General Provisions on Trust

Trust vs. Other Relations1. Bailment - bailment has no legal title, trust involves transfer of title2. Contract - legal obligation based on undertaking supported by consideration, not necessarily fiduciary in character, trust always involves ownership and fiduciary in character3. Debt - creditor merely has personal claim, merely implies obligation to pay money, trust is duty to deal with specific property for benefit of another.

As beneficiary- trustor may be beneficiary or trustee as well, must not be sole trustee and sole beneficiary

Trust Property- any property, real, personal , funds, money or choses in action.- must be actually in existence

Equitable Title - interests of beneficiary can in general be reached by creditors and he can sell / dispose of property. He can transfer only interests he holds (equitable title)

Beneficiary Rights - income from assets of the trust, assets

Classifications of Trusts

Manner of Creation1. Express - from intent of parties2. Implied - by operation of law

Effectivity1. testamentary - take effect upon death of trustor (will)2. living trust / inter vivos - during owner's life

Revocability (depends on wordings or language used, PRESUMED REVOCABLE unless expressly intended otherwise)1. Revocable - can be revoked by trustor or someone with power to2. Irrevocable - may not be terminated during specified term of trust

Elements of Express Trust1. Comptent trustor and trustee2. Ascertainbale trust property3. Sufficiently certain beneficiaries

Termination of Express Trust1. Expiration of period fixed2. Accomplishment of purpose - trust may terminate on expiration even if not accomplished3. Mutual Agreement - needs all beneficiaries4. Exercise of Power to Terminate - any one who has power to terminate the trust (trustor, trustee or someone else with power)

Express Trust

Proving Express Trust1. Burden of Proof - clear and satisfactory2. Trust concerning immovable - writing is necessary3. Failure to object to parole evidence - defense that express trusts cannot be proved by parole evidence may be waived

- failure to object against presentation- cross-examining adverse party along prohibited lines

- immovable must be in public instrument if to affect third persons

Creation of Express Trust- sufficient clearly intended based on positive and direct acts of parties- consideration is not required

Kinds of Express Trust1. Charitable - designed for benefit of public2. Accumulation - earn income to be reinvested by the trustee3. Spendthrift - established if beneficiary needs to be protected4. Sprinkling - gives trustee right to determine the who should receive income.

- Discretionary if trustee has discretion to pay or not to pay the income or principal.

When Trustee may sue or be sued alone- Essential that trust is express

Acceptance, declination, renunciation of the trustee- express trust, acceptance is ncessary however trust is still valid if he declines because court may appoint another- Designated or appointed trust may decline unless contrary intention appears in the trust, declination does not defeat or void trust or vest legal title to beneficiary