8 Elements that you must satisfy for a valid trust:

November Notes Wills and Trusts

Intent

Capacity

Statute of Frauds

Legal purpose to trust

Trust must contain property

Trustee must have legal title

Beneficiary must hold equitable title

No violation of rule against perpetuities

I.. Trust intent - threshold factor in determining whether a trust exists (§ 15201)

A.. Trust intent:

1.. splitting title into legal and equitable portions

2.. imposition of enforceable duties on the trustee

B.. Detailed examination of trust intent

1.. creation of a trust

a.. no special language needed

b.. just need to know effect of a trust

c.. must have present intent

d.. easier to prove a trust exists if the beneficiary is given notice

2.. history of trusts

a.. used to be called “uses”

b.. courts would not enforce trusts, they were just honorary obligations

c.. during 15^th Century uses began to be enforceable

d.. were used to avoid duties of property ownership under the feudal

ownership system

e.. passed the statute of uses in 1536 in order to abolish uses - if you are a beneficiary you have all legal and equitable title

f.. legal interest was eliminated; but exceptions were developed - now called active trusts; elements of what we today call enforceable duties

g.. need to have imposition of duties

3.. split of title

a.. must have a split; cannot have both people holding both halves

b.. only combination that won’t work is same person as beneficiary and

trustee

4.. merger - when the two halves come back together

C.. distinguishing trusts from other legal relationships

1.. people would often rather be in a trust relationship than other relationships

2.. because there are enforceable duties, better statutes of limitations, and more

D.. methods of trust creation

1.. times of creation - when you are alive, when you are dead

a.. while settlor is alive - inter vivos or living trusts - trusts created during setllor’s lifetime; non probate assets; creation of an inter vivos trust (distinguish between them by seeing what is done with legal title)

1.. keep the title and transfer the equitable title (settlor and trustee can be same person) self declaration of trust

2.. transfer the legal title - settlor and trustee are different people; transfer or conveyance in trust; either convey away legal title, or retain legal title and just keep equitable

b.. creation of a trust when you die - testamentary trusts - creating trust in settlor’s will; must have a valid will first (condition precedent to the validity of the trust)

E.. other issues of trust creation

1.. consideration is not needed; trusts are not contracts; only methods of transferring property; do not need consideration for a transfer that has already occurred

2.. to enforce a promise to create a trust in the future, you would need all the elements of a contract including consideration

3.. can put a certificate of deposit in a trust

F.. settlor - the person that creates the trust by splitting the title and imposing the enforceable duties; no special trust rules for a settlor to have capacity

G.. Statute of Frauds - under certain circumstances a trust must be in writing to be enforceable; purpose is to protect people who are not really involved in the trust relationship

1.. who stands to benefit - the trustee; if the trust is declared invalid, the trustee would get the property

2.. CA requirements - real property - written instrument signed by settlor or trustee (admission against interest); agents can also do the signing, but the agency must be in writing; or can be by an authorized agent; statute says that it can be by operation of law as well;

3.. CA requirements - personal property - need clear and convincing evidence, more than preponderance; should not even do it orally

H.. trust purposes - a trust can be created for any purpose as long as it is not illegal or against public policy

1.. split in how to decide this

2.. CA view - follows the

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November 3, 1999