Trusts

Trusts appear frequently on the California Bar Exam, often combined with Wills & Succession, Community Property, or Professional Responsibility. You must be able to analyze trust creation, trustee duties, modification/termination, and remedies for breach. California-specific rules — especially the presumption of revocability and Probate Code provisions — are heavily tested.

I. Trust Creation

A. Settlor

The settlor is the person who creates the trust. The settlor must have the legal capacity to transfer property:

• Inter vivos trust: Requires the same capacity as making a gift or contract (generally, the capacity to understand the nature and effect of one's acts).
• Testamentary trust: Requires testamentary capacity (know the nature and extent of one's property, the natural objects of one's bounty, and the nature of the testamentary act).

B. Intent

The settlor must manifest a present intent to create a trust relationship. Key principles:

• No magic words required. The word "trust" need not be used. Courts look at the totality of the circumstances.
• Precatory language (e.g., "I hope," "I wish," "I desire") is generally not sufficient to create a trust — it is treated as a mere moral obligation, not a legal one. However, extrinsic evidence may convert precatory words into trust intent if the context supports it.
• Present vs. future intent: A promise to create a trust in the future is not a trust (though it may be enforceable as a contract if supported by consideration).

C. Trust Property (Res / Corpus)

There must be identifiable trust property (the "res" or "corpus") at the time the trust is created.

• Any transferable interest in property can serve as the res: real property, personal property, intangible property, contract rights, life insurance policies, etc.
• Future property (property the settlor does not yet own, such as an expectancy) cannot serve as the res. A trust of an expectancy fails for want of res. However, when the property is later acquired, a trust may arise under equity if there is adequate consideration.
• Illusory trusts: If the settlor retains so much control that the trustee has no real duties and the beneficiary has no enforceable rights, the trust may be deemed illusory and void. Under the modern/CA view, however, a revocable trust in which the settlor retains broad powers is not illusory — it is valid.
• The res must be segregated from the settlor's other property (for inter vivos trusts) or clearly identified (for testamentary trusts).

D. Valid Purpose

The trust must be created for a lawful purpose that is not contrary to public policy. A trust created to defraud creditors, to promote illegal activity, or that imposes conditions violating public policy (e.g., requiring a beneficiary to divorce or to refrain from marrying someone of a particular race) is invalid in whole or in part.

E. Ascertainable Beneficiary

A private express trust must have one or more definite and ascertainable beneficiaries:

• The beneficiaries must be identifiable at the time their interests are to be enjoyed (not necessarily at trust creation).
• A trust for the benefit of "my friends" or "worthy people" fails — the class is too indefinite.
• Unborn beneficiaries are permissible if the class is sufficiently definite (e.g., "my grandchildren" — even if none are yet born).
• Incidental beneficiaries have no standing to enforce the trust.
• Exception for charitable trusts: Charitable trusts do not require ascertainable beneficiaries — they may benefit the public at large or an indefinite class.

F. Trustee

A trust will not fail for want of a trustee. If no trustee is named, or the named trustee declines, a court will appoint one. Key rules:

• Acceptance: A trustee must accept the position; trusteeship is not forced. Acceptance can be express or implied (by conduct, such as exercising trust powers).
• Capacity: Any person with legal capacity to hold property may be a trustee. Minors and incompetents generally cannot serve.
• Sole trustee who is sole beneficiary: If the same person is the sole trustee and sole beneficiary, legal and equitable title merge and the trust fails. But if there are other beneficiaries or other trustees, no merger.

II. Types of Trusts

A. Express Private Trusts

Created by the express intention of the settlor, either inter vivos or by will. These are the "classic" trusts tested on the bar and require all five elements above.

1. Inter Vivos Trusts (Living Trusts)

Created during the settlor's lifetime by:

• Declaration of trust: Settlor declares themselves trustee of their own property.
• Deed of trust / transfer in trust: Settlor transfers property to a third-party trustee.

An inter vivos trust of real property must generally satisfy the Statute of Frauds (writing requirement). An inter vivos trust of personal property may be created orally in most jurisdictions, though proof requirements apply.

2. Testamentary Trusts

Created by the settlor's will, taking effect at death. Must comply with all formalities of will execution (Wills Act formalities). The trust is subject to probate.

3. Pour-Over Wills

4. Revocable vs. Irrevocable Trusts

Feature	Revocable Trust	Irrevocable Trust
Settlor control	Settlor retains full power to revoke, amend, or direct	Settlor gives up control; cannot unilaterally revoke or amend
Creditor access (during settlor's life)	Trust assets reachable by settlor's creditors	Generally shielded from settlor's creditors (unless fraudulent transfer)
Creditor access (after settlor's death)	CA: assets subject to creditor claims for debts of deceased settlor (Prob. Code § 19001)	Not available to settlor's creditors post-death
Tax treatment	Grantor trust — income taxed to settlor	May be separate tax entity
Avoids probate?	Yes	Yes
CA presumption	Default (Prob. Code § 15400)	Must be expressly stated
Method of revocation in CA	By any method provided in the trust, or by writing (other than a will) delivered to the trustee (Prob. Code § 15401)	N/A — cannot be revoked

B. Charitable Trusts

A charitable trust is one created for charitable purposes. It differs from a private trust in several critical ways:

• Charitable purpose required: Relief of poverty, advancement of education, advancement of religion, promotion of health, governmental or municipal purposes, or other purposes beneficial to the community. The purpose must benefit the public or a sufficiently large segment thereof.
• No ascertainable beneficiaries required: The beneficiaries may be indefinite ("the poor of Los Angeles").
• No RAP: Charitable trusts may last in perpetuity — they are exempt from the Rule Against Perpetuities.
• Enforcement: Enforced by the Attorney General, not by individual beneficiaries (who have no standing unless they are specifically designated).
• Cy pres doctrine: If the specific charitable purpose becomes impossible, impracticable, or illegal, a court may redirect the trust to a similar charitable purpose rather than allowing it to fail — if the settlor had a general charitable intent. If the settlor had only a specific intent, the trust fails and a resulting trust arises for the settlor or settlor's estate.

C. Honorary Trusts (Pet Trusts)

An honorary trust is a trust for a non-charitable purpose that has no ascertainable human beneficiary — most commonly, a trust for the care of an animal or the maintenance of a grave.

• Common law: Not enforceable as a trust (no beneficiary with standing to enforce), but the "trustee" may carry out the purpose on their honor. If the trustee refuses, a resulting trust arises.
• Modern law / UTC / California: Pet trusts are now enforceable by statute. CA Prob. Code § 15212 authorizes trusts for the care of a designated domestic or pet animal. The trust terminates when the last surviving animal dies. A court may appoint a person to enforce the trust, and may reduce the amount if it substantially exceeds what is needed.
• RAP: Under the common law, honorary trusts were limited to the RAP period (lives in being + 21 years, or in CA, 90 years). Under modern statutes, pet trusts last for the life of the animal.

D. Resulting Trusts

A resulting trust is a trust implied by law based on the presumed intent of the parties. It arises by operation of law, not by the express terms of an instrument.

1. When Resulting Trusts Arise

• Failure of an express trust: If an express trust fails (e.g., beneficiary predeceases, trust purpose becomes impossible without general charitable intent, excess corpus after trust purpose is fulfilled), the property reverts to the settlor (or settlor's estate) on a resulting trust.
• Purchase-money resulting trust (PMRT): When one person pays the purchase price for property but title is taken in another person's name, a resulting trust arises in favor of the payor — the title holder is presumed to hold in trust for the payor. Exception: If the title holder is a natural object of the payor's bounty (spouse, child, close relative), a gift is presumed instead.
• Semi-secret trust: When a will makes a gift to a person "as trustee" but does not name the beneficiary. At common law, a resulting trust arises in favor of the testator's heirs. (A secret trust — an outright gift with an oral agreement to hold in trust — may be enforced as a constructive trust.)

E. Constructive Trusts

A constructive trust is not a true trust at all — it is an equitable remedy imposed by a court to prevent unjust enrichment. The "trustee" has only one duty: to convey the property to the person who is rightfully entitled to it.

1. When Constructive Trusts Are Imposed

• Fraud or undue influence: Property obtained by fraud, duress, or undue influence.
• Breach of fiduciary duty: A fiduciary who profits from the relationship improperly.
• Breach of a confidential relationship: Similar to fiduciary duty but broader.
• Secret trusts: Where a will makes an absolute gift but the recipient orally promised to hold for another. Extrinsic evidence is admissible to prove the promise, and a constructive trust is imposed to prevent unjust enrichment.
• Theft, conversion, or wrongful acquisition: Property wrongfully taken or obtained.
• Homicide / slayer rule: A person who kills the decedent holds the inheritance on constructive trust for those who would have taken absent the killing.

Feature	Resulting Trust	Constructive Trust
Basis	Presumed intent of parties	Equity — prevent unjust enrichment
Wrongdoing required?	No	Typically yes (fraud, breach of duty, etc.)
When it arises	Failure of express trust; PMRT	Fraud, breach of fiduciary duty, secret trusts, theft
Effect	Property returns to settlor/payor	Property transferred to rightful owner
Statute of Frauds	Exempt (implied by law)	Exempt (equitable remedy)

III. The Trustee

A. Acceptance, Resignation, and Removal

• Acceptance: May be express (written acceptance) or implied (exercising trust powers, taking possession of trust property). Mere silence or inaction does not constitute acceptance.
• Resignation: A trustee may resign (a) as provided in the trust instrument, (b) with consent of all beneficiaries, or (c) with court approval. In California, a trustee may resign by giving written notice to the beneficiaries and any co-trustees (Prob. Code § 15640).
• Removal: A court may remove a trustee for cause: breach of trust, incapacity, unfitness, unwillingness to administer, persistent failure to administer effectively, substantial change of circumstances, or hostility among co-trustees. In CA, the court may also remove a trustee for excessive compensation or for failure to provide accountings. (Prob. Code § 15642.)
• Successor trustees: If a trustee vacates the position, a successor is appointed as specified in the trust instrument; if the instrument is silent, the court appoints one. A trust does not fail for lack of a trustee.

B. Co-Trustees

• Majority rule: Under the UTC and CA law, co-trustees who are unable to reach a unanimous decision may act by majority vote (Prob. Code § 15620).
• Liability: A co-trustee is liable for a breach by another co-trustee if the co-trustee: (a) participated in or approved the breach, (b) failed to exercise reasonable care to prevent the breach, or (c) improperly delegated trust administration.
• Delegation among co-trustees: A co-trustee cannot delegate to another co-trustee the performance of a function that requires the exercise of joint judgment.

IV. Trustee Duties

A. Duty of Loyalty

The most important and most tested trustee duty. The trustee must administer the trust solely in the interest of the beneficiaries and must not engage in self-dealing.

Self-dealing includes:

• Buying or selling trust assets to/from oneself.
• Borrowing trust funds or lending trust funds to oneself.
• Using trust property for personal purposes.
• Transactions between the trust and the trustee's spouse, business associates, or other entities in which the trustee has an interest.
• Corporate trustee buying its own stock with trust funds.

Exceptions to the self-dealing prohibition:

• The trust instrument expressly authorizes the transaction.
• Court approval is obtained in advance.
• All beneficiaries (who have capacity) consent after full disclosure.
• The transaction involves a fair and reasonable benefit to the trust and is specifically approved by a disinterested party (e.g., co-trustee).

B. Duty of Prudence / Care

The trustee must administer the trust with the care, skill, and caution that a reasonably prudent person would exercise in managing their own affairs (or, for professional trustees, the care of a professional fiduciary).

C. Duty to Invest — Uniform Prudent Investor Act (UPIA)

D. Duty to Diversify

Under the UPIA, the trustee has a specific duty to diversify trust investments within a reasonable time after accepting trusteeship, unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversification. The duty to diversify is separate from the general duty to invest prudently.

E. Duty to Inform and Account

• The trustee must keep beneficiaries reasonably informed about the trust and its administration.
• The trustee must provide accountings at least annually and upon reasonable request.
• In CA (Prob. Code § 16061.7), the trustee must provide notice to beneficiaries and heirs when a revocable trust becomes irrevocable (typically upon the settlor's death) within 60 days. This triggers the 120-day contest period.

F. Duty of Impartiality

When a trust has multiple beneficiaries (e.g., income beneficiaries and remainder beneficiaries), the trustee must act impartially, balancing the interests of all beneficiaries. The trustee cannot favor one beneficiary at the expense of another, unless the trust instrument directs otherwise.

This duty is central to trust accounting — decisions about what constitutes "income" versus "principal" directly affect different classes of beneficiaries.

G. Duty Not to Delegate Improperly

Under the traditional rule, a trustee could not delegate duties that required the exercise of discretion or judgment ("delegatus non potest delegare"). Under the modern/UPIA rule, a trustee may delegate investment and management functions, but must:

• Exercise reasonable care, skill, and caution in selecting the agent.
• Establish the scope and terms of the delegation consistent with the trust's purposes.
• Monitor the agent's performance and compliance periodically.

H. Duty to Earmark

Trust property must be labeled or designated as trust property (e.g., "John Smith, Trustee of the Smith Family Trust"). Failure to earmark can result in liability if a loss occurs that would not have occurred had the property been properly earmarked. Under modern law, liability attaches only if the failure to earmark caused the loss.

I. Duty to Segregate (Not Commingle)

The trustee must keep trust property separate from the trustee's own property and from other trusts. Commingling is a breach of trust even if no loss results.

V. Trustee Powers

Trustee powers come from three sources:

• Express powers: Granted by the trust instrument. These are primary and should be the first place to look.
• Implied powers: Powers reasonably necessary to carry out the trust's purposes and to administer the trust effectively, even if not expressly stated (e.g., the power to sell trust property, incur expenses, hire agents).
• Court-granted powers: A court may grant additional powers if needed to achieve the trust's purposes or to respond to circumstances not anticipated by the settlor.

VI. Beneficiaries and Beneficial Interests

A. Spendthrift Trusts

Validity: Spendthrift provisions are valid in virtually all U.S. jurisdictions, including California (Prob. Code § 15300).

Exceptions — Creditors who CAN reach spendthrift trust interests:

• Child support and spousal support (alimony): The most commonly tested exception. A court may order the trustee to satisfy a support judgment from the beneficiary's trust interest (Prob. Code § 15305).
• Tax claims: Federal and state tax liens can attach to trust interests despite a spendthrift clause.
• Providers of necessaries: In some jurisdictions (including CA), creditors who provided necessaries of life to the beneficiary may reach the trust interest (Prob. Code § 15307).
• Self-settled spendthrift trusts: A settlor who creates a trust for their own benefit cannot use a spendthrift clause to shield assets from their own creditors. The creditors of the settlor-beneficiary may reach the trust assets to the maximum extent the trustee could distribute to the settlor. (Prob. Code § 15304.) This is a major exam point.
• Tort judgments: In California, the court has discretion to allow a tort judgment creditor to reach the beneficiary's interest (Prob. Code § 15306.5 — enacted 2016).

B. Discretionary Trusts

In a discretionary trust, the trustee has discretion over whether and how much to distribute to the beneficiary. The beneficiary has no enforceable right to any specific distribution.

• Creditor access: Creditors generally cannot compel distributions from a discretionary trust. They may be able to reach distributions once they are made.
• Trustee's discretion: Even with discretionary authority, the trustee must exercise discretion in good faith and in accordance with the trust's terms and purposes. A trustee who exercises no judgment at all, or acts in bad faith, may be compelled by a court to act.
• Standard of review: Courts review trustee discretion for abuse — not whether the court would have made a different decision, but whether the trustee acted reasonably within the bounds of the granted discretion.

C. Support Trusts

A support trust directs the trustee to distribute income or principal as necessary for the beneficiary's support, health, education, and maintenance. The beneficiary is entitled to distributions necessary for support.

• Creditor access: Creditors who provided necessaries may reach the beneficiary's interest (because such claims align with the trust's purpose).
• Voluntary alienation: The beneficiary cannot voluntarily assign their interest beyond what is needed for support.

Feature	Spendthrift Trust	Discretionary Trust	Support Trust
Beneficiary's right to distribution	As trust provides, but cannot transfer	No right to specific distribution	Right to distributions for support
Voluntary alienation	Prohibited by spendthrift clause	Limited (nothing to transfer if trustee hasn't decided)	Cannot transfer beyond support needs
General creditor access	Blocked (with exceptions)	Cannot compel distributions	Cannot reach except for necessaries
Child/spousal support creditors	CAN reach (exception in CA)	CAN compel distributions (CA)	CAN reach
Self-settled?	Spendthrift clause void as to settlor's creditors	Creditors can reach max distributable to settlor	Same

VII. Modification and Termination of Trusts

A. Revocation / Modification by Settlor

• Revocable trust: The settlor may revoke or modify at any time, in any manner specified in the trust instrument or, in CA, by a writing (other than a will) delivered to the trustee (Prob. Code § 15401).
• Irrevocable trust: The settlor generally cannot revoke unilaterally. However, if all beneficiaries consent, the settlor and beneficiaries together may modify or terminate even an irrevocable trust.

B. Termination by Beneficiaries — The Claflin Doctrine

C. Court-Ordered Modification or Termination

• Changed circumstances: A court may modify or terminate a trust if, due to circumstances not anticipated by the settlor, modification or termination would further the trust's purposes (UTC § 412; CA Prob. Code § 15409.5).
• Uneconomic trust: A court may terminate a trust if it has become uneconomic to administer (the value of the corpus is insufficient to justify the costs of administration). (UTC § 414; CA Prob. Code § 15408(b) — generally trusts with less than $50,000 in corpus.)
• Merger (doctrine of merger): If the sole trustee becomes the sole beneficiary (legal and equitable title merge in one person), the trust terminates by operation of law.
• Purpose fulfilled or becomes impossible: A trust terminates when its purpose has been fully accomplished or becomes impossible or illegal.
• By its own terms: A trust terminates according to its terms (e.g., "the trust shall terminate when my youngest child reaches age 30").

VIII. Rule Against Perpetuities and Trusts

• Private trust interests: Subject to RAP. An interest granted to a beneficiary that might not vest within the perpetuities period is void.
• Charitable trusts: Exempt from RAP — may last in perpetuity.
• Shift from charity to charity: Also exempt from RAP.
• Shift from private to charitable (or vice versa): Subject to RAP.

Uniform Statutory Rule Against Perpetuities (USRAP) / CA Rule

IX. Trust Accounting: Income vs. Principal

Trust accounting rules govern the allocation of receipts and disbursements between income and principal. This is crucial when a trust has both income beneficiaries (e.g., life tenant) and remainder beneficiaries.

Income	Principal
Rent	Proceeds from sale of trust assets
Interest on bonds	Capital gains
Cash dividends	Stock dividends / stock splits
Business profits	Insurance proceeds (casualty)
Royalties (percentage)	Eminent domain proceeds

UPIA Power to Adjust

Under the Uniform Principal and Income Act (UPAIA), adopted in CA, a trustee may reallocate receipts between income and principal (the "power to adjust") if the trustee determines that the traditional allocation would be unfair to either class of beneficiary, given the investment strategy adopted under the UPIA. This allows the trustee to invest for total return while maintaining impartiality between income and remainder beneficiaries.

Example: Power to Adjust

Suppose a trust invests entirely in growth stocks (producing little dividend income but high capital appreciation). The income beneficiary receives almost nothing, while the remainder beneficiary benefits greatly. The trustee may use the power to adjust to reallocate some capital gains as "income" to ensure the income beneficiary receives a fair share of the total return.

X. Remedies for Breach of Trust

When a trustee breaches a fiduciary duty, beneficiaries have several remedies available:

A. Money Damages (Surcharge)

The trustee may be surcharged (held personally liable) for:

• Losses to the trust caused by the breach.
• Profits the trustee made from the breach (disgorgement).
• Profits the trust would have earned absent the breach (lost opportunity).

The beneficiary need not prove all three — the remedy is whichever measure puts the trust in the position it would have been in absent the breach.

B. Constructive Trust

If the trustee improperly transfers trust property to a third party or uses trust funds to acquire property, the beneficiary may seek a constructive trust over that property. This gives the beneficiary a priority claim (superior to general creditors).

C. Tracing

If trust property has been wrongfully commingled with the trustee's personal funds, the beneficiary may trace the trust property into its product and impose an equitable lien or constructive trust. Common tracing rules:

• Lowest intermediate balance rule: When commingled funds are in a bank account, the trust is deemed to own the lowest balance the account reached after commingling (any withdrawal below the trust amount is a dissipation of trust funds).
• Presumptions favor the trust: Withdrawals from commingled accounts are presumed to come from the trustee's personal funds first (protecting the trust), unless the trustee's intent or the facts show otherwise.

D. Removal of Trustee

A court may remove the breaching trustee and appoint a successor, with or without additional monetary relief.

E. Equitable Lien

The beneficiary may impose an equitable lien on property acquired with trust funds. This secures the beneficiary's claim against the property, particularly useful if the property has decreased in value (the beneficiary is a secured creditor).

F. Injunction and Other Equitable Relief

A court may enjoin a threatened breach or order specific performance of trust obligations.

Choosing the Right Remedy on the Exam

• If the breach resulted in a loss: Surcharge for the amount of the loss.
• If the trustee profited: Surcharge for the profits (disgorgement) or constructive trust on profits/property acquired.
• If trust property was transferred to a BFP: Surcharge (cannot recover from BFP).
• If trust property was commingled: Tracing + constructive trust or equitable lien on the product.
• If the property value went up: Constructive trust (beneficiary gets the appreciated property).
• If the property value went down: Equitable lien (beneficiary gets a secured claim for original value).

XI. California-Specific Trust Rules

A. Probate Code Trust Provisions

California's trust law is codified in Prob. Code §§ 15000–18201. Key CA-specific provisions to know:

B. No-Contest Clauses

A no-contest clause (in terrorem clause) in a trust instrument provides that a beneficiary who contests the trust forfeits their interest.

• CA rule (Prob. Code § 21311): A no-contest clause is enforceable, but only against direct contests brought without probable cause.
• A direct contest is a contest that alleges invalidity of the instrument or one or more of its terms based on forgery, lack of due execution, lack of capacity, menace/duress/fraud/undue influence, revocation, or disqualification of a beneficiary under § 6112.
• A contest filed with probable cause (objectively reasonable basis) does not trigger forfeiture, even if the contest ultimately fails.
• Creditor claims, requests for accountings, and petitions related to trust administration are generally not "contests" that trigger a no-contest clause.

C. Trust Protectors

California law permits the use of a trust protector — a person designated in the trust instrument to exercise certain powers such as modifying the trust, removing or replacing the trustee, or approving trustee actions. (Prob. Code § 16002(c).) Trust protectors are fiduciaries and are subject to oversight by the court.

D. Pour-Over Wills in CA

Under CA Prob. Code § 6300, a will may pour assets into a trust even if the trust is amendable or revocable and even if the trust is amended after the will is executed. The trust need not have been funded during the testator's lifetime. This eliminates many common-law problems with pour-over gifts.

XII. Common Essay Patterns

Pattern 1: Trust Creation Issues — "Was a Valid Trust Created?"

Setup: A person gives property to another with some instruction about using it for someone's benefit, but the language is ambiguous or informal.

Analysis framework:

1. Walk through all five creation elements (STBIP).
2. Focus on intent: Is the language precatory or imperative? Did the settlor intend to impose a legal obligation?
3. Identify the res: Is the property ascertainable? Has it been transferred or set aside?
4. Identify the beneficiaries: Are they ascertainable? Is the class definite enough?
5. If the trust fails, discuss what happens: resulting trust for the settlor, or outright gift to the holder.

Pattern 2: Trustee Breach of Duty — Self-Dealing & Loyalty

Setup: A trustee engages in a transaction that benefits the trustee personally or involves a conflict of interest.

Analysis framework:

1. State the duty of loyalty and the no further inquiry rule.
2. Identify the self-dealing transaction.
3. Check for exceptions (express authorization in the instrument, prior court approval, beneficiary consent).
4. Discuss remedies: transaction is voidable; surcharge for losses; disgorgement of profits; removal; constructive trust on property acquired.
5. Address co-trustee liability if applicable.

Pattern 3: Spendthrift Trust & Creditor Access

Setup: A beneficiary's creditor attempts to reach the beneficiary's interest in a trust that contains a spendthrift clause.

Analysis framework:

1. State the spendthrift rule: creditors generally cannot reach the beneficiary's interest while in the trust.
2. Check which type of creditor: child support? Tax? Necessaries? Tort?
3. Check if the trust is self-settled — if so, the spendthrift clause is void as to the settlor's creditors.
4. Determine whether the interest is discretionary or mandatory — this affects whether a creditor can compel distribution.
5. Distinguish between reaching the trust interest vs. reaching distributed funds (once distributed, all creditors can reach them).

Pattern 4: Modification / Termination of Trust

Setup: Beneficiaries or a court seeks to modify or terminate a trust before its stated termination date.

Analysis framework:

1. Is the trust revocable? If so, the settlor can simply revoke (in CA, writing delivered to trustee).
2. If irrevocable, do all beneficiaries consent? If yes: apply Claflin doctrine — is there a material purpose? In CA, even if a material purpose exists, the court may allow termination if the reasons outweigh the purpose.
3. Has there been a change in circumstances? If so, the court may modify under the equitable deviation doctrine.
4. Is the trust uneconomic to administer? The court may terminate.
5. Has the trust purpose been fulfilled or become impossible? Termination by operation of law.

Pattern 5: Charitable Trust & Cy Pres

Setup: A charitable trust's specific purpose becomes impossible or impracticable.

Analysis framework:

1. Confirm the trust is charitable (charitable purpose, indefinite beneficiaries OK, AG enforces).
2. Has the purpose become impossible, impracticable, or illegal?
3. Apply cy pres: Did the settlor have general charitable intent? In CA, there is a presumption of general charitable intent.
4. If general charitable intent exists, the court will redirect the trust to a similar purpose as close to the original as possible.
5. If the settlor had only a specific charitable intent (rare in CA), the trust fails and a resulting trust arises for the settlor or settlor's estate.

XIII. Issue-Spotting Checklist

• Trust creation: Is there a valid trust? Check all five elements (STBIP). Watch for precatory language, missing res, or indefinite beneficiaries.
• Type of trust: Express private, charitable, resulting, or constructive? Inter vivos or testamentary? Revocable or irrevocable?
• Pour-over will: Does the will pour into a trust? Was the trust in existence? CA allows pour-over even to an unfunded, amendable trust.
• Trustee duties: Loyalty (self-dealing, no further inquiry), prudence, UPIA (diversification, portfolio standard), impartiality, inform/account, segregate, earmark.
• Self-dealing: Any transaction between the trustee and the trust? Apply the no further inquiry rule. Check for exceptions.
• Investment: Has the trustee invested prudently under the UPIA? Reviewed inception assets? Diversified?
• Spendthrift: Is there a spendthrift clause? What type of creditor? Is the trust self-settled?
• Discretionary / support trust: What standard governs distributions? Can a creditor compel distribution?
• Modification / termination: Can the settlor revoke? Do all beneficiaries consent? Is there a material purpose? CA § 15403 balancing test? Changed circumstances? Uneconomic?
• RAP: Do any beneficial interests violate the RAP? Apply CA 90-year USRAP if the common-law rule voids the interest.
• Charitable trust: Valid charitable purpose? Cy pres applicable? AG enforcement?
• Resulting trust: Did an express trust fail? Purchase-money situation?
• Constructive trust: Fraud, breach of fiduciary duty, unjust enrichment, secret trust, slayer rule?
• Remedies for breach: Surcharge, constructive trust, tracing, equitable lien, removal, injunction.
• No-contest clause: Is there one? Is the contest "direct"? Does the contestant have probable cause? (CA rule.)
• Notification: In CA, did the trustee notify beneficiaries within 60 days of settlor's death?

XIV. Exam Tips

XV. Mnemonics

XVI. Key Distinctions

Distinction	Rule A	Rule B
Revocability default	Common law: Irrevocable unless settlor reserves power to revoke	CA / UTC: Revocable unless expressly stated irrevocable (Prob. Code § 15400)
Termination over material purpose	Claflin doctrine: Cannot terminate if inconsistent with material purpose	CA § 15403: Court may allow if reasons outweigh the material purpose
Cy pres presumption	Common law: Settlor must affirmatively show general charitable intent	CA § 15409: General charitable intent is presumed
RAP period	Common law: Lives in being + 21 years	CA USRAP: Common law or 90 years (wait and see) — § 21205
Self-dealing standard	No further inquiry rule: Voidable regardless of fairness	Exceptions: Trust instrument authorization, court approval, or informed beneficiary consent
Precatory language	"I wish" / "I hope": Presumptively not a trust; mere moral obligation	Imperative language ("shall hold for," "in trust for"): Creates a trust
Secret vs. semi-secret trust	Secret trust: Absolute gift on face; oral promise to hold in trust → constructive trust imposed	Semi-secret trust: "To X as trustee" but no named beneficiary → resulting trust for settlor's estate
Resulting trust vs. constructive trust	Resulting trust: Based on presumed intent; arises when express trust fails or PMRT situation	Constructive trust: Equitable remedy to prevent unjust enrichment; requires wrongful conduct
Prudent investor: old vs. new	Old rule: Each investment judged individually; speculative investments prohibited	UPIA: Portfolio standard; no investment imprudent per se; total return focus
Honorary trust enforcement	Common law: Not enforceable; "trustee" may honor on conscience	Modern / CA § 15212: Pet trusts enforceable by statute; court may appoint enforcer

Feature	Private Express Trust	Charitable Trust
Beneficiaries	Must be definite and ascertainable	May be indefinite; public or large class
RAP	Applies	Exempt — may last in perpetuity
Enforcement	By beneficiaries	By Attorney General (and sometimes settlor)
Cy pres	Not applicable (resulting trust if purpose fails)	Applicable — court redirects to similar purpose
Duration	Limited by trust terms and RAP	Perpetual
Tax benefits	None specifically	Tax-exempt status possible