Chapter XX TRUSTS CONDENSED OUTLINE - · PDF fileChapter XX TRUSTS CONDENSED OUTLINE I....

Chapter XX

TRUSTS

CONDENSED OUTLINE

I. INTRODUCTION

A. In General.

B. Other Relationships Distinguished.

C. Tentative Trust in Bank Deposit.

D. Conflict of Laws.

E. The Trust Law.

II. CREATION OF EXPRESS TRUST

A. In General.

B. Statute of Frauds.

C. Trust Property.

D. Trust Intent.

E. Trust Purpose.

F. Beneficiary of Private Trust.

III. TRUSTEES

A. In General.

B. Compensation and Indemnification.

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C. Duties.

D. Powers.

E. Liability to Beneficiaries.

IV. BENEFICIARIES

A. In General.

B. Spendthrift and Other Protective Trusts.

V. REVISED PRINCIPAL AND INCOME ACT

A. In General.

B. Adjustments Between Principal and Income.

C. Distributions With Respect to Decedent’s Estate orTerminating Income Interest.

D. Apportionment at Beginning and End of Income Interest.

E. Allocation of Receipts From Entities During TrustAdministration.

F. Allocation of Receipts Not Normally Apportioned During TrustAdministration.

G. Allocation of Receipts Normally Apportioned During TrustAdministration.

H. Allocation of Disbursements During Trust Administration.

VI. DURATION, MODIFICATION, AND TERMINATION

A. Duration of Trusts.

B. Revocation and Modification of Revocable Trust.

C. Revocation and Modification of Irrevocable Trust.

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VII. JUDICIAL PROCEEDINGS CONCERNING TRUSTS

A. Jurisdiction and Venue.

B. Proceedings.

C. Testamentary Trusts Subject to Continuing Jurisdiction.

D. Transfer of Trust to or From Another Jurisdiction.

VIII. RIGHTS OF THIRD PERSONS

A. Liability of Trust and Trustee.

B. Protection of Third Persons.

C. Rights of Settlor’s Creditors Where Trust Is Revocable.

IX. CHARITABLE TRUSTS

A. In General.

B. Indefinite Beneficiaries.

C. Charitable Purposes.

D. Cy Pres Doctrine.

E. Enforcement and Supervision.

X. RESULTING TRUSTS

A. Nature and Distinctions.

B. Failure of Express Trust.

C. Payment of Consideration for Transfer.

XI. CONSTRUCTIVE TRUSTS

A. Nature of Constructive Trust.

B. Existence of Adequate Legal Remedy.

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C. Fraud or Mistake.

D. Crime.

E. Breach of Fiduciary Duty.

F. Violation of Unenforceable Contract.

DETAILED OUTLINE

I. INTRODUCTION

A. In General.

1. [§1] Nature and Classification of Trusts.

2. [§2] Common Terminology.

3. [§3] Trust as Separate Legal Entity.

4. [§4] Restatement.

5. [§5] Uniform Acts.

6. [§6] Treatises and Practice Works.

B. Other Relationships Distinguished.

1. [§7] In General.

2. [§8] Debt or Security Device.

3. [§9] Impound Account.

4. [§10] Equitable Charge.

5. [§11] Interest Subject to Condition.

6. [§12] Pension or Deferred Compensation Plan.

7. [§13] Public and Statutory Trusts.

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C. Tentative Trust in Bank Deposit.

1. [§14] Nature of Trust.

2. [§15] Adoption of Doctrine in California.

3. [§16] Elements of Trust.

4. [§17] Distinction: Absolute Trust.

D. Conflict of Laws.

1. [§18] Validity of Trust.

2. [§19] Construction of Instrument.

3. [§20] Administration of Trust.

E. The Trust Law.

1. [§21] Law Revision Commission Report.

2. [§22] Enactment.

3. [§23] Principal Changes.

4. Scope and Application of Trust Law.

(a) [§24] General Rule: Application to All Trusts.

(b) [§25] Exceptions: Prospective Application.

(c) [§26] Subjects Covered or Excluded.

(d) [§27] Other Provisions Governing Trusts.

5. [§28] Role of Common Law.

6. [§29] Definitions.

II. CREATION OF EXPRESS TRUST

A. In General.

1. [§30] Methods of Creation.

2. [§31] Parties and Capacity.

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3. [§32] Sufficient Evidence of Creation.

4. [§33] Essential Elements.

5. [§34] Matters That Are Not Essential.

B. Statute of Frauds.

1. [§35] Express Trust in Real Property.

2. Oral Trust in Personal Property.

(a) [§36] In General.

(b) [§37] Trust Law.

C. [§38] Trust Property.

D. Trust Intent.


2. Precatory Words.

(a) [§40] Words Ineffective To Create Trust.

(b) [§41] Words Addressed to Executor.

(c) [§42] Words Interpreted as Creating Trust.

E. Trust Purpose.


2. [§44] Financial Incentive for Divorce.

3. [§45] Rule Against Accumulations.

4. [§46] Definiteness of Purpose.

F. Beneficiary of Private Trust.


2. [§48] Beneficiaries Must Be Ascertainable.

3. [§49] Disclaimer by Beneficiary.

4. [§50] Honorary Trust.

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III. TRUSTEES

A. In General.

1. [§51] Capacity and Selection.

2. [§52] Nonprofit Charitable Corporation as Trustee.

3. [§53] Appointment by Court or Beneficiaries.

4. [§54] Acceptance.

5. [§55] Bond.

6. [§56] Vacancy in Office.

7. [§57] Rejection.

8. [§58] Resignation.

9. Removal.


(b) [§60] Trustee Appointed by Settlor.

(c) [§61] Trustee Subject to Donative TransferRestrictions.

(d) [§62] Costs and Fees in Removal Proceedings.

10. [§63] Cotrustees.

11. [§64] Trust Advisor.

B. Compensation and Indemnification.

1. Compensation.

(a) [§65] Where Instrument Does Not SpecifyCompensation.

(b) [§66] Where Instrument Specifies Compensation.

(c) [§67] Notice of Increase.

(d) [§68] Dual Compensation as Trustee and Attorney.

2. Indemnification.


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(b) Attorneys’ Fees and Costs.

(1) [§70] In General.

(2) [§71] Disputes Between Beneficiaries.

(3) [§72] Fees Must Be Reasonable.

C. Duties.

1. In General.

(a) [§73] Trust Law Revision.

(b) [§74] Administer Trust.

(c) [§75] Act With Loyalty to Beneficiaries.

(d) [§76] Deal Impartially With Beneficiaries.

(e) [§77] Avoid Conflict of Interest.

(f) [§78] Control and Preserve Property.

(g) [§79] Make Property Productive.

(h) [§80] Dispose of Improper Investments.

(i) [§81] Keep Property Separate and Identified.

(j) [§82] Enforce Claims and Defend Actions.

(k) [§83] Use Special Skills.

(l) [§84] Delegate Powers Appropriately.

(m) [§85] File Change of Ownership Statement.

2. Standard of Care.


(b) Uniform Prudent Investor Act.

(1) [§87] Early Development of Rule.

(2) [§88] Restatement and Uniform Act.

(3) [§89] Law Revision Commission Report.

(4) [§90] Nature and Scope of Rule.

(5) [§91] Standard of Care.

(6) [§92] Duties of Trustee.

(7) [§93] Delegation.

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3. Duty To Report and Account.

(a) In General.

(1) [§94] Nature of Duty.

(2) [§95] Law Revision Commission Report.

(b) Duty To Report to Beneficiaries.

(1) [§96] Scope of Requirement.

(2) [§97] Duty To Report on Request.

(3) [§98] Notice of Changes Affecting IrrevocableTrust.

(4) [§99] Limitation on Time for Contesting Trust.

(5) [§100] Limitations on Duty To Report.

(c) Duty To Account to Beneficiaries.

(1) [§101] Scope of Requirement.

(2) [§102] Contents of Account.

(3) [§103] Limitations on Duty To Account.

D. Powers.

1. In General.

(a) [§104] Law Revision Commission Report.

(b) [§105] Nature and Scope of Powers.

(c) [§106] Incidental Powers.

2. Deviation From Trust Restrictions.


(b) [§108] When Deviation Will Be Denied.

3. Discretionary Powers.


(b) Where Absolute Power Is Conferred.


(2) [§111] Illustrations.

(c) [§112] Power To Invade Corpus.

(d) [§113] Payment Under Five-or-Five Power.

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(e) [§114] Use of Power To Discharge Holder’sObligations.

4. Specific Powers.

(a) Property.

(1) [§115] Collecting and Holding Property.

(2) [§116] Management, Maintenance, andDevelopment.

(3) [§117] Purchase, Sale, and Exchange.

(4) [§118] Leases and Encumbrances.

(b) [§119] Participating in Business.

(c) [§120] Investments.

(d) Deposits.


(2) [§122] Deposit in Affiliated Institution.

(e) [§123] Corporate Rights and Activities.

(f) [§124] Securities.

(g) [§125] Borrowing Money.

(h) [§126] Payment, Settlement, and Release of Claims.

(i) [§127] Payment of Taxes and Expenses.

(j) [§128] Loans and Distributions to Beneficiaries.

(k) [§129] Hiring Agents.

(l) [§130] Actions and Proceedings.

5. Notice of Proposed Action.


(b) [§132] Procedure.

E. Liability to Beneficiaries.

1. Liability for Breach of Trust.

(a) [§133] What Constitutes Breach of Trust.

(b) [§134] Liability for Acts of Agent.

(c) [§135] Liability for Acts of Cotrustee.

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(d) [§136] Liability for Acts of Predecessor.

2. Remedies for Breach of Trust.


(b) [§138] Statutory List.

(c) [§139] Compelling Performance of Duty.

(d) [§140] Enjoining Threatened Breach.

(e) [§141] Action for Damages.

(f) [§142] Appointment of Receiver or Temporary Trustee.

(g) [§143] Removal of Trustee.

(h) [§144] Setting Aside Action of Trustee.

(i) [§145] Reduction or Denial of Compensation.

(j) Recovering Trust Property or Proceeds.


(2) [§147] Tracing Trust Property.

3. Measure of Liability for Breach of Trust.

(a) [§148] General Law.

(b) [§149] Law Revision Commission Report.

(c) [§150] Damages.

(d) [§151] Interest.

(e) [§152] Other Remedies.

4. Limitations and Exculpation.

(a) [§153] Statute of Limitations.

(b) [§154] Laches.

(c) Exculpation of Trustee.


(2) [§156] Exculpation as Condition for Distributionor Payment.

(d) [§157] Nonliability Where Directions Are Followed.

(e) [§158] Consent of Beneficiary.

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(f) Discharge of Liability.

(1) [§159] By Release or Contract.

(2) [§160] By Subsequent Affirmance.

IV. BENEFICIARIES

A. In General.

1. [§161] Beneficiary’s Equitable Estate.

2. [§162] Interest Vests on Termination of Trust.

3. Beneficiary of Revocable Trust.

(a) [§163] Limits on Rights.

(b) [§164] Standing of Beneficiary To Assert Breach.

(c) [§165] Consent by Beneficiary.

(d) [§166] Notice to Beneficiary.

(e) [§167] Holder of Power of Appointment.

4. Rights Against Third Persons.


(b) [§169] Where Third Person Participates in Breach ofTrust.

B. Spendthrift and Other Protective Trusts.

1. General Law and California Cases.

(a) [§170] Nature and Validity of Spendthrift Trusts.

(b) [§171] Assignment of Interest by Beneficiary.

(c) [§172] Support and Discretionary Trusts.

(d) [§173] No Spendthrift Trust for Settlor.

(e) [§174] Rights of Favored Creditors.

(f) [§175] Rights of General Creditors.


3. [§177] Restraints on Transfer.

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4. [§178] Support Trust.

5. [§179] Discretionary Trust.

6. [§180] Where Settlor Is Beneficiary.

7. Rights of Favored Creditors.

(a) [§181] Claims for Child or Spousal Support.

(b) [§182] Liability for Public Support.

(c) [§183] Restitution Judgment Against Convicted Felon.

8. Rights of General Creditors.


(b) [§185] Reaching Surplus Income.

V. REVISED PRINCIPAL AND INCOME ACT

A. In General.

1. [§186] Early Development.

2. [§187] Adoption of Revised Act.

3. [§188] Major Changes From Prior Law.

4. [§189] Definitions.

5. [§190] General Allocation Rules.

6. [§191] Impartial Exercise of Discretionary Power.

7. [§192] Notice of Proposed Action.

8. [§193] Unitrust Conversion.

B. Adjustments Between Principal and Income.

1. [§194] Trustee’s Power To Make Adjustment.

2. [§195] Factors Considered in Making Adjustment.

3. [§196] Where Adjustment Is Prohibited.

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4. [§197] Law Revision Commission Comments.

5. [§198] Examples Applying Adjustment Rules.

C. Distributions With Respect to Decedent’s Estate orTerminating Income Interest.

1. [§199] Specific and Pecuniary Devises and Gifts.

2. [§200] Remainder and Residuary Devises and Gifts.

D. Apportionment at Beginning and End of Income Interest.


2. [§202] Distribution of Undistributed Income.

E. Allocation of Receipts From Entities During TrustAdministration.


2. [§204] Distribution in Partial Liquidation.

3. [§205] Distribution From Trust or Estate.

4. [§206] Separate Accounting for Business or Activity.

F. Allocation of Receipts Not Normally Apportioned During TrustAdministration.


2. [§208] Obligation To Pay Money.

G. Allocation of Receipts Normally Apportioned During TrustAdministration.

1. [§209] Deferred Compensation and Similar Payments.

2. [§210] Marital Deduction.

3. [§211] Liquidating Assets.

4. [§212] Natural Resources.

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5. [§213] Timber.

6. [§214] Non-Income-Producing Assets.

7. [§215] Derivatives and Options.

8. [§216] Asset-Backed Securities.

9. [§217] Insubstantial Allocation Is Not Required.

H. Allocation of Disbursements During Trust Administration.

1. [§218] Disbursements From Income.

2. [§219] Disbursements From Principal.

3. [§220] Transfers From Income.

4. [§221] Taxes and Related Adjustments.

VI. DURATION, MODIFICATION, AND TERMINATION

A. [§222] Duration of Trusts.

B. Revocation and Modification of Revocable Trust.


2. Presumption of Revocability.


(b) [§225] Trust Law.

3. Methods of Revocation.


(b) [§227] Revocation by Will.

(c) [§228] Revocation by Joint Settlor.

4. [§229] Power To Modify.

5. [§230] Trust of Community Property.

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C. Revocation and Modification of Irrevocable Trust.

1. Modification or Termination by Beneficiaries.

(a) General Law and California Case Law.

(1) [§231] Modern Rule.

(2) [§232] Beneficiary’s Waiver as Means ofTermination.

(3) [§233] Settlor’s Purpose To Continue Trust.

(4) [§234] Application by Fewer Than AllBeneficiaries.

(b) Trust Law.

(1) [§235] Beneficiaries.

(2) [§236] Beneficiaries and Settlor.

2. Obtaining Consent of Beneficiaries.


(b) [§238] Law Revision Commission Report.

(c) [§239] Guardian Ad Litem.

(d) [§240] No Conclusive Presumption of Fertility.

3. Modification or Termination by Court.

(a) [§241] Uneconomically Low Principal.

(b) [§242] Changed Circumstances.

(c) [§243] Ambiguous Language.

(d) [§244] Drafting Error.

4. [§245] Termination of Small Trust by Trustee.

5. [§246] Termination by Operation of Law.

6. [§247] Trustee’s Powers on Termination.

7. [§248] Disposition of Property on Termination.

8. [§249] Combination and Division of Trusts.

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VII. JUDICIAL PROCEEDINGS CONCERNING TRUSTS

A. Jurisdiction and Venue.

1. [§250] Approach of Trust Law.

2. [§251] Bases of Jurisdiction.

3. Subject Matter Jurisdiction.


(b) [§253] Exclusive and General Jurisdiction.

(c) [§254] Concurrent Jurisdiction.

(d) [§255] Illustrative Decisions.

4. [§256] Principal Place of Administration.

5. [§257] Jurisdiction Over Parties.

6. [§258] Venue.

B. Proceedings.


2. Petition.


(b) [§261] Nature and Scope.

(c) [§262] Grounds.

(d) [§263] Internal Affairs of Trust.

(e) [§264] Property Claims.

3. [§265] Notice.

4. [§266] Orders and Appeal.

5. [§267] Appointment of Trustee Ad Litem.

6. [§268] Costs and Expenses in Contest of Account.

C. Testamentary Trusts Subject to Continuing Jurisdiction.

1. [§269] Statutory Development.

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3. [§271] Nature and Scope of Continuing Jurisdiction.

4. [§272] Removal of Trust From Continuing Jurisdiction.

D. Transfer of Trust to or From Another Jurisdiction.

1. Transfer to Another Jurisdiction.


(b) [§274] Transfer and Discharge of Trustee.

2. Transfer From Another Jurisdiction.


(b) [§276] Transfer and Administration of Trust.

VIII. RIGHTS OF THIRD PERSONS

A. Liability of Trust and Trustee.

1. [§277] Traditional Rule and Modern Rule.

2. [§278] Contracts.

3. [§279] Ownership or Control of Property.

4. [§280] Torts.

5. [§281] Dissenting Trustee.

6. [§282] Liability as Between Trustee and Estate.

7. [§283] Liability to Omitted Spouse or Child.

8. [§284] Procedure for Asserting Claims Against Trust.

B. Protection of Third Persons.

1. Restatement and General Law.

(a) [§285] Title.

(b) [§286] Value.

(c) [§287] Notice.

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2. Trust Law.


(b) [§289] Third Person Acting in Good Faith.

(c) [§290] Trustee’s Certification of Trust.

(d) [§291] Transfer of Real Property.

C. Rights of Settlor’s Creditors Where Trust Is Revocable.


2. [§293] Rights During Settlor’s Lifetime.

3. Rights After Settlor’s Death.


(b) [§295] Scope of Liability to Creditors.

(c) [§296] Irrevocable Life Insurance Trust.

(d) Notice to Creditors.


(2) [§298] Publication of Notice.

(3) [§299] Service of Notice.

(4) [§300] Immunity for Good Faith Acts orOmissions.

(e) Claims That Must Be Filed.


(2) [§302] Claims by Public Entities.

(3) [§303] Claims Established by Judgment.

(f) Time for Filing Claims.


(2) [§305] Amended and Revised Claims.

(3) [§306] Petition To File Late Claim.

(g) Procedure for Filing Claims.


(2) [§308] Documentary Support.

(3) [§309] Waiver of Formal Defects.

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(h) Response by Trustee.

(1) [§310] Allowance or Rejection.

(2) [§311] Payment or Compromise.

(i) Action on Rejected Claim.

(1) [§312] Statute of Limitations.

(2) [§313] Procedure.

(j) Approval, Compromise, Settlement, or Allocation byCourt.


(2) [§315] Petition.

(3) [§316] Notice of Hearing.

(4) [§317] Failure To File Pleading.

(5) [§318] Disposition by Court.

(k) Allocation of Debts Between Trust and SurvivingSpouse.

(1) [§319] Petition and Order To Show Cause.

(2) [§320] Notice of Hearing.

(3) [§321] Allocation of Debts.

(l) [§322] Liability of Surviving Spouse.

(m) Personal Liability of Distributee.


(2) [§324] Limitations.

IX. CHARITABLE TRUSTS

A. In General.

1. [§325] Nature of Charitable Trust.

2. [§326] Distinguishing Characteristics.


B. Indefinite Beneficiaries.


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2. [§329] Single Beneficiary.

3. [§330] Gift Directly to Charitable Institution.

4. [§331] Charitable Gift to Noncharitable Institution.

C. Charitable Purposes.

1. [§332] Health and Relief of Poverty.

2. [§333] Religion.

3. [§334] Educational and Cultural Objects.

4. [§335] Social and Political Objects.

5. [§336] Miscellaneous Objects.

6. [§337] Coupling of Noncharitable Object.

7. [§338] Where No Purpose Is Stated.

D. Cy Pres Doctrine.

1. [§339] Nature of Doctrine.

2. [§340] Illustrations.

3. [§341] Where Doctrine Is Not Applicable.

E. Enforcement and Supervision.


2. Supervision of Trustees and Fundraisers for CharitablePurposes Act.

(a) [§343] Nature, Purpose, and Scope of Act.

(b) [§344] Register, Documents, and Reports.

(c) [§345] Securing Compliance.

(d) [§346] Scope of Attorney General’s Supervision.

3. [§347] Compliance With Internal Revenue Code.

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X. RESULTING TRUSTS

A. [§348] Nature and Distinctions.

B. Failure of Express Trust.


2. [§350] Gift by Implication.

C. Payment of Consideration for Transfer.


2. [§352] Effect of Partial Payment.

3. [§353] Payment Directly by Claimant.

4. [§354] Payment by Grantee on Behalf of Claimant.

5. [§355] Payment After Conveyance.

6. [§356] Presumption of Gift or Advancement.

XI. CONSTRUCTIVE TRUSTS

A. [§357] Nature of Constructive Trust.

B. [§358] Existence of Adequate Legal Remedy.

C. [§359] Fraud or Mistake.

D. [§360] Crime.

E. Breach of Fiduciary Duty.


2. [§362] Where No Benefit Is Obtained.

F. Violation of Unenforceable Contract.

1. Promise To Buy Property for Plaintiff.


(b) [§364] Illustrations.

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2. [§365] Promise To Reconvey to Transferor.

3. [§366] Gift at Death on Unenforceable Trust.

4. [§367] Conveyance During Life on Unenforceable Trust.

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