Trusts

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jpbehnke
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119865
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Trusts
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2011-12-01 13:39:16
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Texas Trusts Settlor Trustee
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Texas Trust Flashcards
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  1. Trusts––Generally
    Created when there is a split of title, no matter how miniscule.
  2. Trusts––Legal Interest
    All responsibility of ownership of prop., none of the benefits
  3. Trusts––Equitable interest
    Benefits of the prop.
  4. Trusts––Trust Property Requirement
    Trusts must have property in order to be created

    S must also have the power to transfer the trust property
  5. Trusts––S
    Owns the property and provides the title that is split––creates the trust

    AKA: Trustor, grantor (IRS), or donor
  6. Trusts––Basic Trust Functioning
    • 1. S splitstitle
    • 2. T manages trust according to state law and instrument
    • 3. T's duties end when trusts terminates
  7. Trusts––When Trust Terminates
    • 1. Prop. depleted
    • 2. By its own terms
  8. Trust Purposes and Uses––Generally
    • 1. Provide for and protect trust Bs
    • 2. Asset distribution flexibility
    • 3. Protect against S incompetance
    • 4. Professional mgmt of prop.
    • 5. Avoids probate
    • 6. Tax benefits
  9. Trust Purposes and Uses––Protection/providing for Bs––Who?
    • 1. Minors
    • 2. People w/o mgmt skills
    • 3. Spendthrifts
    • 4. Persons susceptible to influence
  10. Trust Purposes and Uses––Flexible Asset Dist.––How?
    • 1. Benefits spread over time
    • 2. Give T's discretion
    • 3. Set standards
    • 4. Impose conditions
  11. Trust Purposes and Uses––Protecting Against S Incompetance
    S controls trust until incompetant, then successor T will take over (prevents need for guardians)
  12. Trust Purposes and Uses––Professional Mgmt
    E.g., Banks know how to handle money than most normal people
  13. Trust Purposes and Uses––Avoids probate
    Trusts execute according to their own terms––even after S's death.

    Prop. in trust is not subject to probate.

    NB: Doesn't apply to testamentary trusts
  14. Trust Purposes and Uses––Tax Benefits
    • Can reduce:
    • 1. Income
    • 2. Gift; and
    • 3. Estate taxes
  15. Trust Creation––Generally
    • 1. Split of legal and equitable title
    • 2. Imposition of fiduciary duties
    • NB: Intent to create trust is required!
  16. Trust Creation––Ascertaining Intent
    • 1. "Trust language" not needed (S needn't know or understand technical trust language)
    • 2. Ct.s will push envelope to find trust intent
    • 3. "Trust language" usage is not dispositive!
    • 4. Must be fiduciary duties imposed!
    • 5. Present intent not needed (future trusts okay)
  17. Trust Creation––Merger
    T is also B. Trust ends.
  18. Trust Creation––S as sole B
    Impossible. BUT, if S gives a little title to someone else, trust can be formed.
  19. Trust Creation––Permissible Combination of Parties: One Rule
    Sole B cannot be sole T. Everything else is okay.
  20. Methods of Trust Creation––Inter vivos (living) trusts
    • S creates trust whil alive
    • Methods:
    • 1. Declaration (or self-declaration) of trust (S = T)
    • 2. Transfer or conveyance trust (S ≠ T, but may retain some or all equitable title)
  21. Methods of Trust Creation––Testamentary Trusts
    S creates trust in will

    NB: Will validity is a precondition!
  22. Relevance of Consideration––Generally
    Not required to creat valid trust

    NB: Trusts are conveyances, not Ks
  23. Relevance of Consideration––Promise to Create Future Trust
    Consideration is needed.
  24. Relevance of Consideration––Promise as Trust Prop
    If trust prop. is a promise, it must be supported by consideration to have value

    E.g., "I promise to give $1K to trust." Not a trust. BUT, if $1K was to be given in exchange for a comp, there'd be a K and a trust created.
  25. Statute of Frauds––Generally
    In some sitches, trusts must be in writing

    Protects against false claims that a trust doesn't exist (so T couldn't bring suit to declare trust invalid, thus creating merger)
  26. Statute of Frauds––Requirements
    • 1. Written ev. of trust terms
    • 2. Signed by S (or S's agent)

    NB: SoF violation doesn't make trust voided––only voidable––If T carries out trust, estoppel occurs from denying existence.
  27. Statute of Frauds––Exceptions
    • Oral trusts allowed if:
    • 1. Personal prop.
    • 2. T is not S
    • 3. T is not B
    • 4. S expresses trust intent prior to or simultanesouly w/ transfer

    • Self-declaration if:
    • 1. Personal prop.
    • 2. S states in writing that S hold holds prop. in trust, even though the writing doesn't comply w/ normal req's

    • Part-performance:
    • If alleged T acts like a T––estoppel
  28. Statute of Frauds––Special Rule for Written trusts
    All changes must be in writing (even if it could have been oral originally)
  29. Statute of Frauds––Standing for Defense
    • 1. Alleged T can carry out a trust voluntarily (e.g., trust for land)
    • 2. T in bankruptcy––can use SoF to say prop. T says is in trust is not valid because there's no writing
  30. RAP––Generally
    Prevents the remote vesting of contingent future interests
  31. RAP––Armageddon Approach
    • 1. Ascertain lives in being
    • 2. Give each life in being a child who is born after date of trust creation
    • 3. Everyone dies except new children
    • 4. Determine if beneficial interest in trust must vest/not vest w/in 21 years
  32. RAP––Violation consequences
    • Approaches
    • 1. Common law: trust invalid (even if crazy hypothesis)
    • 2. Wait and see
    • 3. Expand period (e.g., 1000 years)
    • 4. Cy pres [Tex.]
    • 5. Uniform Statutory RAP act (90 years from date of grant, wait and see, reform if needed)
  33. RAP––Tex [Cy. pres]
    Ct. must reform or construe interests that violate RAP by ascertaining S's intent

    NB: Ct. must liberally construe statute and can use cy pres when reforming/construing
  34. RAP––Savings clause
    Clause to have backup in the even of RAP violation
  35. Trust Purpose––Generally
    Trusts can be made for any non-illegal purpose
  36. Trust Purpose––Prohibited purposes
    • Committing a:
    • 1. crime
    • 2. tort
    • 3. act contrary to public policy
  37. Trust Purpose––Approaches to determine if against public policy
    • 1. Intent and effect [Tex.]
    • 2. Use
  38. Trust Purpose––Intent and Effect Approach to Determining Purpose
    Look at S's intent, not how prop. is used––if will induce someone to commit a crime or go against public policy = invalid
  39. Trust Purpose––Use Approach to Determining Purpose
    Look at how trust prop. is used
  40. Trust Purpose––Discriminatory purpose
    Hot button issue––no regulation
  41. Trust Purpose––Defrauding creditors
    If S puts prop. into trust to keep from Cs, Cs may set aside original transfer or invalidate trust from beginning

    Remedy: Set aside conveyance (e.g., Trust worth $60K, S owes $40K, trust is made w/ $20K)
  42. Trust Purpose––Remedies for otherwise improper purposes
    • 1. Resulting trust (S gets prop. back)
    • 2. Permit T to retain prop (merger––unjust enrichment, but prevents S from doing illegal things)

    How to decide: Look at moral culpability of S
  43. S––Generally
    Splitter of title and creator of duties by making a trust through manifesting trust intent
  44. S––Capacity
    • Same capacity to make other transfers:
    • 1. Inter vivos trust = capacity to make inter vivos gift
    • 2. Testamentary trust = capacity to make will
  45. S––Capacity to make will
    • Understand:
    • 1. What you're doing
    • 2. Who you're doing it for
    • 3. What you're doing it to
    • 4. The effect of what you're doing
  46. S––Retention of powers
    • S may retain:
    • 1. legal title;
    • 2. life interest;
    • 3. power to amend, modify, revoke;
    • 4. power to change B;
    • 5. control over trust admin;
    • 6. ability to add prop. to trust

    Redux: All that matters is that someone else holds *some* equitable titel––no matter how small

    Called "Dacey" trusts
  47. Trust Property––Generally
    Trusts must have prop.
  48. Trust Property––Adding trust prp.
    • May come from any source, unless:
    • 1. Prohibited by trust instrument;
    • 2. Prop. unacceptable to T (10 horses)
  49. Trust Property––Types
    Real and personal
  50. Trust Property––Prop. not holdable in trust
    • Prop. S cannot immediately transfer
    • E.g., non-assignable K right; spouse's share of CP; future acquired prop.; expectancy interest from still-living indiv
  51. Trust Property––Funding the trust: delivery
    • Real prop: Deed
    • Personal prop: Possession, deed of gift, title registration
  52. T––Generally
    Holds legal title and must follow fiduciary duties

    NB: Title can't be reached by his creditors and is not in his estate at death
  53. T––Capacity
    • 1. Take title
    • 2. Hold title; and
    • 3. Transfer title to trust prop.
  54. T––Capacity––Intdividuals
    • 1. 18 (or ct. removal of minority/disabilities); and
    • 2. Competent

    NB: T may be S or a B (so long as not sole B)
  55. T––Capacity––Corp.
    • Power to acts as T
    • 1. Financial inst: no sep. charter needed
    • 2. Trust co.s: separate charter needed
    • 3. Foreign co.s: allowed if comply w/ prob. code (reciprocity, essentially)
  56. T––Acceptance
    • Don't *have* to accept position
    • No liability until you do
  57. T––Methods of Acceptance
    • 1. Signature
    • 2. Presumption (estoppel)

    • NB: PErson can act as T and not accept when:
    • 1. Preserving (w/ notice)
    • 2. Inspecting (look at prop. before accepting it)
  58. T––Reasons to Accept
    • 1. Familial bond
    • 2. Compensation
  59. T––Reasons not to accept
    • 1. Submit self to substantial responsibility/liability
    • 2. Could make familial conflict
  60. T––Event of non-acceptance procedure
    • 1. Trust instrument
    • 2. If nothing, ct must appoint a T upon pet. of interested person

    NB: Trusts don't fail due to lack of T
  61. T––Bond
    • Protects B
    • E.g., distrust of T

    NB: Some trusts only require bond for non-S-named Ts
  62. T––Fiduciary bonds
    Surety co.s––require 1% or less down
  63. T––Bond presumption
    • [Tex.]
    • Bond rquired unless waived by S or T is a corp that has ins.
  64. Multiple Ts––Benefits
    • "Two heads to chop are better than one"
    • (Also, divides duties––e.g., family member provides compassion, bank provides expertise)
  65. Multiple T's––Dangers
    More possiblities of breach, expensive. Even T number may lead to deadlocked bvotes

    NB: Majority may act
  66. Multiple T's––Resignation
    • 1. Trust instrument instructions
    • 2. Otherwise, pet. ct. to resign (expensive and trust pays)
  67. Multiple T's––Successor T
    • If no T remains:
    • 1. Successor name by S
    • 2. Trust instrument
    • 3. Ct. may appoint on its own motion; or
    • 4. Ct. must appoint on pet. of interested person

    • If ≥1 T remain:
    • 1. Successor named by S; or
    • 2. Trust instrument

    NB: If charitable trust, remaining Ts can fill vacancy by majority vote
  68. Multiple T's––Powers of Successor
    • Same as original, unless:
    • 1. trust provides otherwise; or
    • 2. ct. order provides otherwise
  69. Multiple T's––Substitute fiduciary act
    When one corp. eats another corp., new corp. can serve as T

    NB: To avoid this, put clause in trust (e.g., small hometown bank eaten by Wells)
  70. B––Generally
    Holds equitable title and enforces duties vs. T
  71. B––Capacity
    Ability to take and hold prop.
  72. B––Private trusts Bs
    Clearly ascertainable (multiple allowed)
  73. B––Types of Private Bs
    • 1. Concurrent
    • 2. Successive
  74. B––Honorary (purpose) trust
    Lacks a human B or charitable purpose

    Traditionally invalid but allowed under Uniform Trust Code (and Tex.)

    E.g., posthumous pet care
  75. B––Incidental Bs
    No equitable title, but still benefits frmo trust (e.g., house increasing/decreasing surrounding prop.values)

    NB: Typically no standing unless can show they're "intersted person" or "affected by"
  76. B––Disclaimer––Inter Vivos Trust
    Cannot exert dominion, control, or accept benefits
  77. B––Disclaimer––Inter Vivos Trust––Cherry Picking
    Allowed (partial disclaimer)
  78. B––Disclaimer––Inter Vivos Trust––Revocability
    Not. Irrevocable and unconditional
  79. B––Disclaimer––Inter Vivos Trust––Formalities
    • 1. In writing
    • 2. Notarized
    • 3. Delivered to T <9 mos. after the later ofL date of trust creation, B reaching age 21 (if future interest: date indefeasible vests)
  80. B––Disclaimer––Inter Vivos Trust––Passage of Prop.
    • Under trust terms; or
    • Under terms of trust as if B predeaced the creation
  81. B––Characterization of Distributions
    • Issues of marriage––assume trust is not created by one or both spouses;
    • 1. Principal dist: Bs sep prop.
    • 2. Undist. trust income: unclassifiable
    • 3. Discretionary income dist: Bs sep. prop.
    • 4. Mandatory income dist: Disagreement; case law not definitive
  82. B––Divorce effect
    • When divorce stat. applies:
    • 1. Trust created on or after Sept. 1, 2005;
    • 2. Trust is written;
    • 3. Trust is revocable;
    • 4. S named spouse as B
    • 5. S later divorces spouse (finalized)
    • 6. Trust is silent as to impact of divorce
  83. B––Effect of divorce on trust
    • Revocation of:
    • 1. Ex-spouse as B and T
    • 2. Other ex-relatives as Bs and Ts
  84. B––Divorce effect on passage of prop.
    As is ex-spouse/relative disclaimed

    Fiduciary designations as though ex-spouse died before marriage terminated
  85. B––Priority of assignments
    • English view––first to notice
    • American (Tex.)––first assignee
  86. B––Spendthrift provisions
    B can't transfer right ot future payments of income or principal

    Cs can't get B's prop. before its distributed to him
  87. B––Spendthrift Provisions––Purposes
    • 1. Protects B
    • 2. Allows S to have trust prop. used as he intended

    NB: There is not req that B "needs" protection
  88. B––Spendthrift Provisions––Time of Protection
    Only as long as in trust––once it's in B's possession, no more protection
  89. B––Spendthrift Provisions––Recommendation
    Do it.
  90. B––Spendthrift Provisions––Methods of Creation
    No language specified––intent just must be clear
  91. B––Spendthrift Provisions––Exceptions to Enforceability
    S = B, can't protect own prop. from creditors
  92. B––Spendthrift Provisions––Child support
    • Ct. can break provision to provide for child
    • If dist. mandator, up to mandatory amt.
    • If dist. disc, up to entire income of trust

    NB: Include provision, "if any child falls behind on child support, he is no longer a B until he becomes current."
  93. B––Spendthrift Provisions––Federal Tax Leins
    Chuck Norris of leins. Nothing can stop it––not even a spendthrift provision
  94. B––Spendthrift Provisions––Fam. Settlement Agreements
    Agreement is binding––can' back out because of spendthrift provisions
  95. B––Spendthrift Provisions––Torts
    No law in Tex.––some states allow corpus to be reached
  96. B––Discretionary Trusts
    Ts have disc. re: which Bs to pay and how much to pay
  97. B––Discretionary Trusts––Substituted jgmt
    T can do what he sees fit (w/in reason)
  98. B––Discretionary Trusts––Spray or Sprinkle
    Chicken or feathers––the T decised
  99. B––Discretionary Trusts––Interest of B
    B gets no principal or income until T exercises disc.
  100. B––Discretionary Trusts––Discretion
    Good faith decision w/in the terms of the trust and always w/ B's best interst in mind

    NB: Never complete disc, otherwise a ct. couldn't review and there'd be not enforceable duties (title would vest completely in B)
  101. B––Discretionary Trusts––T and B same person
    Okay, so long according to trust terms (e.g., HEMS) (and some title vested elsewhere)
  102. B––Support Trusts
    • Use of trust funds limited to HEMS
    • Mandatory or discretionary trusts
  103. B––Support Trusts––Drafting considerations
    Default level of support = waht B is used to before becoming B

    Presumed support of B's dependents = they get it, to

    First or last dollars?
  104. B––Support Trusts––HEMS
    • Health
    • Education
    • Maintenance
    • Support
  105. B––Charitable Trusts
    Governed by same rules as private trusts w/ a few differences
  106. B––Charitable Trusts––Basic cat.s of charitable purposes
    • 1. Relieft of poverty
    • 2. Advancement of educ.
    • 3. Advancement of religion
    • 4. Promotion of health
    • 5. Gov't or municipal purpose

    PHERG
  107. B––Charitable Trusts––Size of Class
    Sufficiently large or indefinite class of Bs so community is interested in enforcement of trust
  108. B––Charitable Trusts––Construing
    Helping one person is sometimes allowed (e.g., educating one doctor [but prolly not one actress])

    Award for doing something good (e.g., Nobel prize)

    Help for common disaster
  109. B––Charitable Trusts––Mortmain
    None in Tex.
  110. B––Charitable Trusts––Determination of Purpose
    • Ct. determines if trust is charitable
    • Standard: "Generally accepted" standard––would community accept trust as charitable
  111. B––Charitable Trusts––Tax Benefits
    • Income tax (contributions to are tax deductible; charities are exempt from income tax)
    • Gift and estate taxes (savings can be huge)
  112. B––Charitable Trusts––Successor T
    Majority can appoint
  113. B––Charitable Trusts––Enforcement
    AG
  114. B––Charitable Trusts––Cy pres
    Ct. can appoint an equitably equivalent charity
  115. B––Charitable Trusts––RAP
    Exempt
  116. B––Charitable Trusts––Split interest
    Charitable remainder OR a charitable lead trust
  117. Pour-over wills
    See wills discussion on pours-over
  118. Life Ins. Trusts––Generally
    B of a life ins. policy can be a trust rather than the person policy holder wanted to get the prop.
  119. Life Ins. Trusts––Which trust to use
    • 1. Inter vivos trust: already set up when dead, money will be there instantly, ensures S intent for longer time, easier to modify BUT there are fees for creation and maintaning
    • Application: Married w/ minor kids: Primary B is spouse but kids' remainder goes to inter vivos trust
    • 2. Testamentary trust: easy to creat; BUT prop. has to go thru probate, can't modify, etc.
  120. Life Ins. Trusts––Characteristics of Inter vivos ins. trusts
    • 1. Funded: T would pay premium for life ins. BUT T's fee would be higher
    • 2. Unfunded: don't have large sums of money up front
  121. Allowing S to undo plan
    • Recovable: Change anything at anytime (e.g., mean kids) but all proceeds will be estate taxable
    • Irrevocable: Tax benefits
  122. Trusts with most benefits
    Inter vivos, funded, irrevocable
  123. Trusts with most flexibility
    Inter vivos, unfunded, revocable
  124. Trust Administration––T acceptance
    • Signature (conclusive ev.) OR
    • Excercise power or duty = prsumption
  125. Trust Administration––Post Bond
    Req'd unless waived or T is a corp.
  126. Trust Administration––Obtain possession and/or control of prop.
    T becomes title-holder of prop.
  127. Trust Administration––Ascertain ID and location of Bs
    Find people, monitor them (if needed), carry out duties to Bs
  128. Trust Administration––Follow S's instruction
    • In re:
    • 1. Investments
    • 2. Mgmt
    • 3. Distribution
  129. Trust Administration––Exercise appropriate std. of care
    • In re:
    • 1. Mgmt
    • 2. Investments
    • 3. Distribution
  130. Trust Administration––Act w/ high fiduciary loyalty
    • 1. Avoid Self-dealing
    • 2. Avoid conflicts of interest
  131. Trust Administration––Personal liability for failure to comply
    • 1. Civil
    • 2. Criminal
  132. Trust Administration––Safeguarding and preserving trust prop.
    Exercise reasonable care, skill, and caution

    E.g., insure, record deeds, assess prop. lose toxic assets, keep property safe
  133. Trust Administration––Earmarking
    Labels trust prop. (helps keep separate)

    • Common law = strict
    • Modern = liable only if failure to earmark causes losses
  134. Trust Administration––Earmarking––Holding as Nominee
    To aid in, for e.g., security trading, broker can trade more easily because account has trust name on it but the stock he owns doesn't have to be individually earmarked
  135. Trust Administration––Commingling
    • Prohibited:
    • 1. W/ T's own assets (strict)
    • 2. W/ assets of other trusts (must get authorization––helps increase investing power, etc.)
  136. Trust Administration––Commingling––Common trust funds
    Can do by corp Ts
  137. Trust Administration––Obtaining corp. benefits for non-corp Ts
    • Ts for more than one S can get permission in trust instrument; OR
    • T uses an investment vehile like mutual fund, or other fund
  138. Trust Administration––Duty to support trust
    T must defend trust from attacks (atty fees/reasonable defense fees come from trust, even if T loses)

    T has duty to appeal
  139. Investments Std. of Care––Generally
    T is personally liable if he doesn't invest w/ appropriat level of care

    NB: T is not an insurer––only responsible for losses from breaches
  140. Investments Std. of Care––Types
    • Prudent person w/ respect to own prop
    • Prudent person w/ respect to others' prop
    • Prudent investor [Tex./majority]
  141. Investments Std. of Care––Prudent person
    Each investment view as a prudent person would dispose of prop.

    Consider: income, appreciation, safety
  142. Investments Std. of Care––"Legal lists"
    Ts could only invest in things on those lists
  143. Investments Std. of Care––Prudent Investor rule
    • Tex. BUT
    • S can trump
  144. Investments Std. of Care––Lowering Std. of Care
    • S says so in trust instrument; OR
    • Exculpatory clause (limited, though––doesn't cover bad faith, intentional, reckless breaches or when T profits from trust, or if clause inserted because of an abuse of relationship w/ S––essentially, only covers negligence)
  145. Trust protector
    Watches over T to ensure he's being prudent––T must follow protector's directive unless manifestly contrary to terms of trust or would seriously breach protector's duties
  146. T w/ special skills
    Must exercise that special skill––held to that higher std.

    NB: If you don't possess the special skill but you hold yourself out as such, you're held to higher std.
  147. Prudent Investor Standard––Basic Factors
    • 1. Must act w/ trust purpose;
    • 2. Must act in accord w/ trust terms;
    • 3. Dist. req's
    • 4. Circumstances generally
  148. Prudent Investor Standard––Portfolio approach
    View investments collectively, not individually as in prudent person rule

    NB: T must take reasonable risk (scary)
  149. Prudent Investor Standard––Comprehensive factors
    • 1. general economic conditions
    • 2. possible effect of inflation or deflation
    • 3. tax consequences
    • 4. role of each investment w/in the portfolio
    • 5. income expected
    • 6. B's other resources
    • 7. Need for liquidity
    • 8. Importance of preserving trust prop.
    • 9. Importance of appreciation
    • 10. Spec. relation or value of an asset tot he purposes of the trust or B
  150. Prudent Investor Standard––Diversification
    Generally: required

    Exception: Spec. circumstances dictate it (e.g., entire trust is a family farm)
  151. Prudent Investor Standard––Duty to Review Investments
    T must bring assets into compliance w/ Prudent Investor Rule (can't keep as-is as in former law)

    Review investments, ditch bad ones, sue former T
  152. Prudent Investor Standard––Loyalty
    T can only work in B's interest
  153. Prudent Investor Standard––Imparitality
    T cannot favor one B over another
  154. T Powers––Main Sources
    • 1. Trust instrument
    • 2. Trust code (look at powers)
    • 3. Granted by Equity (implied powers)
    • 4. Ct. order (may expand or limit)
  155. T Powers––Delegation
    • 1. Permitted delegation––ministerial duties
    • 2. Prohibited delegation––discretionary duties

    Modern rule: If "reasonably necessary"––T's hate this rule for vaguery and uncertainty
  156. Prudent Investor Standard––Delegation of Investment and mgmt duties
    • Common law––not allowed
    • Tex. 1999-2003––delegate to investment agent, could escape personal liabliity if steps were followed
    • Tex. Jan. 1, 2004––Uniform Prudent Investment Act
  157. T Powers––Uniform Prudent Investment Act
    • Stds for delegation:
    • 1. Would a "prudent T of comparable skills" delegate?
    • 2. No notice needed to B

    NB: Essentially, T knows he is not a prudent investor and delgates accordingly
  158. T Powers––Delgation––Duty of T to Agent
    • "Due diligence"
    • Use reasonable care, skill, caution in:
    • 1. selecting agents
    • 2. establishing scope and terms of delegation
    • 3. periodically review agent's axns
    • Benefit: Escape liability
  159. T Powers––Delegation––Duty of agent
    Reasonable care to comply w/ terms of delegation
  160. T Powers––Delegation––Liability to T for Agent's Axns
    T not liable so long as T used due diligence
  161. T Powers––Delegation––Delegate to co-T
    • Allowed unless trust req's joint exercise
    • NB: If delegator takes proper steps, only delegee T is liable
  162. T Powers––Delegation––When agent breaches
    T must go after agent on behalf of trust
  163. T Powers––Delegation––Liability of T to B for Agent's axns
    • Exceptions where T is liable:
    • 1. Agent is affiliate (e.g., relative, partner, employee)
    • 2. T or B is req'd to arbitrat (your'e taking away ability to go to ct.)
    • 3. Shortening of SoL against agent
  164. Multiple Ts––Unanimity
    Not req'd. Majority may act.
  165. Multiple Ts––Vacancies
    Remaining T may act alone

    NB: Instrument tells how to fill vacancy (charitable trusts can fill vacancy absent instrument instructions)
  166. Multiple Ts––Co-T Participation Duty
    • Usu. co-T's must participate
    • Exceptions:
    • Co-T is unavailable (e.g., he's on vacation and a stock is tanking); or
    • Co-T has properly delegated
  167. Multiple Ts––Duty to exercise reasonalbe care in:
    • 1. Preventing another T from committing a serious breach; and
    • 2. Compel breaching T to redress a serious breach
  168. Multiple Ts––Serious Breach
    Fact question
  169. Multiple Ts––Joint and several liablity
    Co-Ts are usu. joint and severally liable

    • Exception:
    • 1. T doesn't join; OR
    • 2. Express dissent, even if you join (e.g., selling land)
    • - Exercise reasonable care;
    • - Dissent in writing;
    • - Give dissent to any T;
    • - At or before time of axn (never after)
  170. Trust Distribution––Generally
    T has an absolute duty to pay correct B (even good faith mistakes using reasonable care is not an excuse)
  171. Trust Distribution––Exception to Absolute Duty to Pay Correct B
    • T not liable for mistake of fact before T had actual knowledge or written notice
    • NB: T must still seek return of impropertly distributed property
  172. Trust Distribution––Who T should dist. to
    A S directed in trust
  173. Trust Distribution––Types of Bs to be distributed to
    • 1. Competent adult B––to B unless instrument says otherwise
    • 2. Reduced capacity B (e.g., minors, persons adjudged by T as incapacitated (no judicial or med. determination needed))
  174. Trust Distribution––Distribution to Bs w/ reduced capacity
    • 1. B
    • 2. B's or estate's guardian (ct. appointed, S can change)
    • 3. Custodian (also a fiduciary of a minor)
    • 4. Reimburse person caring for B
    • 5. Manage as sep. fund on B's behalf subj. to B's right to w/draw (e.g., B is incompetent now, but there's a mandatory dist––put in a sep. fund and manage that fund)
  175. Trust Distribution––Deviation from S's instructions
    No. BUT, some exceptional circumstances allow it w/ ct. permission
  176. Duty of Loyalty––Generally
    T owes Bs undivided loyalty (i.e., no self-dealing, no profit, no conflicts)

    NB: This can be waived by S
  177. Duty of Loyalty––Standard
    • Strict liability for breach (regardless of good faith, fairnes, or T didn't personally benefit)
  178. Duty of Loyalty––Self Dealing Avoidance
    • 1. Buy assets from trust or sell T's assets to trust
    • 2. Lending––T cannont lend trust funds to T
    • Exceptions––authorized; corp. T can deposit under certain circumstances
    • - Can put in bank as precursor to dist.
  179. Duty of Loyalty––Conflicts of Interest––Securities
    If T owns stock in a co, can't purchase stock for the trust (but can retain stock already in trust if reasonable)
  180. Duty of Loyalty––Conflicts of Interest––Sales from one trust to another
    Can't be both buyer and seller
  181. Duty of Loyalty––Conflicts of Interest––Other transactions w/ B
    In non-trust transactions––not arms-length––full disclosure of all applicable facts and laws req'd
  182. Duty of Loyalty––Conflicts of Interest––T employing self
    Keep detailed records ot everything you do; get informed consent
  183. Duty of Loyalty––Conflicts of Interest––Waiver
    S can waive, but ct. will strictly construe (usu. done for unsophisticated T)
  184. K liability––Warning
    Don't sue a trust––you must sue T in his rep. capacity
  185. K liability––Suit against T in rep. capacity
    Allowed if K was w/in T's capacity to make (not a breach of trust for T to make K)
  186. K liability––Suit against T personally
    • Generally allowed.
    • BUT, express provision in K (not trust) excluding T from personal liability; T signing K "as T" = prima facie ev. of intent to exclude personal liability
  187. K liability––Duty of atty
    • If representing T: Make sure they sign "as T" and get no-liability term in K
    • If representing other K-ing party: Try to increase the number of "people" liable (T in rep. and personal capactiy)
  188. K liability––P's duty of notice
    Alert Bs taht T is breaching K––Bs may intervent

    • Notice:
    • 1. W/in 30 days of filing and 31 days before jgmt
    • NB: P's written request requires T to provide names and addresses of Bs w/in 10 days (notice to this list is deemed sufficient)
  189. Tort Liability––Suit against T personally
    • T is liable for his and his agent's torst
    • T may get reimbursement or exoneration in certain cases
  190. Tort Liability––T entitlement to reimbursement or exoneration
    • 1. Common incident tort
    • 2. Strict liability
    • 3. Concerstion (increased the value of trust; trust may pay back)
  191. Tort Liability––Notice Duties of P
    Same as in K disputes (30 days w/in filing; 31 days before jgmt; list w/in 10 days)
  192. Tort Liability––Charitable immunity
    Abolished in Tex. (mostly, still available occasionally)
  193. Tort Liability––Duty of Atty for T
    Recomend ins. policy that covers the entire trust
  194. Principal and Income Allocation––Conflict
    Income and remainder Bs are in conflict
  195. Principal and Income Allocation––Methods of allocating receipts and charging expenses
    • 1. S instructions (followin Uniform Principal and Income Act is deemed reasonable to all Bs)
    • 2. Trust code rules
    • 3. If no S instruction, or Trust Code rule, allocate to principal
  196. Principal and Income Allocation––Capital gains
    Principal
  197. Principal and Income Allocation––Interest earned
    Income
  198. Principal and Income Allocation––Rent
    Income
  199. Principal and Income Allocation––Eminent Domain
    Principal
  200. Principal and Income Allocation––Ins. proceeds
    Principal
  201. Principal and Income Allocation––Dividends
    • Cash dividends: Income
    • Stock dividends: Principal
    • Sotck splits: Principal
  202. Principal and Income Allocation––Business and Farm Receipts
    Determined according to GAAP (Generally Accepted Acct-ing Principals)
  203. Principal and Income Allocation––Liquidating or "wasting" assets
    • Income: 10%
    • Principal: 90%

    (e.g., patent in betamax tapes)
  204. Principal and Income Allocation––Oil and Gas Royalties
    • Prior law (1/1/2004–may use if established before this date)
    • Income: 72.5%
    • Principal: 27.5%

    • Tex. now:
    • Divided equitably––IRS depletion allowancase presumed equitable
  205. Principal and Income Allocation––Timber
    • Timber that doesn't exceed growth: Income
    • Timber that does exceed growth: Principal
  206. Principal and Income Allocation––Non-income earning prop.
    Principal
  207. Principal and Income Allocation––T's power of adjustment
    Allows T to ignore basic rules under certain circumstances

    (Controversial)
  208. Principal and Income Allocation––Principal and Income Allocation––T's power of adjustment––Factors
    • 1. Nature/purpose/duration of trust
    • 2. S's intent (e.g., daughter inc.or g-daughter principal)
    • 3. ID and circumstances of Bs
    • 4. Liquitidy need
    • 5. Asset from S, used by B, or investment
    • 6. Terms of trust re: principal and income
    • 7. Tax consequences
  209. Principal and Income Allocation––Principal and Income Allocation––T's power of adjustment––Factors to not adjust
    • 1. Prohibited by S
    • 2. T is a B
    • 3. T would benefit from adjustment
    • 4. Adverse tax consequences
  210. Principal and Income Allocation––T's power of adjustment––Notice to Bs
    None needed
  211. Principal and Income Allocation––T's power of adjustment––Ct. axn.
    • Ct. can reverse T's decision (abust of disc.)
    • T may seek ct. approval of adjustment if Bs may object
  212. Disbursements––T compensation
    50/50 P/I
  213. Disbursements––Accounting expenses
    50/50 P/I
  214. Disbursements––Ordinary Repairs
    Income
  215. Disbursements––Capital improvements and extraordinary repairs
    Principal
  216. Disbursements––Debt payment
    • Interest = income
    • Principal = principal
  217. Disbursements––Ins. premiums on pricipal
    Income
  218. Disbursements––Income taxes
    • Receipts allocated to income = income
    • Reciepts allocated to principal = principal
  219. Disbursements––Prop. taxes
    Income
  220. Disbursements––Depreciation
    T's disc. to allocate to principal to make up for depreciation
  221. Unitrust
    • Current B gets fixed percentage of trust's FMV each year
    • NB: Determining %-age is hard––look to some other rate (e.g., GDP rate, etc)
  222. Duty to Inform Bs––Generally
    Duty to disclose upon B's request or T about to take a material axn
  223. Duty to Inform Bs––Limiting
    • Limited when:
    • 1. Trust is revocable;
    • 2. B is under 25;
    • 3. B is not eligible for current dist.or dist if trust were to terminate now
  224. Accountings––Generally
    Allows B to obtain info to see if T is breaching duties (not req'd in Tex., only available)
  225. Accountings––Standing
    B or interested person
  226. Accountings––B's request
    • 1. Writeen
    • 2. 90 days for T to provide
    • 3. If T does not, any B may sue
    • 4. Ct. may give B atty fees and ct. costs against trust or T personally
    • 5. Only allowed once a year
  227. Accountings––Interested person request
    File suit––ct. will order if interested person's reasoning warrents it
  228. Accountings––S's ability to alter acct-ing rules
    S may require––but total waiver not allowed

    • NB: Limitations allowed under Trust Code:
    • 1. Trust is revocable
    • 2. B of irrevocabe trust is remote
  229. Accountings––Advice
    Keep good records
  230. Trustee Compensation––Modernly
    • If trust is silent:
    • 1. Ct. determination (T pet's for approval)
    • 2. T determination (most common)
    • 3. Schedule or scale (e.g., based on value of trust, etc.)

    NB: Presumption = resonablecompensation (unless S provides otherwise or ct. denies compensation)
  231. Trustee Compensation––Waiver
    • T is already receiving from trust
    • T's compensation is taxed––B's is not
    • BUT, if you're paid, you might to a better job
  232. Trustee Compensation––Fixed fee
    Doesn't change for inflation and bears no relation to amount of work
  233. Trustee Compensation––Shopping around
    S should do it.
  234. Trustee Compensation––Determining Reasonable Fee––Factors
    FIAT RECS

    • Fidelity
    • Income
    • Appreciation
    • Time

    • Responsibility
    • Estimate
    • Community custom
    • Skills (special or did it require skills)
  235. Court Alterations––Generally
    Ct. can do what S would have done had he had hindsight
  236. Court Alterations––Deviation
    Change trust terms
  237. Court Alterations––Deviation––Who may request
    T or B
  238. Court Alterations––Deviation––Discretion
    Ct. has discretion––can refuse to authorize, even for "good" reason

    Std. of Rev.: Abuse of Discretion
  239. Court Alterations––Deviation––When possible
    • 1. Fulfilled
    • 2. Ilegal
    • 3. Impossible
    • 4. Impracticable
    • 5. Purposes are served by achieveing S's tax objectives and not contrary o his intent
    • 7. Purposes no longer served (all Bs must consent directly, virtually, or thru guardian)
    • 8. Purposes mot materially inconsistent w/ the purposes (all Bs consent directly, virtually, or thru guardian)
  240. Court Alterations––Deviation––Permitted Deviations
    • 1. Change T
    • 2. Modify trust terms
    • 3. Allow T to do acts not auth'd by S (e.g., "do not invest in stock" from depression-era trust)
    • 4. Prohibit T from performing acts req'd by trust
    • 5. Terminate trust, in whole or in part
  241. Court Alterations––Deviation––Cy pres
    Saves charitable trust––S must have general charitable intent
  242. Party Alterations––By S
    Presumption: S may revoke, mod., amend, etc.

    Revocation: must be in writing if trust was created in writing––or follow trust specified method
  243. Party Alterations––By T
    • Generally: Can't.
    • Exceptions:
    • 1. S said T could
    • 2. Divions or combo of trusts on same terms (e.g., tax reasons––tax elections for diff. types of prop.)
    • 3. Non-judicial cy pres (T can do this)
  244. Party Alterations––By T and Bs acting together
    Causes merger (no merger if spendthrift trust)
  245. Party Alterations––By Bs
    • US rule: allowed if material purposes are fulfilled
    • Tex: allowed if all purposes are fulfilled (get ct. approval, change not inconsisten w/ material purpose and all Bs agree)
  246. Party Alterations––S and all Bs
    If S is alive and all Bs of irrevocavle spendthrift trust consent, trust can be modified or terminated

    DANGEROUS
  247. Party Alterations––Family Settlements
    Favored––Controversy must be genuine
  248. Termination––Occurrence
    • 1. Trust terms (most common)
    • 2. S revokes
    • 3. Prop. exhausted
    • 4. Uneconomical (running trust cost > benefit)
    • 5. Ct. order
    • 6. Merger
    • 7. All Bs die
  249. Termination––T's duty
    Wind up trust business in a reasonable time and dist prop. to remainder Bs
  250. Enforcement Procedural Matters––Standing
    Intersted person (B, T, others affected by trust [S?], AG)
  251. Enforcement Procedural Matters––Necessary parties
    • 1. B of trust on whose act or obligation the axn is predicated
    • 2. B designated by name in trust (unless trust prop. exhaused)
    • 3. Person receiving current dist (even if not named, e.g., class gift)
    • NB: Bs merely designated by class are not necessary parties, but you want to bind them
  252. Enforcement Procedural Matters––Jx––Inter vivos trust
    • 1. W/ stat. prob. ct. and dist. ct.––concurrent jx., no priority
    • 2. W/o stat. prob. ct.––dist. ct.
  253. Enforcement Procedural Matters––Jx––Testamentary trust
    • 1. W/ stat. prob. ct. and dist. ct.––concurrent jx., priority w/ stat prob ct.
    • 2. W/o stat. prob. ct.––dist. ct.
  254. Enforcement Procedural Matters––Jx––While estate pending
    If estate pending in cty. ct. at law, this ct. has jx.
  255. Enforcement Procedural Matters––Jx––What ct.s can do
    Enormous list––pretty much anything needed to be done
  256. Enforcement Procedural Matters––Venue––Single non-corp T
    • Any or all:
    • 1. Cty. of T's residence (now or in past 4 years)
    • 2. Cty. of situs of trust admin (now or in past 4 years)
  257. Enforcement Procedural Matters––Venue––Multiple Ts or Corp T
    • Any or all:
    • 1. Cty. of situs of trust admin (nor or in past 4 years)
    • NB: If corp. t is D, cty. in which T maintains its principal ofice in Tex.
  258. Enforcement Procedural Matters––Venue––If estate is pending
    Proper in cty. where estate is pending
  259. Enforcement Procedural Matters––Venue––Transfer
    • Just and reasonable cause
    • NB: Venue may be changed thru consent of all parties
  260. Enforcement Procedural Matters––Rules of Procedure
    Generally, TRCP
  261. Enforcement Procedural Matters––Virtual Rep––Order binds holder of power to revoke
    • Usu. S
    • Binds all
    • E.g., revocable trust
  262. Enforcement Procedural Matters––Virtual Rep––Order binding guardian of estate or atlitem
    • Binds ward
    • Minor or incapacitated person
  263. Enforcement Procedural Matters––Virtual Rep––Order binding T
    Binds B in proceeding to review acts of prior T and axns involving creditors

    E.g., new T sues old T for breach, B is bound
  264. Enforcement Procedural Matters––Virtual Rep––No guardian or conflict of interest
    Parent may rep child
  265. Enforcement Procedural Matters––Virtual Rep––Unborn or unascertained persons
    • If.
    • 1. Interest was adequately rep'd by another party; and with
    • 2. substantially identical interest
  266. Enforcement Procedural Matters––Guardians Ad litem
    • Discretionary: Minor, unborn, incapacitated, unascertained, unelectable, etc.
    • Mandatory: If trust sued by a tort P and there is a minor or incompetent
  267. Civil Remedies Against T––Money dmgs
    • Any profit thru or arising out of trust admin (sans compensation)
  268. Civil Remedies Against T––Money damages-–Ways to obtain
    • 1. Lost value to trust (cause req'd, no benefit req)
    • 2. Profit made by T (cause req'd, no req trust lost, only that T gained)
    • 3. Lost profits (cause req'd––difficult to ascertain)
    • 4. Punitive damages (intentional breach)
  269. Civil Remedies Against T––Remove T
    • Discretionary:
    • 1. T has materially violated trust (or attempted); and
    • 2. Trust suffered a material financial loss
    • NB: Material loss is fact Q
  270. Civil Remedies Against T––Remove T––When to do it
    • 1. T becomes incompetent or insolvent
    • 2. Discrtionary for the ct. for any other cause (ct.s are reluctant to remove T that S chose)
  271. Civil Remedies Against T––Remove T––SoL
    Does not run when seeking removal rather than recovery (the latter's SoL is 4 years)
  272. Civil Remedies Against T––Decree to carry out trust
    "Do your job!"
  273. Civil Remedies Against T––Injunction
    Prevent T from going through w/ threatened breach
  274. Civil Remedies Against T––Receivership
    Extraordinary remedy––when T disobeys injunction
  275. Civil Remedies Against T––Require or increase bond
    Remedy against T
  276. Civil Remedies Against T––Declaratory jgmt
    Ct.s may determine any Q arising during the admin of a trust
  277. Civil Remedies Against T––Atty fees
    • Award may be against any party (P or D)
    • Std: Equitable and just

    Always request fees
  278. Civil Remedies Against T––Remove
  279. Civil Remedies Against T––Criminal
    Misapplication by Fiduciary

    • Elements:
    • 1. Intenionally, knowingly, or recklessly committed an
    • 2. Evil act
    • - mis-apply trust prop. (violate trust instrument or trust code)
    • - substantia risk of loss to B
  280. Civil Remedies Against T––Criminal––Penalty
    >$200K = life
  281. Civil Remedies Against T––Liability of Acts for Prior T
    • Req's:
    • 1. Knowledge (subjective or objective)
    • 2. Improper conduct
    • - allows bad conduct to continue;
    • - fails to make reasonable effort to compel T to deliver trust prop.
    • - fails to make reasonable effor to compel redress of breach

    NB: To escape liability, you must do the opposite of ALL of those things
  282. Remedies Against B––Misappropriation
    B has misappropriated or otherwise wrongfully dealt w/ trust prop. (e.g., taking watch in trust)
  283. Remedies Against B––Participation in Breach
    • The B:
    • 1. Consented to breach;
    • 2. Participated in breach;
    • 3. Agreed to be liable for T's breach
  284. Remedies Against B––Failure to repay loan or advance
    Sue for payment
  285. Remedies Against B––Failure to repay excess dist.
    E.g., mistaken payments
  286. Remedies Against B––Breach of K to contribute to trust
    E.g., B promises to add prop. to trust and then fails to do so
  287. Remedies Against B––T's right of offset
    T may offset, even if trust has a spendthrift provision
  288. Remedies Against Trust Prop––Tracing
    Recover actual trust prop. from T or non-BFP

    No double recovery, though
  289. Remedies Against Trust Prop––Tracing––Benefits
    • B can:
    • 1. Get exact prop. that was in trust above all other creditors;
    • 2. Subrogate and get creditor's superior rights
  290. Remedies Against Trust Prop––Tracing––Notes
    • There is an unrealistic presumption of honesty––T takes from his funds first, then the trust funds
    • Trust $ in T's acct. only increases by embezzling from trust acct.
  291. Remedies Against Trust Prop––Subrogation
    B gets same rights as secured creditors if T uses trust prop. to pay creditor (e.g., T pays off house w/ embezzled trust funds, Bs get to foreclose on house)
  292. Remedies Against Trust Prop––Marshalling
    Creditor w/ right ot recover from several funds must first go for funds not subject ot the rights of another creditor who has accessto only one of the funds
  293. Remedies Against Trust Prop––BFPs
    Purchaser who can keep embezzled prop. when he meets only one Tex. protection.
  294. Remedies Against Trust Prop––BFPs––Protrections
    • 1. BFP (good faith, fair val)
    • 2. Dealings w/ T (not a B, good faith, obtain a copy of trust or trust cert.––no duty to inquire about T's powers)
    • 3. Delivery of $ or other prop. to T (good faith, no duty to make sure T properly deals w/ prop.)
    • 4. Dealing / T of terminated trust (not a B, good faith, w/o knowledge of trust termination, protected as if former T were still T)
    • 5. Conveyances from trust which don't
    • - ID the trust; or
    • - Disclose the names of the Bs
    • - Purchaser not subject to B's claims
  295. Who can T sue on behalf of trust?
    • Party who breaches K
    • Tortfeasor who dmgs trust prop
  296. Enforcement of Charitable Trusts––Challengers
    Anyone who would rec. prop. if trust were invalidated (e.g., heirs, will Bs)
  297. Enforcement of Charitable Trusts––Enforcers
    • 1. S (but only if he qualifies as interested person)
    • 2. AG
    • 3. Charitable B
    • 4. Anyone who can qual as interested person

    2 & 3 most commonly––3 most common
  298. Enforcement of Charitable Trusts––Notice to AG
    Application to "charitable trusts"
  299. Enforcement of Charitable Trusts––Notice to AG––What are charitable trusts
    • 1. Charities, even if not a trust
    • 2. Trust to benefit charities
    • 3. Inter vivos outright gifts to charities
    • 4. Testamentary outright gifts to charities
  300. Enforcement of Charitable Trusts––Notice to AG––When a proper party
    Nearly always

    • E.g.,
    • 1. Axn to terminate trust
    • 2. Distributeto non-charitable donees
    • 3. Cy pres
    • 4. Construe instrument
    • 5. Will contest if will makes charitable gift
    • 6. Obtain declaratory jgmt
  301. Enforcement of Charitable Trusts––Notice to AG––How to give
    • 1. Given by party initiating axn
    • 2. Certified or registered mail
    • 3. Include pleadings
    • 4. W/in 30 days of filing
    • 5. At elast 25 days before hearing
    • 6. Submit affidavit swearing compliance w/ notice duty w/ return receipts from the mail scv
  302. Enforcement of Charitable Trusts––Notice to AG––Failure to give
    May set aside as voidable
  303. Enforcement of Charitable Trusts––Notice to AG––How often AG gets involved
    Rarely
  304. Barring of Remedies-–S's approval in trust
    • S may waive anything but:
    • 1. Req valid trust purpose
    • 2. Limitations on exculpatory clause
    • 3. SoL
    • 4. Accounting for irrevocable trust if B is entitled to receive current dist. or would take if trust ended now
    • 5. T's duty to act in good faith
    • 6. T's duty to inform Bs (unless B<25 or B is remote)
    • 7. Ability of ct. to take axn (deviatoin, remove T, exercise jgmt. over trust, bond, compensation, etc.)
    • 8. Terrorum provisions
  305. Barring of Remedies-–B release
    • Req's
    • 1. Legal capacity
    • 2. Fully informed
    • 3. Written
    • 4. Delivered to T
  306. Barring of Remedies-–B release––What may be released
    Anything––even forgive past conduct or give permission for future conduct
  307. Barring of Remedies-–B release––Virtual Rep (VR)
    • 1. Binding on B who can revoke (usu. S)
    • 2. Minor bound
    • - parent signs (no conflict of interest; and no ct.-appointed guardian)
    • 3. Unborn or unascertained B bound if:
    • - B is lineal of consenting B; and
    • - Substantially identical interst
    • 4. Less comprehensive than VR in a ct. proceeding

    NB: Can't use VR to modify or terminate trust
  308. Barring of Remedies-–Ct. Decree
    The "escape" clause––ct. can bar anything
  309. Barring of Remedies-–SoL
    4 years––runs from date breach was/should have been discovered
  310. Barring of Remedies-–Laches
    Equitable remedy, even before SoL runs
  311. Trust Bank Accounts––Generally
    Not a true trust––just an acct. at a bank, credit union, or other financial inst.
  312. Trust Bank Accounts––Other terms
    • Totten trust
    • Savings acct. trust
    • Tentative trust
  313. Trust Bank Accounts––Ownership during T's lifetime
    T (depositor) maintains all rights, no imposition of dutes

    If more than one T, they each own in proportion to net contributions
  314. Trust Bank Accounts––Ownership after T's death
    B gets prop. in acct. when all Ts die and B survives all Ts
  315. Trust Bank Accounts––Benefits
    • Avoids probate
    • Cheap
    • No control need be given up
    • Effective to make small gifts (e.g., to gardener)
  316. Trust Bank Accounts––Disads
    • No pro mgmt
    • No tax benefits
    • Confusing to clients (go w/ POD acct.)
  317. Resulting Trust––Generally
    Not a true trust
  318. Resulting Trust––Beneficiary
    S or S's heirs
  319. Resulting Trust––Situations where these occur
    • 1. Express trust prop. is excessive and trust instrument doesn't provide instructions. (e.g., "Money in trust for HEMS of B" B dies. No remainder B.)
    • 2. Failure of an express trust (e.g., "Trust to open a bar in Anytown, USA" Bars are illegalized in Anytown, USA. )
    • 3. Purchase-money resulting trust (PMRT) (e.g., I'm moving to Dallas so I order furniture online and have it sent to Dallas friend so I don't have to move it––a PMRT is presumed)
    • NB: if parent, child, or spouse, gift presumed.
    • Other relationships: Gift or creditor/debtor
  320. Constructive Trust––Generally
    Equitable remedy to prevent unjust enrichment

    Person seeking must request it

    Bad conduct must have nexus to prop. (e.g., the prop. of the estate if an heir murders intestate)
  321. Constructive Trust––General Categories of Behavior that Can Lead to Constructive Trust
    • 1. Fraud
    • 2. Confidential relationships are abused
    • 3. Promises made in contemplationof death
    • 4. Any other evil conduct which the ct. finds merits the remedy

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