EXPRESS & IMPLIED TRUSTS
OVERVIEW
 Revocable Living Trusts
 Testamentary Trusts
 Constructive Trust
 Resulting Trust
EXPRESS TRUSTS
TRUSTS: NOW AND LATER
Inter Vivos Trusts
Created during the settlor’s life
Property is not subject to probate
May be revocable or irrevocable,
depending on the settlor’s intent
Created by:
1. Declaration of Trust – document in which the
settlor declares herself to be the trustee of
specified property
2. Deed of Trust –document whereby the settlor
transfers to the trustee the property that will be
held in trust
Testamentary Trusts
Created by will, after the death of
the testator/settlor
Always irrevocable (because the
settlor is dead)
Subject to probate
IMPORTANCE OF REVOCABLE TRUSTS
Revocable living trusts (together with “pour-over”
wills) have become the central vehicle for estate
planning
Will
(Residue
into
Trust)
Life Insurance
(Trust as
Beneficiary)
Revocable
Living Trust
This is the principal
device for interrelating
wills and trusts
Life Insurance
(Trust as
Beneficiary)
WHAT IS A “POUR-OVER” WILL?
All of Testator’s assets “pour
over” from the will into the
trust
•“Pour over” is a will that
designates a trust as one
beneficiary
•The effect is to pour probate
assets into the trust
Will
(Residue
into Trust)
Lifetime
transfer (to
Trustee of
Trust)
Revocable
Living Trust
RECAP: TRUST TYPES & CLASSIFICATIONS
Inter Vivos
Testamentary
Created By
Declaration of Trust
or Deed of Trust
Will
Type of
Transfer
Non-probate
Probate
Revocability
Revocable
Or Irrevocable
Irrevocable
POUR-OVER WILLS: THEN AND NOW
Traditionally, a devise in a will to an existing trust violates
the Statute of Wills because such a devise is an attempt to
make a gift at death of probate property by using the
provisions of a document (the trust) that has not been
executed with the formalities required of a will
Today, every state has a statute, either identical to or
closely modeled on the Uniform Testamentary Addition to
Trusts Act (incorporated into the UPC as §2-511), which
expressly validates such a devise so long as some minimal
requirements are met
Generally, the
trust must be in
writing and in
existence by the
time the testator
dies.
Even after the
probate property
is added to the
trust the trust is
not a
testamentary
trust.
TRUSTS & POUR-OVER WILLS
Typical structure:
 Grantor creates a revocable living trust with herself, or a 3rd party, as trustee
 Grantor may (or may not) transfer assets into the trust during her life
 Grantor executes a will which devises her probate estate to the trustee of the trust
 The revocable trust is named as the sole beneficiary (or the primary beneficiary)
under Testator’s will
 Testator’s assets pass to beneficiaries through the administration of the trust, not
through the probate administration of the will
UTC §2-511(A):
TESTAMENTARY ADDITIONS TO TRUSTS
A will may validly devise property to the trustee of a trust established or to be
established:
 during Testator’s lifetime by Testator, or
 at Testator’s death by Testator’s devise to the trustee,
If the trust is identified in Testator’s will, and
Its terms are set forth in a written instrument, other than a will, executed before,
concurrently with, or after the execution of Testator’s will
TESTAMENTARY ADDITIONS TO TRUSTS
The devise under UTC §2-511(a) is not invalid
because the trust is amendable or revocable
or
because the trust was amended after the execution of the
will or the testator’s death
UTC §2-511(B):
TESTAMENTARY ADDITIONS TO TRUSTS
Unless Testator’s will provides otherwise,
property devised to a trust described in subsection (a) is not held
under a testamentary trust of Testator, but
it becomes a part of the trust to which it is devised
WHAT DOES ALL OF THIS MEAN?
Pour-over-wills (into revocable trusts) are specifically permitted
under the UPC and in most states
The order of creating the will and the trust no longer matters
A devise made to a trust that is identified in the will is valid even if
the trust itself is not created until after the will is executed
The revocable trust may be amended after the will is executed
REVIEW: REVOCABLE LIVING TRUST
RLT primary goal is to avoid probate and provide a mechanism for
managing property during a period of incapacity
Property is placed in the trust and it can be removed and used by
the settlor at any time, giving the settlor virtually unlimited flexibility
during life
But at the settlor’s death, the trust becomes irrevocable and the
property passes outside probate, according to the terms of the trust
REVOCABLE TRUSTS VS. WILLS
For inter vivos revocable trusts created by declaration of trust
(where Settlor is also the trustee), there is little practical distinction
between the trust and a will
In a revocable trust, Settlor has the power to amend or revoke the
trust (just like a will), and
Settlor continues to have physical possession of the property and
continues to administer the property during Settlor’s lifetime (just
like a will)
REVOCABLE LIVING TRUSTS: ADVANTAGES
Offers possibility of avoiding probate
Provides for someone to take over management of property in
the trust for settlor upon disability or death
Easily amendable testamentary document since most or all of
settlor’s assets are included or poured over
Provides greater privacy about property in estate and plan of
distribution
REVOCABLE LIVING TRUSTS: DISADVANTAGES
 Testator almost always has some property that needs to be probated and
the expense of probate is not so great any longer
 Many of the probate steps need to be done anyway – collect assets, pay
creditors and taxes, distribute property to beneficiaries, etc.
 Privacy is only maintained if there is not a legal dispute about trust
 No cleansing of creditor’s claims against property
 Complexity and cost and lack of privacy when writing checks or
transacting business
REVOCABLE LIVING TRUSTS: LIMITATIONS
Do not protect against creditors of settlor, present
or future
Except for certain later creditors if in a asset protection
jurisdiction
HYPO
Trixie Testator wants to dispose of her probate estate in trust so that the property will
be managed by First Coast Bank as trustee, who will have extended discretion to
distribute both income and trust principal to her descendants until the trust terminates
at the end of the applicable perpetuities period. How can Trixie accomplish her
estate-planning goal?
Trixie has 3 basic options for accomplishing her estate planning objectives:
1.
She can create a testamentary trust by devising her probate property to the trustee named
in her will to hold as the property of a trust the terms of which are stated in the will.
2.
She can create a revocable lifetime trust by agreement between herself as creator and
trustee and naming First Coast Bank as successor trustee or by declaration of trust making
herself trustee of specific property, formally transfer her probate property to herself as
trustee, thereby creating non-probate property, remain in control of that property during
her life and provide for management after her death.
3.
She can create a revocable lifetime trust by the same methods in (2) and fund the trust by
devising her probate property in her will to the trustee of the trust (who will be First Coast
Bank).

The will is a pour over will, so called because it “pours over” the testator's probate property to an
existing trust.
IMPLIED TRUSTS
CONSTRUCTIVE VS. RESULTING
Constructive Trusts
Arises by operation of law
Intention is not a necessary
element of the constructive trust,
as it is for both express and
resulting trusts
Resulting trusts
Arises because equity presumes an
intention to create a trust
Arise when property transferred
to another returns (“results back”)
to the transferor
Can be used to impose on the
transferee a duty to hold the
property on trust for the benefit of
the transferor
RESULTING TRUSTS
WHAT IS A RESULTING TRUST?
Resulting trusts arise when the intention of the settlor is not
expressed but can be inferred from all the circumstances. They
have four elements:
1. The transferor disposes of property to the transferee,
2. Under circumstances raising an unrebutted (i.e.,
unchallenged) inference,
3. That the transferor doesn't intend the transferee to have
the benefit of the property, and
4. The transferor doesn't provide for other means of
disposing of the beneficial interest.
In such a case, the
transferee, with legal
title, holds it in a
“resulting trust” for
the transferor —
and the transferee's
sole duty is to
transfer the legal
title to the transferor
A resulting trust is
an equitable
reversionary
interest
HYPO
Ace transfers to Bob by written deed, will, or declaration of trust
that states Ace’s intention to create a trust but fails to identify the
intended beneficiary (or Bob refuses to act as trustee according to
an oral agreement with Ace naming the beneficiary). What
happens to the property?
 Bob holds upon a resulting trust for Ace (or his successors).
•This is the result because it is clear that Bob holds in trust, and because the
terms of the trust are not provided, the equitable interests are undisposed of
and remain in the settlor
RESULTING TRUST
There are 3 ways a resulting trust typically arises:
1.When an express trust fails (e.g., the beneficiary predeceases the
execution of the trust)—but keep in mind that there's no resulting trust if
the transferee paid the transferor for the trust property (the trust
doesn't arise if the inference that the settlor didn't intend the transferee
to benefit is rebutted)
2.When an express trust doesn't use up all of the trust property (i.e., there
are leftovers)
3.When one person buys property in another person's name (in the absence
of evidence that the real purchaser did intend the person named to
benefit)
 This is called a “purchase money resulting trust”
HYPO
Jack Beanstalk wants to sell his magic bean farm. Wynken, Blynken, and Nod pay
$10,000 each of the $30,000 purchase price, telling Jack that they intend to
operate the farm as a business and then sell it at a profit. They instruct Jack to write
in Eugene's name as grantee on the deed. Is there a resulting trust?
Yes. In the absence of contrary intent, when somebody pays for property but the
property is put in somebody else's name, the person with legal title holds it in a
resulting trust for the true purchaser(s). This is a “purchase money resulting trust.”
Here, there is no indication that Wynken, Blynken, and Nod were buying the property
for Eugene; in fact, you've got just the opposite, that they were buying it as an
investment for themselves. So Eugene holds 1/3 of the farm in a resulting trust for each
of Wynken, Blynken, and Nod, because their intent as expressed to Jack was not to
make a gift to Eugene, and the transfer was not made to further an unlawful purpose.
RECAP: BASIC CONCEPTS
Implied by conduct, rather than words
Who benefits?
 Settlor, or
 If settlor is dead, settlor’s successors in interest
Not governed by normal trust law because it is not a real trust
TYPES OF RESULTING TRUSTS
Automatic resulting trusts
Presumed resulting trust
Resulting trusts which arise when
there has been a failure of an express
trust, or, alternatively, where there is
a surplus of trust property after a
trust has been terminated
Resulting trusts which arise because
contributions have been made to the
purchase of property but the
contributor has not been given a legal
title that is equivalent to that
contribution
In these situations the remaining trust
property is held on resulting trust for
the creator of the trust because it is
presumed that the creator intended
to receive any leftover beneficial
interest
In such a transaction, equity presumes
that the equivalent legal title is held on
trust for the contributor
CONSTRUCTIVE TRUSTS
COMMON SITUATIONS IN WHICH COURTS WILL
IMPOSE CONSTRUCTIVE TRUSTS
1.
The wrongdoer obtains title to property by fraud, duress, mistake, or undue influence;
2.
The wrongdoer murders someone to inherit his property;
3.
A person wrongfully takes property from a trustee with notice of an existing trust;
4.
A grantee acquires property by deed on an oral promise to hold it in trust for the grantor,
but the oral trust is voidable under the Statute of Frauds. Some states limit this doctrine to
situations in which there's fraud at the time of the promise, or the transfer is made in
contemplation of death, or a confidential relationship exists between the grantee and
grantor);
5.
The wrongdoer gets property as a gift by will or intestacy in reliance on an oral promise
(express or implied) to hold the property in trust for someone else (this is sometimes called
a “secret trust”); and
6.
The wrongdoer holds property by reason of breach of a fiduciary duty.
WHAT IS THE MOST IMPORTANT DISTINCTION
FOR CONSTRUCTIVE TRUSTS?
The other types of trusts are motivated by the settlor's intent
(whether express or implied) to create a trust
A constructive trust is designed to remedy wrongdoing, and as a
result will be something the “settlor” (the wrongdoer) doesn't want
at all!
HYPO 1
Maria had made a will giving much of her property to her minister.
Near death, but still mentally alert, Maria changed her mind and
tried to execute a new will in favor of her friend, John. The
minister intervened and prevented Maria from executing the new
will. When Maria died, with the old will intact, what arguments
can you make for getting the property to John?
A constructive trust
HYPO 2
Scarlett comes to the conclusion that Ashley is hopelessly simple-minded. She
figures she can do so much more with his estate, Twelve Oaks, than he can,
and so she convinces him to sell it to her for $20,000. He executes a deed but,
by mistake, describes both the estate she wanted, Twelve Oaks, and an estate
next door that he also owns, Ten Rotting Stumps. Scarlett pays him $20,000
and takes the deed. When Ashley realizes his mistake, he sues Scarlett to get
title to Ten Rotting Stumps back. Scarlett says “No way, José,” and says that
because she didn't defraud Ashley, he can't get Ten Rotting Stumps back. Is she
correct?
No; a court will order her to hold Ten Rotting Stumps in constructive trust for
Ashley.
HYPO 3
Macbeth knows that Duncan has left him a lovely country estate in
his will. Macbeth is in the army, but really wants to be able to quit
and spend more time with his family. He figures he could do that if
he could get his mitts on the country estate and sell it. So, he kills
Duncan. Sure enough, he gets the title to the country estate, and the
residue of the estate goes to Banquo. In a majority of states, is that
how things will stay?
No; Macbeth will hold the estate in constructive trust for Banquo,
the residuary beneficiary.
CAN A COURT FORCE A THIEF TO BE A CONSTRUCTIVE
TRUSTEE OF THE PROPERTY HE STOLE?
No. That's because constructive trusts come about only after a wrongdoer
has acquired title to the property.
A thief (or a converter) doesn't acquire title at all as a result of his
wrongdoing, so he can't be made a constructive trustee of the property he
stole
The rightful owner of the property still has title to the property; he just
doesn't have possession of the property itself
Instead, in that case, the rightful owner would want to sue to get the
property itself back or to recover the value of the property
THE END