As a general rule, personal property may be held in an oral trust. However, express real property trusts must be made in writing to be enforced. If a person creates a trust in their will, the resulting testamentary trust is only valid if the will itself meets the requirements of state law for wills. Some states have adopted all or part of the Uniform Probate Code, which governs both wills and testamentary trusts. The terms of the trust are the duties and powers of the trustee and the rights of the beneficiary that the settlor transferred when establishing the trust. The negative aspects of using a living trust as opposed to a will and estate include the initial legal fees, the cost of administering the trust, and the lack of certain guarantees. The cost of the trust can be 1% of the estate per year, compared to the one-time estate costs of 1-4% for the estate, which applies whether or not there is a will written. Unlike trusts, wills must be signed by two or three witnesses, the number depending on the law of the jurisdiction in which the will is executed. Legal protections that apply to estates, but do not automatically apply to trusts, include provisions that protect the deceased`s assets from mismanagement or misappropriation of funds, such as requirements for obligations, insurance, and detailed accounting of estate assets. The trustee is the rightful owner of the trust assets, as a trustee for the beneficiary(ies) who are/are the equitable owners of the trust assets.
Trustees therefore have a fiduciary duty to administer the trust for the benefit of the equitable owners. You must provide a regular statement of escrow income and expenses. Trustees may be compensated and their expenses reimbursed. A court of competent jurisdiction may dismiss a trustee who fails in his or her fiduciary duty. Certain breaches of the duty of loyalty may be charged in court and tried as criminal offences. The trust fund is an ancient instrument that dates back to feudal times and is sometimes greeted with contempt because it is associated with the idle rich (as in the pejorative “baby of the trust fund”). But trusts are highly versatile vehicles that protect assets and can steer them into good hands in the present and into the future, long after the original owner of the assets has died. The Uniform Probate Code has shaped state law in this area.
It contains provisions relating to the matters and estates of the deceased, as well as laws relating to certain incontestiary transfers, such as trusts and their administration. The theory behind the code is that wills and trusts are closely related and therefore require unification. Since its inception, more than thirty per cent of States have adopted the Code essentially as a whole. There are two types of living trusts in South Africa, namely acquired trusts and discretionary trusts. In the case of vested trusts, the beneficiaries` benefits are set out in the trust deed, while in the case of discretionary trusts, the trustees are at all times free to decide how much and when each beneficiary should benefit from them. A trust may have multiple trustees, and these trustees are the rightful owners of the trust`s assets, but have a fiduciary duty to the beneficiaries and various duties, such as a duty of care and a duty to inform. [19] If the trustees do not comply with these obligations, they may be dismissed by appeal. The trustee may be a natural person or a legal person such as a corporation, but generally the trust itself is not an entity and any action must be directed against the trustees. A trustee has many rights and obligations that vary depending on the jurisdiction and the fiduciary instrument. If a trust does not have a trustee, a court may appoint a trustee. Fiduciary Any person who has the legal capacity to take, hold and administer property for his or her own use may take, hold and administer property in trust.
Non-residents of the state in which the trust is to be administered may be trustees. State law determines whether an alien may act as a trustee. A company can act as a trustee. For example, a trust is a bank designated by a settlor to act as trustee in the management of a trust. A partnership can serve as a trustee if permitted by state law. An unregistered association, such as a trade union or social club, generally cannot act as a trustee. The settlor must intend to create an existing trust. Proof of the intention to build trust in the future is legally ineffective. If a settlor does not immediately name the assets of the beneficiary, trustee or trust, a trust is not created until after the designations. Some people use trusts simply for confidentiality reasons. The terms of a will may be public in some jurisdictions. The same terms of a will can apply through a trust, and people who do not want their wills to be publicly disclosed instead opt for trusts.
Support trusts A trust that directs the trustee to pay or use only the amount of income and capital necessary to form and support a beneficiary is a support trust. The interests of the beneficiary cannot be transferred. Paying money to a beneficiary`s assignee or creditors would void the purposes of the trust. Support trusts are primarily used in jurisdictions that prohibit wasteful trusts. A fiduciary relationship still exists in fiduciary law if the settlor relies on the trustee and grants him a special trust. The trustee must act in good faith with strict honesty and with due regard to the protection and service of the interests of the beneficiaries. The trustee also has a fiduciary relationship with the beneficiaries of the trust. The Lord Chancellor would consider it “unscrupulous” that the rightful owner could take his word and deny the claims of the Crusader (the “real” owner). Therefore, he would find it in favor of the return of the Crusader. Over time, it was learned that the Court of the Lord Chancellor (the Court of Chancery) would constantly recognize the claim of a returning Crusader.
The rightful owner would hold the land in favour of the original owner and would be obliged to return it to him upon request. The Crusader was the “beneficiary” and knowledge was the “fiduciary”. The term “land use” was coined and, over time, evolved into what we know today as a trust. Spending trusts A spendthrift trust is a trust where the beneficiary is unable to transfer his or her right to future payments of income or capital due to a grantor`s direction or the law, and creditors are unable to receive the beneficiary`s interest on future distributions of the trust for the payment of debts.
