Essay on Trusts Law

Many people strive and struggle hard so as to accumulate wealth. The wealthy status is viewed with esteemed prestige such that everyone wants to be wealthy. For one to be considered as one, they must have a certain degree of things with a high monetary value such as lands, buildings, big investments and of course a lot of money. The lavish lifestyle of wealth is appealing as many people are blinded to see. However, with more money comes more problems. Most governments tax wealthy people more than the rest with the assumption that they have a lot to give compared to the poor people. The wealthy status puts a family on the receiving end of many crimes such as robbery, kidnaps, carjacking and even fraud. Some of these challenges are external, but internal factors also challenge property owners. Many families dispute over the same. They do not see eye to eye concerning the management and use of such properties. Many property owners foresee such challenges and to keep the family together in the future; they formulate a will with the aid of legal advisors. A will is a legal documentation of how ones property will be managed in the event that they die. A property owner can also draft another document that will act like a will and be effective while he/she is alive. For this reason, together with other factors involved they use their property to create a trust.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

What a Trust Entails.

A trust is a fiduciary relationship to a specific property CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). It is an agreement where one person holds assets for the benefit of another. It is created with a purpose of distributing and managing the property while one or more people benefit from it. When a trust is made before a person dies, it is termed as a living trust. Trusts can be created by any person rich or poor depending on the reason behind its creation. The outline of a trust can vary from one trust to another. It is the lawyers obligation to customize it to suit the needs of a settlor. The trust document is not a one-page thing, and in some cases, it is more than a thirty-page booklet since it should contain many details. It should entail all the elements of a trust which are intent, the property, the parties involved and clauses of the constitution regarding the trust laws CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007).

Elements of a Trust

`To create a trust, there must be certain requirements met first. The requirements build up the trust itself. They are the sole contributor to the very existence of a trust. Such requirements also referred to as the elements of trust consist of intent to create trust, a trust property, a valid trust purpose and the parties involved.

Intent of a Trust

The settlor should express intent to create trust is basically an expression both written and oral that one what to create a trust for a certain property or simply by conduct. The best way to show intent is to write it down and have the parties involved sign it CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). By doing this one can avoid future legal implications especially when the trustee does not live up to his word. The words should be precise and not ambiguous leaving any room for violation. One should not use precatory language. One should not say they hope a particular person will take care of their children when they are not there. It leaves room for debate. It was a hope and not a straight forward demand meaning that the trustee has a choice of taking care of them or not, which is not what the settlor meant. The settlor must mean to enforce a legal obligation on the trustee that makes him use the designated property for the benefit of another. It would be wrong for a trustee to have unrestrained freedom over the property since nobody knows if he/she will live up to the agreement. They may decide not to. In such a case, the settlor should ensure the trustee is clear on that matter. The settlor should also state the time and place when the trust should be effective. They should also make it clear whether they want the trust effective while he/she is still alive or it should take effect upon their deaths.

Property

The second element is the trust property CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). There need to be some properties that need to be safeguarded or managed by the trustee. Without the property, there is no trust. The property can be intangible or tangible. Intangible in the sense of copyright, trademark and a patent while the tangible property includes lands, buildings businesses, and company shares. First, there should be an existing interest in the property before and during the existence of the trust. The settlor or owner of the property should legally own the property and has evidence and documentation that it actually belongs to them CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). The documentation will help identify the property, and it should be easily identified. It would be very hard to have a trust based on speculations and confusing details. The trust will only end once the property has been destroyed. If destroyed there will be no more responsibilities for the trustee nor will there be anything to protect and manage. Once the settlor hand out the property to the trust he/she relinquishes some rights if not all to it. The settlor should be of sound mind and legal age while doing this CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). They should not have been forced by anybody to do it.

Parties of a Trust

There are at least three parties involved in this agreement CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). First is the settlor. A settler is a person who owns assets and uses them to create a trust for someone else. The settlor must have a legal capability to create a trust measured in the same standards used as when someone is making a will. The standards are being of legal age, a sound mind so that he/she can tell the value of the property, where it is located, how big it is and why they want to create a trust for it. The settlor should be able to tell the relationship between themselves and the trustee. If one is not of sound mind at the time they want to create a trust, then the whole process cannot go through. The agreements stipulate what rights the settlor holds once the property has been placed in the trust. If the settlor has debts, what remains of the property, the interests they get can be reached by creditors CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). Creditors in this context can be people they owe money or former spouses. In some countries, creditors can access the property under trust protection if they were gotten through the illegal process and fraud and that is proved in a court of law. If proven so, the trust can be broken and right action taken against the settlor.

The second party is the trustee. The trustee is the recipient of the legal title of the transferred property CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). He/she must have certain qualifications that make them liable as a trustee. One should be able to hold the title of the property for the benefit of another person.

When setting up a trust one should consult thoroughly with legal advisors and research meticulously to determine what type of trust that will suit their needs best. The wording of a trust should be clear and brief to the point. As such, one will require a lawyer to draft a will for them. The process can be expensive depending on a country and the particular solicitor. However, their organizations that have charity methods that aid parents foot the bill for creating a trust for their disabled children. Then one should choose a trustee; normally people choose family members and best friends however one has to put everything into consideration. Nobody wants to entrust their future or the future of their children on a two-faced friend or relative. One should think hard and observe the people one is contemplating to choose. After making a decision, one should approach them and tell them and ensure that they are not overwhelmed by the responsibility; if they are well and good. If not, someone else should be chosen. One is not limited to one trustee alone, one can choose two to three people to ease the burden of responsibility from a trustee better yet if one can afford it, and they can hire a company to be a trustee.

Powers and Duties of a Trustee

Power in this context means the authority that a trustee has. There are particular acts that a trustee should perform. Unless there are clear guidelines and instructions in the trust, a trust can imply many things. It can imply the power to sell the property or power to lease it. One should be trustworthy and truthful to themselves and others. They should be loyal and not in a position of conflicting interests. The trustee should be an independent person of strong judgment and character. They should be able to administer the trust and execute it CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). Minors and mentally disabled persons cannot administer a trust, hence they do not qualify as a trustee. A trustee can be one person or in some cases two or more, where they become a co-trustee and in case one is disqualified or dies the rest can go on with the commitment. The trustee may be refunded for expenses cost of managing the property, but all the profits should turn over. In some cases where trustees refuse to live up to their end of their agreement then the court can appoint another trustee if the settlor is long dead. By doing, the court ensures that the trust goes on and it is upheld till the end. When the Trustee accepts the property, he/she is bound by the law to carry out some duties. A trustee should carry out the terms and conditions of the trust CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). They are expected to act in accord with the rules of the trust that they hold. A trustee will have breached the contract if they do not do as it is stipulated in the trust. A trustee should defend the trust and manage the properties diligently as if they were their own. They also have a duty of insuring it. They must act fairly between beneficiaries and not show any biases or favoritism. The trustee should account for his actions concerning the property and keep the beneficiaries updated as they are entitled to in the trust. They should ensure transparency. The trustee must show the duty of prudence that shows care and caution while administering the property CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). The trustee may find themselves liable to claimants of the property they hold. Since the trustees should carry out the judiciary responsibilities, in the event that they delegate a nondelegable duty, they will be responsible for any losses incurred. For example, if taxes are not being paid for the particular property he/she is holding they will be answerable. They can also be paid for their taking care of another persons property depending on the terms of that particular trust.

Limitation of a Trustee

The trustee can violate their duties, and hence there are limited to some control of the property. They hold the title to the trust property but doesnt mean they own the property. They can invest the properties but should turn over the all the profits. In the event that they incurred an expense the money used is refunded to the trustee CITATION Hal07 \l 1033 (Halbach & Gilbert, 2007). They do not have a right to the trust document. If they want to access the trust documents, they will have to go to court and explain why. If the court agrees, the trustee can administer the documents but under supervisor. They cannot disclose the content of the trust, and this ensures confidentiality. In the event that the trustee dies, their children and spouses cannot claim anything in t...