Ch. 31: Wills and Trusts – No. 7
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Trust: An arrangement by which title to property owned by
one person (the grantor or settlor) is held by another person
(the trustee) for the benefit of a third person (the beneficiary).
In addition to a designated beneficiary and a designated
trustee, a valid trust requires:
Ch. 31: Wills and Trusts – No. 8
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
SPECIAL AND IMPLIED TRUSTS
Charitable Trust: A trust in which the property held by a
trustee must be used for a charitable purpose, such as the
advancement of health, education, or religion.
own money in his or her own name as trustee for another.
A Totten trust is revocable at will until the grantor dies
or completes the gift by some unequivocal act or
declaration.
in the interest of fairness and justice when someone
wrongfully holds legal title to property.
Ch. 31: Wills and Trusts – No. 9
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
a reasonably prudent person would exercise in her personal
affairs.
Duty of Loyalty: A trustee must act in the exclusive interest
of the trust beneficiaries.
furnishing a complete and correct accounting to the
beneficiaries;
keeping the trust’s assets separate from hers;
Ch. 31: Wills and Trusts – No. 10
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TRUSTEE’S AUTHORITY
In the absence of specific terms in the trust, a trustee
generally may and must:
confine investments of the trust’s principal to
conservative debt securities, such as government bonds
allocate the expenses of maintaining trust assets
between income and principal beneficiaries in
accordance with applicable state law.
Ch. 31: Wills and Trusts – No. 11
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
ESTATE PLANNING
Durable Power of Attorney: A written – and, where
necessary, notarized – document authorizing a party to act on
behalf of the person granting the power of attorney when the
grantor becomes incapacitated.
Health-Care Power of Attorney: A written – and, where
that informs those reading it whether the maker wants
certain lifesaving or life-sustaining procedures to be
undertaken in situations where the treatment will not
likely improve the maker’s quality of life.
Ch. 31: Wills and Trusts – No. 8
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
SPECIAL AND IMPLIED TRUSTS
Charitable Trust: A trust in which the property held by a
trustee must be used for a charitable purpose, such as the
advancement of health, education, or religion.
own money in his or her own name as trustee for another.
A Totten trust is revocable at will until the grantor dies
or completes the gift by some unequivocal act or
declaration.
in the interest of fairness and justice when someone
wrongfully holds legal title to property.
Ch. 31: Wills and Trusts – No. 9
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
a reasonably prudent person would exercise in her personal
affairs.
Duty of Loyalty: A trustee must act in the exclusive interest
of the trust beneficiaries.
furnishing a complete and correct accounting to the
beneficiaries;
keeping the trust’s assets separate from hers;
Ch. 31: Wills and Trusts – No. 10
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TRUSTEE’S AUTHORITY
In the absence of specific terms in the trust, a trustee
generally may and must:
confine investments of the trust’s principal to
conservative debt securities, such as government bonds
allocate the expenses of maintaining trust assets
between income and principal beneficiaries in
accordance with applicable state law.
Ch. 31: Wills and Trusts – No. 11
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
ESTATE PLANNING
Durable Power of Attorney: A written – and, where
necessary, notarized – document authorizing a party to act on
behalf of the person granting the power of attorney when the
grantor becomes incapacitated.
Health-Care Power of Attorney: A written – and, where
that informs those reading it whether the maker wants
certain lifesaving or life-sustaining procedures to be
undertaken in situations where the treatment will not
likely improve the maker’s quality of life.