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1、Estates and TrustsBrowne C. LewisAssociate ProfessorLeon and Gloria Plevin Professor of Law & Director, Center for Health Law & Policy Cleveland-Marshall College of Law, Cleveland State UniversityeLangdell Press 2013About the AuthorProfessor Lewis graduated number one in her class with a degree in P
2、olitical Science from Grambling State University. Prior to attending law school, Professor Lewis received summer fellowships to study at Carnegie-Mellon University, the Hubert H. Humphrey Institute at the University of Minnesota and the John F. Kennedy School of Government at Harvard University. Pro
3、fessor Lewis started her professional career as a statistician and ADR trainer at the Conflict and Change Center in Minneapolis, Minnesota. Then, she clerked for the Honorable Daniel Wozniak, Chief Judge of the Minnesota Court of Appeals. Professor Lewis practiced in the areas of environmental, elde
4、r, family, housing and probate law. Professor Lewis spent most of her career working as a legal services attorney. Professor Lewis is the Leon & Gloria Plevin Professor of Law and the Director of the Center of Health Law & Policy at Cleveland-Marshall College of Law. Prior to joining the faculty at
5、Cleveland-Marshall, Professor Lewis was an associate professor at the University of Detroit Mercy School of Law, a visiting professor at the University of Pittsburgh School of Law, a summer visiting professor at Seattle University School of Law and a legal writing instructor at Hamline University Sc
6、hool of Law. Professor Lewis has also taught in the American Bar Association CLEO Summer Institute. Lewis is a member of the American Society of Law, Medicine & Ethics, the Health Care Compliance Association, the Public Health Law Association and the American Health Lawyers Association. Professor Le
7、wis is also a public member of the Board of the Joint Commission and a member of Cleveland State Universitys Institutional Review Board (IRB). Professor Lewis writes in the areas of environmental, family and reproductive law. Her next most recent article on surrogacy and maternity is forthcoming in
8、the St. Johns Law Review. Professor Lewis has recently completed a book on paternity and artificial insemination for New York University Press. In 2010, Professor Lewis casebook on the inheritance rights of children was published by Carolina Academic Press.NoticesThis is the first version of this ca
9、sebook. Visit http:/elangdell.cali.org/ for the latest version and for revision history.This work by Browne C. Lewis is licensed and published by CALI eLangdell Press under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. CALI and CALI eLangdell Press reserve under copyr
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16、ut CALI eLangdell PressThe Center for Computer-Assisted Legal Instruction (CALI) is: a nonprofit organization with over 200 member US law schools, an innovative force pushing legal education toward change for the better. There are benefits to CALI membership for your school, firm, or organization. E
17、Langdell is our electronic press with a mission to publish more open books for legal education. How do we define open? Compatibility with devices like smartphones, tablets, and e-readers; as well as print. The right for educators to remix the materials through more lenient copyright policies. The ab
18、ility for educators and students to adopt the materials for free.Find available and upcoming eLangdell titles at elangdell.cali.org. Show support for CALI by following us on Facebook and Twitter , and by telling your friends and colleagues where you received your free book.Table of ContentsAbout the
19、 AuthoriiiNoticesivAbout CALI eLangdell PressvPrefaceviiiChapter 1 - The Capacity to Create a Testamentary Trust11.1.Parties Involved in a Trust Arrangement21.2.Testamentary Capacity4Chapter 2 - Creation of a Private Trust461.2Intent to Create a Trust462.2Requirement of Trust Property53Edwards v. Ed
20、wards542.3Necessity of Trust Beneficiaries63Chapter 3 - Categories of Private Trusts713.1.Private Expressed Trusts713.2.Trusts Created By Operation of Law93Chapter 4 - Discretionary and Support and the Rights of the Beneficiarys Creditors1224.1Discretionary Trusts1254.2.Support Trust131Chapter 5 - S
21、pendthrift Trusts and Creditors1405.1Expressed Spendthrift Trust1415.2Implied Spendthrift Trust1425.3Creditors149Chapter 6 - Modification and Termination of Trusts1746.1Termination1756.2Claflin and Material Purpose1836.3Deviation and Changed Circumstances1866.4Removal of the Trustee194Chapter 7 - Cr
22、eation and Modification of Charitable Trusts2017.1Creation of the Charitable Trust2017.2Modification/Cy Pres207Chapter 8 - Supervision/Enforcement of Charitable Trusts2378.1Donor Standing2378.2Beneficiary Standing248Chapter 9 - Treatment of Trust Property2549.1 The Duty to Collect and Protect Trust
23、Property2549.2The Duty to Earmark Trust Property and to Not Comingle Trust Funds2549.3The Duty Not to Delegate2609.4Duty of Prudence261Chapter 10 - Duty of Loyalty282Chapter 11 - Duty of Impartiality302Chapter 12 - Duty to Account and Inform32312.1To Account32412.2To Inform34612.3 The Trustees Liabi
24、lity358PrefaceRecently, the public waited patiently to find out the contents of Whitney Elizabeth Houstons will. People were entertained by her music and fascinated by her death. Thus, it is no surprise that they were on the edge of their seats to discover how much money she had in her estate. Insid
25、e Edition and other entertainment shows teased the public with previews stating that they had received a copy of the will and planned to reveal its contents. The big reveal fell short when the public realized that Houston had left everything to her daughter using a testamentary trust. Wills are publ
26、ic documents, but trust instruments are not. Therefore, the public will never know the specific provisions contained in the trust document. Privacy is one of the reasons why more and more people are disposing of their property using testamentary trust created in their wills. The reasons people estab
27、lish trusts are as varied as the lawyers who draft them. Traditionally, trusts were vehicles wealthy people used to provide for their love ones. Currently, people from all economic classes establish trusts. Thus, for students desiring to practice in the probate or elder law arena, it is crucial that
28、 they have a basic understanding of the law of trusts. The standard four-credit Wills & Trusts courses taught at most law schools do not spend a sufficient amount of time on the law of trusts. Professors teaching such courses have the daunting task of teaching intestacy, wills, non-probate transfers
29、, estates, and trusts. The semester is not long enough to give detail coverage to all of the important topics. Consequently, professors have to decide what material to omit. Typically, the material on the law of trusts is either omitted or severely shortened. One obvious reason for the treatment of
30、the trust information is the fact that the chapters on trusts are in the latter part of most casebooks. It is difficult to predict the pace at which the material will be covered. Thus, most professors have to adjust their reading assignments. Those adjustments usually require the professors to cut a
31、ssigned materials. Frequently, by the time the decision to reduce the reading assignments needs to be made, the only significant material left to be covered are the chapters on the law of trusts. Hence, that material is routinely omitted. The use of testamentary trusts is becoming an important part
32、of estate planning. As a result, students who want to make a living as probate attorneys will need to know how trusts fit into estate planning. In addition, bar examiners realize that it is important for students to have a basic knowledge of trust law. That realization will result in bar examination
33、 questions that test that knowledge. The Law of Trusts is designed for use as a supplementary text for a course on wills and trusts and the primary text in a seminar or course exploring the law of trusts. Since the settlor is dead when the testamentary trust becomes effective, the testamentary trust
34、 is an irrevocable trust. The main focus of this book is on that type of trust. However, the revocable inter vivos trusts will be briefly mentioned as it relates to the testamentary trusts. Most of the legal issues surrounding the law of trusts come from challenges to the creation and implementation
35、 of the trusts. In addition, even if the testamentary trust is deemed to be valid, the actions of the trustee may lead to litigation. This book is divided into two components to address the issues that arise in those two types of litigation.Part I explores the legal issues involved in the creation,
36、modification and implementation of private and charitable trusts. In order to have a trust invalidated, the opponent must successfully challenge the capacity of the settlor or the procedure used to create the trust. Part I contains a chapter that examines the level of mental ability a person must ha
37、ve to create a trust. Other chapters in this part explains the steps that must be taken to create, modify and terminate a trust and compares the various types of private trusts.Part II discusses the administration of private and charitable trusts. In particular, the part focuses upon the numerous du
38、ties of the trustee. Trusts are usually created to protect a person who is vulnerable in some way. In a lot of respects, that person is at the mercy of the trustee. Any decision that the trustee makes, good or bad, directly impacts the beneficiary. In order to protect the beneficiary from the action
39、s of the trustee, the law imposes a fiduciary duty on the trustee. Chapters in Part II analyze the trustees duties and the remedies available to the beneficiary in the event of the trustees breach of any of those duties. Part II also includes a discussion of powers of appointments and their relevanc
40、y to trusts. This discussion is necessary because bar examinations frequently contain questions dealing with powers of appointment.In additional to cases, the book contains problems, notes and questions. The cases are designed to give the student a clear understanding of the law. The problems are in
41、cluded to permit the student the opportunity to apply the law. The notes and questions are provided so the student will think critically about the policies behind the law and the outcome of the cases.Chapter 1 - The Capacity to Create a Testamentary TrustThis chapter is divided into two parts. Part
42、I introduces students to the parties that are involved in the creation of a trust. Further, that part discusses the function of each of the parties. Most trusts are testamentary in nature, so they are created as a part of a will. In order for a testamentary trust to be valid, the testator must be le
43、gally capable of executing the trust. Thus, in Part II of the chapter, I discuss the mental capacity the testator must possess to be deemed competent to create a trust. In addition, the students will be introduced to the other legal theories that may be used to attack the testators ability to establ
44、ish a trust.The primary purpose of a trust is to provide a source of income for a person who is not capable of managing his or her resources. For instance, Barbaras son, John has a gambling problem. Barbara wants to make sure that John always has a place to live. If Barbara gives John a house outrig
45、ht, he would probably lose it in a card game. Barbara cannot give John the house and forbid him from transferring it because a direct restraint on alienation is invalid. Thus, the court would ignore the condition and give John the house without the restriction. Barbara can give John a life estate in
46、 the property, so that he would have a place to live until he died. Granting John a life estate may not be a good idea for several reasons. A legal life tenant has a duty to pay taxes and to maintain the property in good repair. However, that duty is limited because the life tenant only has to fulfi
47、ll that obligation to the extent the income from the property is sufficient to cover those expenses. It is unlikely that the house will produce any income, so John would not be obligated to pay the property taxes or to keep the house in good repair. Even if John has such a duty, he is probably too i
48、rresponsible to do so. Thus, giving John a life estate in the house may cause more problems than it cures. Moreover, if the life tenant accrues debt, that persons creditor can legally seize the life estate and sell it. The creditor would probably realize very little from the sale. But, the sell of the life estate will defeat Barbaras purpose of providing John with a place to live. Barbaras best option is to put the house in trust for John. This means that Barbara would give the legal title of the house to a third party. That person would be resp
