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Trusts I. Creation of Private (NonCharitable) Trust A. Express Trust – created by language 1.

Definition: Fiduciary relationship wherein trustee holds legal title for the beneficiary, who hold equitable title 2. Declaration of trust or transfer in trust a. Declaration: Settlor is trustee b. Transfer: Settlor is not trustee 3. Elements (settler must put his TRIB in writing) a. Settlor with capacity (sane & 18) b. Trust purpose i. Anything legal (a) support (b) conserve assets (c) save taxes ii. not against public policy (a) destruction (b) looking favorable upon divorce iii. If purpose bad, consider settler intent (a) if have wanted trust without it, strike clause (b) if he wouldn’t, void the trust c. Res – specific identifiable property d. Intent – use language, name of settler i. precatory terms – insufficient ii. exception: detail (dollars – shows intent) e. Beneficiary – settler cannot be sole beneficiary f. writing i. inter vivos (a) realty – writing (S of F) (b) Personalty – no writing even oral ii. Testamentary g. Trustee i.. if necessary appointed by court ii. unlike regular agent, has legal title, and personal liability B. Resulting Trust = implied trust (arise from conduct) 1. Purchase money a. by agreement b. by gift to someone not related (gift not intended) c. for close relatives, presume gift 2. Failure of express trust 3. Failure of charitable or honorary trust C. Constructive trust – to prevent unjust enrichment II. Transfer of Interest A. Restraints – are permitted

unless he shows trustee acted in bad faith or in violation of duty III. Illinois (where settler is not the beneficiary. Impartiality to all beneficiaries 4. Uniform Principal and Income Act 1. Irrevocable trusts 1. Liability of trustee D. Termination A. Presumption – when silent presume trusts irrevocable B. cash dividends . pay on time C. Duty to follow instructions (SAIL) 2. Charitable A. Settlor alive – if trustee. Perpetual – OK B. income. beneficiary cannot convey 2. Appreciation 6.if specific charity is give to next closest C. automatic spendthrift provision) 1. but also the corpus (principal) 1. settler and all beneficiaries agree (consent) irrevocable trusts can be revoked 2. After exercise – can be reached 3. Liquidity and diversification 5. Duties of trustee 1.can’t do business w/ trust b/c supervision is impossible 5. Before exercise – cannot be reached 2. Settlor dead – if all parties agree. Segregation of assets 3. Illinois – statutory spendthrift provision would be thwarted – not revocable if dead IV. and no trust purpose would be thwarted then irrevocable can be revoked C. Principal (corpus) – repayments or loans – distributions. Technically void(violates RAP) 2. Loyalty . Cy Pres . Honorary – beneficiary not charity or private (pets) 1. Inflation 3. Discretionary – settler gives discretion to trustee to pay the life beneficiary not only the income. upheld if trustee willing V. stock splits 2. Accounting – keep records. credit cannot attach except under court order C. Investment standard (“prudent investment rule”) – I IT LAN 1. Will beneficiary have other resources B.B. Administration A. Income – rent. but. Income and safety 2. Beneficiary cannot force distribution. Taxes 4.

property. Uninterrupted e. bailee liable for ordinary negligence 3. Elements of Inter Vivos a. mutual benefit bailment. sole benefit of bailee. If donor recovers. Misplaced (found in place where it should be) – goes to landowner 3. Holder in due course 4. Bailments – giving off possession (not title) by bailor. Abandoned property and adverse possession 1. item not accidentally left 2. family law) I. Acquisition of possession or title A. must be in contemplation of death b. defined: bailee must have intent to accept. Accession 2. abandoned. Visible f. unowned. Cash 3. Types and results a. Causa Mortis a. acceptance (can be silence) 2. Lost (found in a place where it shouldn’t be) Goes to finder unless trespasser or private locus 2. or donee dies first gift is revoked 3. Exclusive c. Lost. donative intent to pass title b. Misplaced. mink – gal II. Actual D. bailee liable for gross negligence b. Gifts 1. Buyer Acquires Title of Seller A. equity. bailee liable for slight negligence c. Trove (gold or silver in refined state) – treat like property (goes to finder) B. Remember “sale on approval” is bailment C. Owner . giving possession with intent 2. Intermingling (common law confusion) 5. Buyer may ACHIEVE title from seller (who never had title) in 7 cases 1. Entrustment a. Special problems a. ring –guy b. Hostile b. trover 1. Unowned – acquire possession with intent 4. sole benefits or bailor. delivery c. it is to be returned 1. adverse (HELUVA) a. Lasting (5 years) d.Personal Property (contracts.

b. Voidable title 7. Estoppel – detrimental reliance. sells to buyer in ordinary course – buyer gets title 6. Entrusts to merchant c. cloaking with incidia of ownership .