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Trusts Cheat Sheet (DRAFT) by

This is a draft cheat sheet. It is a work in progress and is not finished yet.


Management devise
Bifurcated Transfer
Trustee owns legal title but not equitable
Original trust property and any increase in value
Money invested by the trust
Majority presumes irrevo­cable; UTC presumes revocable
Mandatory Trust
Trustee must make distri­butions from the trust
Discre­tionary Trust
Trustee makes distri­butions in her discretion
Remedial Trust
Remedy created by operation of law


Person who creates trust
Person who manages the trust, has legal title to the property
Receives the benefit of the trust; has equitable title to property

Trust Distri­butions

Mandatory Trust
Trustee has no discretion as to whether she will make a distri­bution
Discre­tionary Trust
Trustee has complete discretion as to whether she will make a distri­bution
Support Trusts
Trustee makes distri­butions to support the benefi­ciary

Asset Protection Trust

Shield benefi­ciaries from creditor's claims
Support Trusts
Creditors can reach only when trustee has made a support payment
Discre­tionary Trust
Creditors can only reach when trustee has made a payment
Spendt­hrift Trust
Trust expressly restricts the benefi­ciary's power to alienate her interest; creditors can only reach when trustee makes a payment
spousal or child support; provision of basic necess­ities; federal or state tax liens

Principal v. Income

Old Rule
life benefi­ciary entitled to income; remainder interest entitled to principal
Modern Approach (UPAIA)
Trustee can re-cha­rac­terize and reallocate as necessary to fulfill trust purpose; alloca­tions must be reasonable

Express Trusts

Express Trust
Owner expressly indicates intent to create truts
Private Express Trusts- Intent
"­trust words" create presum­ption of trust (look out for precatory language); oral trusts are valid unless conveying real property or devise
Private Express Trusts- Trust Res
must be property in the trust (unless pour-over trust- trust my be in writing at time will is executed)
Private Express Trusts- Purpose
valid if not illegal or contrary to public policy
Private Express Trusts- Benefi­ciaries
Must be ascert­ained benefi­ciary- specific person or criteria
Charitable Trust
Must have charitable purpose; Rule Against Perpet­uities does not apply; Cy Pres doctrin
Cy Pres Doctrine
Court can modify a trust if the trusts charitable purpose is not longer possible; must have had a general charitable purpose (if not goes to resulting trust); goal is to make as close to original purpose as possible
Charitable Trust- Standing
Attorney General's office has standing to enforce; UTC givers Settlor standing as well
Creation of Express Trust- Inter Vivos
during Settlor's life- declar­ation of trust (Settlor declares herself the holder of property in trust and is trustee); deed of trust (settlor conveys property to a trustee)
Creation of Express Trust- Testam­entary Transfer
Created according to terms of a will

Creditor's Ability to Reach

Rule 1
Benefi­ciary's equitable interest in trust property is freely alienable unless statute or trust instrument limit this right
Rule 2
Creditor cannot reach trust principal or income until such amount becomes payable to the benefi­ciary or the benefi­ciary can demand it

Remedial Trusts

Equitable Remedy
created by operation of law; passive in nature (trustee's only duty is to convey property back to settlor)
Resulting trusts
used when a trust fails; property returned to settlor or estate; avoid unjust enrichment
Purcha­se-­Money Resulting Trust
person one buys property but title is taken in person two's name (person two is not the natural object of person one's bounty)
Avoiding a Resulting Trust
Create a gift-over clause
Constr­uctive Trusts
Remedy used to prevent unjust enrichment if third party takes advantage of settlor; look for wrongful conduct directed toward settlor that caused settlor to create trust


Express trust can expire at the end of a stated term
Material purpose
Automa­tically terminates when the trust purpose is satisfied
Claflin Doctrine
Unfulf­illed material purpose; trustee can block premature termin­ation if the trust is still serving some material purpose
Settlor's power
Unilateral termin­ation if expressly reserved the right; settlor and benefi­ciaries must consent if right to terminate was not expressly reserved


Settlor alive
Unilat­erally modify if reserved right; otherwise, all benefi­ciaries must consent and proposed change must not interfere with primary purpose of trust
Settlor dead
All benefi­ciaries agree to modifi­cation consistent with material purpose or unforeseen event frustrated purpose of trust
cannot modify or terminate through unilateral action

Trustee Removal

Trustee breached a fiduciary duty or grossly mismanaged the property
Written notice, if settlor is alive, to co-tru­stees and benefi­ciaries

Trustee's Power

Trust Documents
Look for powers here first- if silent, look to statutory and common law
Modern Trend
Grant trustee all those powers necessary to act as a reasonably prudent person

Trustee's Duties

Did trustee act reason­ably?; Self-d­ealing is a breach (always per se breach)
Did trustee act in good faith?; duty of ordinary prudence
common law- never allowed to delegate; modern law permits delegation
old rule- limited to specific list of invest­ments; modern- prudent investor rule (expected to diversify assets and spread risk of loss)
balance competing interests of present and future benefi­ciaries
Admini­str­ative duties
Inform benefi­ciaries about nature of trust property; duty to account for actions taken on behalf of trust

Future interests

Review Property Sheet