusts; Trust for care of an animal ...
Transfer of the Beneficiary's Interest- Involuntary transfer-rights of creditors; Creditors of one with power to appoint or withdraw Trust property holder of power of appointment is authorized to appoint may not be reached/attached by creditors/assignees except to extent power holder- 1) authorized to appoint property to himself, creditors, or estate, and 2) exercises that power
Transfer of the Beneficiary's Interest- Involuntary transfer-rights of creditors; Creditors of one with power to appoint or withdraw: Trust property w/drawn By person holding power to w/draw may not be reached or attached by that person's creditors or assignees unless and until power holder w/draws property from trust
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts One in which, by statute or more often by virtue of terms of trust, the beneficiary is unable voluntarily or involuntarily to transfer his interest in trust
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Rights of creditors ...
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Restraint on involuntary alienation Only invalid
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Effect of spendthrift clause Assignments are unenforceable
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Exceptions, Trust for settlor Settlor not allowed to create spendthrift trust for own benefit to avoid claims of credits Creditors can reach his interest in trust despite spendthrift clause; WY- created self-settled "qualified spendthrift trust"
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Exceptions, Claims for child support exception WY recognizes policy exceptions to enforceability of spendthrift clause for child support; WY does not recognize exceptions for alimony, necessities claims, or claims by gov't
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Exceptions, Trustee's failure to make timely distribution Creditor can reach mandatory distribution of either income/principal if trustee has not made distribution to beneficiary w/in a reasonable time after mandatory distribution date
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts in WY Settlor create by transferring property to irrevocable spendthrift trust that specifically states it qualified and is governed by WY law; Settlor may be beneficiary, & at least one trustees must be resident individual or WY corporate fiduciary
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Settlor's creditors may not reach qualified trust assets Even though settlor may be beneficiary, creditors may not reach assets in properly created qualified spendthrift trust to satisfy settlor's debts
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Settlor's creditors may not reach qualified trust assets- Child support exception Qualified spendthrift is not protected from claims for child support
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Settlor's creditors may not reach qualified trust assets- Fraudulent transfers exception Creditors can reach qualified trust assets if transfer of property was fraudulent transfer under WY Fraudulent Transfer's Act
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Interests settlor may retain An irrevocable trust may not be deemed revocable b/c settlor has retained interests in 1) Current trust income, 2) Charitable remainder trust, 2) Up to 5% in total return unitrust, and 4) Qualified personal residence trust
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Powers settlor may retain do not render an irrevocable trust revocable- 1) Power to veto distributions from trust, 2) Presently exercisable or testamentary general/special power of appointment, 3) Power to appoint/remove trustee, trust advisor/protector, 4) Power to serve as investment advisor to trust
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Qualified transfer affidavit- 1-2 Qualified transfer required affidavit from settlor stating- 1) Settler has full right/title/authority to transfer property to trust, 2) Transfer of property to trust will not render settlor insolvent
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Qualified transfer affidavit- 3-5 3) Settlor does not intend to defraud any creditors by transfer, 4) No ct actions or other proceedings are pending against settlor other than those identified in affidavit, 5) Settlor is not in default of any child support obligations by more than 30 days
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Qualified transfer affidavit- 6-8 6) Settlor does not contemplate filing for bankruptcy, 7) Property transferred to trust is not derived from any unlawful activity, and 8) Settlor has/will maintain personal liability insurance of lesser of $1 million or total value of property transferred
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Existing trusts become qualified spendthrift trusts Settlor/trustee/trust protection of existing irrevocable trust may elect to treat trust as qualified spendthrift trust, w/creditor protection relating back to the date of election; Trust must be modified to conform w/4-10-510
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Existing trusts become qualified spendthrift trusts: Assets from trust previously created in another jurisdiction W/similar creditor protection for settlors may be transferred to WY qualified spendthrift trust, w/creditor protection relating back to date other trust originally funded
Transfer of the Beneficiary's Interest- Restraint's on alienation; Spendthrift trusts: Qualified spendthrift trusts, Compare- Offshore asset protection trust (OAPTs) Trust established in foreign jurisdictions to protect assets from creditors w/o requiring the settlor to lose control over assets; While there are legitimate reasons such trust exist, use that hinder or delay creditors may be fraudulent "Breitenstine"
Transfer of the Beneficiary's Interest- Discretionary trusts If trustee has power to pay income to beneficiary or accumulate it, or has power to appoint income among several beneficiaries in whatever amounts he may choose, beneficiary does not have any right to income until trustee exercises power
Modifications and Termination of the Trust- In general A trust will terminate automatically at expiration of trust term specified in instrument; Trust will terminate when all purposes of trust have been accomplished or purposes become unlawful, contrary to public policy or impossible to achieve
Modifications and Termination of the Trust- By the settlor WY- Subsequent execution of an inconsistent will does not revoke or amend revocable trust "In re estate of Lohrie"
Modifications and Termination of the Trust- By the beneficiaries Trust terminated/modified upon consent of settlor and all beneficiaries, even if modification/termination conflict w/material purpose of trust; Also may terminate/modify on consent of all beneficiaries, but only if no material purpose of trust frustrated
Modifications and Termination of the Trust- By the beneficiaries; Fulfillment of settlor's purpose Seen as equivalent to his consent; If trust purposes incapable of fulfillment, no material purpose of trust would be frustrated by termination of trust
Modifications and Termination of the Trust- By the beneficiaries; Distribution of trust property If trust terminated by consent of settlor and beneficiaries, or by agreement of all beneficiaries, then trustee must distribute trust property pursuant to wishes of beneficiaries
Modifications and Termination of the Trust- By the court If termination/modification not available b/c all beneficiaries do not or cannot consent, or b/c material purpose of settlor would be frustrated, parties may seek modification based on supervisory function of court if-
Modifications and Termination of the Trust- By the court if- 1) trust could have been modified if all beneficiaries had consented, and 2) Interests of any non-consenting beneficiaries will be adequate protected
Modifications and Termination of the Trust- By the court; Unanticipated circumstances Ct will permit termination of trust or modifications of its terms if circumstances unanticipated by settlor threaten the purpose of trust; Ct may modify trust's terms if continuation of trust on existing terms impracticable or wasteful
Modifications and Termination of the Trust- By the court; Unanticipated circumstances: Carrying out settlor's primary intent Welfare of beneficiaries, cts may ignore some specific direction of settlor or may grant trustee powers specifically prohibited in trust instrument; If trust terminated, it must be distributed in manner consistent w/trust's purposes
Modifications and Termination of the Trust- By the court; Uneconomic trust or tax purpose Ct can modify or terminate trust if value of trust is insufficient to justify cost of administration or achieve settlor's tax objectives
Modifications and Termination of the Trust- By the court; Reformation Ct can reform terms of trust to reflect settlor's intent if by clear and convincing evidence it is shown that settlor's intent and the trust's terms were affected by mistake
Modifications and Termination of the Trust- By the trustee; Uneconomic trust WY- trustee can terminate trust if its value is less than $150,000
Modifications and Termination of the Trust- By the trust protector Non-charitable irrevocable trust may be modified or terminated by trust protector, provided terms of trust authorize trust protector and grant him such power
Trust Administration- Power of trustee; Sources of trustee's power Trustee can properly exercise only such powers as are expressly or impliedly conferred upon her
Trust Administration- Power of trustee; Sources of trustee's power include- 1-2 1. Powers expressly conferred upon her by terms of trust, 2. All powers that an unmarried individual has over her own property unless limited by trust's terms
Trust Administration- Power of trustee; Sources of trustee's power include- 3-4 3. Powers that are appropriate to achieve property investment, management, and distribution of trust property and that are not forbidden by terms of trust, and 4. Power conferred upon her by UTC unless limited by terms of trust)
Trust Administration- Power of trustee; Sources of trustee's power include- UTC confers powers to trustee including power to- Collect and hold trust assets, invest trust assets, buy/sell/encumber trust assets, enter into lease, vote securities, pay taxes/assessments, insure assets, make distributions, prosecute/defend actions, etc.
Trust Administration- Power of trustee; Joint powers Co-trustees who are unable to reach a unanimous decision may act by majority decision; If vacancy occurs among cotrustees, remaining cotrustees may act for trust; Cotrustee cannot perform b/c of absence/illness, remaining cotrustees may act for trust
Trust Administration- Power of trustee; Joint powers: Imperative powers Power is "imperative" (mandatory) where trust terms require performance of particular act
Trust Administration- Power of trustee; Joint powers: Discretionary powers Most powers in sense trustee may or may not perform particular act determined in own judgement to be most appropriate
Trust Administration- Power of trustee; Joint powers: Discretionary powers must be exercised In good faith, subject to judicial review to prevent abuse of trustee's discretion; Business judgment= ct generally refuse to interfere
Trust Administration- Power of trustee; Joint powers: Discretionary powers must be exercised, Effect of giving trustee absolute discretion Where terms of trust provide that trustee shall have "sole" or "uncontrolled" discretion, the trustee's power is still not wholly immune from review
Trust Administration- Duties of trustee Trustee is subject to number of duties designed to ensure security of trust property and fairness of its administration
Trust Administration- Duties of trustee; Duties to administer trust 1. Trustee w/special skills is held to higher standard, 2. Loyalty and impartiality, 3. Reasonable costs reimbursement permitted
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing- 1-5 Cannot- 1) Buy/sell trust assets, 2) Sell assets from one trust to another, 3) Borrow trust funds/make loans to trust, 4) Use trust assets to secure personal loan, 5) Personally gain through position as trustee
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing- 6-7 6) Corporate trustee cannot invest in own stock, 7) Self-employment can constitute form of prohibited dealing- a. Indirect self-dealing, b. Good faith irrelevant, c. Duty extends equally to all beneficiary
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing, Beneficiary's rights in case of prohibited transaction- 1-2 Transaction involving trustee self-dealing is voidable by beneficiary affected by transaction unless- 1) Transaction authorized by terms of trust or approved by ct, 2) Beneficiary failed to bring suit w/in prescribed time
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing, Beneficiary's rights in case of prohibited transaction- 3-4 3) Beneficiary consented to trustee's conduct, ratified transaction, released trustee, or 4) Transaction involves K entered into or claim acquired by trustee before she became trustee
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing, Transaction b/w trustee and beneficiary Transaction b/w trustee and beneficiary is voidable by beneficiary even if it does not involved trust property if it occurs during existence of trust or while trustee has influence over beneficiary unless transaction fair to beneficiary
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing, Restriction on self-dealing Can be waived by settlor
Trust Administration- Duties of trustee; Duty of loyalty: No self-dealing, Transactions not constituting self-dealing in WY No presumption of conflict of interest when trustee- 1) invests in insurance K purchased from agency owned by or affiliated w/trustee, or 2) places securities through broker that is part of same company as, owned by, or affiliated w/trustee [4-10-802(k)]
Trust Administration- Duties of trustee; Duty to report In WY, duty to report and inform extends only to qualified beneficiaries
Trust Administration- Duties of trustee; Duty to separate trust property and keep records No commingling
Trust Administration- Duties of trustee; Duty to enforce claims and defend trust from attack ...
Trust Administration- Duties of trustee; Duty to preserve trust property and make it productive 1. Collect all claims, 2. Lease land or manage it, 3. Record recordable documents, pay taxes, secure insurance, 4. Invest trust funds
Trust Administration- Investments; Uniform act or legal list are default rules No matter which approach to investments a state uses, trust terms can expand or limit trustee's powers, including investment powers; Provision apply only if no contrary provisions in trust instrument
Trust Administration- Investments; Uniform prudent investor act WY has enacted
Trust Administration- Investments; Standard of care Trustee must invest and manage trust assets as prudent investor would, taking into account purposes/terms/distribution requirements/other circumstances of trust; Objective standard of prudence= Reasonable care/skill/caution
Trust Administration- Investments; Standard of care 1. Fiduciaries w/special skills held to higher standard, 2. Loyalty and impartiality
Trust Administration- Investments; Prudence evaluated as to overall investment strategy 1. Investment performance measured by "overall return" 2. Risk/return curve, 3. Any type of investment permitted, 4. Factors considered in making investment decisions
Trust Administration- Investments; Prudence evaluated as to overall investment strategy: Investment decisions factors General economic conditions, Possible effect of inflation/deflation, Expected tax consequence of investment decision/strategies, Role that each investment playings w/in overall trust portfolio, Expected total return from income and appreciation of capital
Trust Administration- Investments; Prudence evaluated as to overall investment strategy: Investment decisions factors continued... Other resources of beneficiaries, Need for liquidity/regularity of income/preservation or appreciate of capital, and Asset's special relationship or value to purpose of trust or to one or more of beneficiaries
Trust Administration- Investments; Delegation of investment and management functions Permitted
Trust Administration- Liabilities of trustee; Remedies for breach of trust Include specific performance, injunction, repayment to trust and suspension of trustee
Trust Administration- Liabilities of trustee; Damages to beneficiaries for breach: Liability for profits in absence of breach If trustee commits breach of trust, he is liable to beneficiaries for greater of 1) amt necessary to restore trust property and distributions to what would have been absent breach, or 2) trustee's profit from breach
Trust Administration- Liabilities of trustee; Damages to beneficiaries for breach: Statute of limitations Beneficiary must bring her action w/one yr after she receives any report disclosing breach; If no report then bring w/5 yrs after first of following 1) removal/resignation/death of trustee, 2) termination of interest, 3) termination of trust
Trust Administration- Liabilities of trustee; When trustee is not liable for breach 1. Reasonable reliance, 2. Beneficiary accepts breach, 3. Effect of exculpatory clause (clause seeks to lower standard to be used to evaluate trustee's actions)
Trust Administration- Liabilities of trustee; When trustee is not liable for breach: Exculpatory clause Attempts to limit trustee's liability to breaches in bad faith/reckless disregard for rights of beneficiaries or appears in trust document b/c of an abuse of confidential relationship w/settlor, are void
Trust Administration- Liabilities of trustee; Liability of co-trustees Cotrustee not liable if he did not participate in breach AND did try to prevent breach of compell its redress
Trust Administration- Liabilities of trustee; Trustee's liability to third persons: Ks on behalf of trust estate Third party can sue trust estate on K, proceeding against trustee in representative capacity; If trustee did not indicate capacity as trustee, he can be personally liable
Trust Administration- Liabilities of trustee; Trustee's liability to third persons: Tort Third party can sue trust for tortious conduct, as well as trustee personally, if he was at fault, but not by virtue of respondeat superior
Trust Administration- Liability of third parties to trust; Participation in breach of trust Third party who knowingly participates in breach of trust by trustee is liable for resulting loss to trust estate
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Uniform principal and income act (WY) Applies to all trusts and estates unless governing instrument provides otherwise, gives trustee or personal representative an adjustment power to reallocate investment portfolio return
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Uniform principal and income act (WY): Adjustment power authorizes Trustee to characterize items such as capital gains/stock dividends/etc. as income if trustee deems it appropriate or necessary to carry out trust purposes
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Uniform principal and income act (WY) 1. Duty of fairness to all beneficiaries, 2. Adjustment power 3. Factors considered
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Uniform principal and income act (WY): Factors considered, 1-5 1. Nature/purpose/expected duration of trust, 2. Intent of settlor, 3. Identity and circumstances of beneficiaries, 4. Needs for liquidity/regularity of income/preservation and appreciation of capital, 5. Nature of trust's assets,
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Uniform principal and income act (WY): Factors considered, 6-7 6. Net amount allocated to income under other sections of Act and increase or decrease in value of principal assets, 7. Whether and what extent trust gives or denies trustee the power to invade Principal or accumulate income,
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Uniform principal and income act (WY): Factors considered, 8-9 8. Actual and anticipated effect of economic conditions principal and income and effects of inflation and deflation, and 9. Anticipated tax consequences of an adjustment
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Allocation of receipts Act sets out detailed rules as to how certain receipts and expenses are to be allocated b/w income and principal accts (subject to trustee's adjustment power)
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Allocation of expenses ...
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Conversion of "income" trust to total return unitrust Payment of trust's income to primary beneficiary may not provide substantial economic support since corporate stock do not pay dividends and saving accts interest is 2-3% today;
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Conversion of "income" trust to total return unitrust: Income only trust Can produce tension b/w income beneficiary (who wants investments in high-yield fixed-dollar investments such as corporate bonds) and remaindermen (who would like to see investments that have substantial potential for appreciation, w/o regard to income)
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Conversion of "income" trust to total return unitrust: Addressed concerns trustee Convert trust to total return unitrust
Trust Administration- Allocation of receipt and expenses b/w income and principal accounts; Conversion of "income" trust to total return unitrust: Addressed concerns, Total return unitrust Instead of receiving trust's income, beneficiary receives amt equal to 3-5% value of trust principal annual value; So trustee make investment decision w/o concern about investment projected "income"
Will Substitutes- In general ...
Will Substitutes- Revocable inter vivos trusts Reason why revocable trust is not will, and does not have to comply w/ Statute of wills, is that interests passes to beneficiary during settlor's life, it merely becomes possessory on settlor's death
Will Substitutes- Revocable inter vivos trusts; Interests revoked Interest can be revoked or divested during settlor's life, but it passes subject to revocation
Will Substitutes- Revocable inter vivos trusts; Where trustee given usual powers ...
Will Substitutes- Revocable inter vivos trusts; Advantages of revocable trust 1. Management of asset,s 2. Planning for incapacity (avoid guardianship), 3. Avoidance of probate, 4. Secrecy, 5. choice of law, 6. Defeat spouse's force share (WY allows)
Will Substitutes- Revocable inter vivos trusts; "Pour-over" gift from will to revocable trust 1. Trust may be established before/after/concurrently w/will, 2. Trust may be amendable and revocable, 3. Gift is valid even though trust unfunded during settlor's lifetime
Will Substitutes- Life insurance trusts 1. Contingent beneficiary trust, 2. Assignment of policies, 3. Payable to testamentary trustee
Will Substitutes- Totten trust bank accounts ...
Will Substitutes- Uniform transfers to minor act ...
Trusts as Matter of Law- Resulting and constructive trusts; In general: Resulting and constructive trusts Do not arise by settlor's express declaration of trust; Implied by law or imposed by ct
Trusts as Matter of Law- Resulting and constructive trusts; In general: Resulting and constructive trusts, Resulting trust Involve revisionary interest when equitable interest in property is not completely disposed of and are based on presumed intent of settlor
Trusts as Matter of Law- Resulting and constructive trusts; In general: Resulting and constructive trusts, Doctrine of constructive trusts Developed by equity cts for granting relief where, by series of events, one person has obtained legal title to property that, the conscience of equity feels, rightfully belongs to another, purpose being prevent unjust enrichment by person who obtain title
Trusts as Matter of Law- Resulting and constructive trusts; In general: Resulting and constructive trusts, Statute of frauds Inapplicable, no writing necessary even where real property involved
Trusts as Matter of Law- Resulting and constructive trusts; Resulting trusts: When will they be implied?, Three types 1) Purchase money resulting trusts, 2) Resulting trusts arising on failure of an express trust, and 3) Resulting trusts arising from an incomplete disposition of trust assets
Trusts as Matter of Law- Resulting and constructive trusts; Resulting trusts: When will they be implied?, Corpus Person declared by equity beneficiary of resulting trust is responsible for supplying trust property (corpus); Either directly conveyed property to person held trustee, or supply consideration for transaction through which other acquired title to property
Trusts as Matter of Law- Resulting and constructive trusts; Resulting trusts: When will they be implied?, Consideration Person who holds titled (trustee) did not give consideration so equity presumes not intended to have benefits of ownership and should be trustee for person who did furnish consideration or conveyed title
Trusts as Matter of Law- Resulting and constructive trusts; Constructive trusts: When will they be implied? Not really trust at all; Flexible equitable remedy imposed by ct ot prevent an injust enrichment of one person at expense of another as result of wrongful conduct, such as fraud/undue influence/breach of fiduciary duty
Trusts as Matter of Law- Resulting and constructive trusts; Constructive trusts: When will they be implied?, Trustee's duty Convey property to person who would have owned it but for wrongful conduct permitting wronged party to receive very property of which he was deprived
Trusts as Matter of Law- Resulting and constructive trusts; Constructive trusts: When will they be implied?, Remedy Especially important where property increased in value since it was wrongfully acquired
Created by: dmoore147