Bar Prep - PA Trusts

Question 0

Categories of express trusts

Answer 0

Private or charitable.

Question 1

Types of trusts

Answer 1

Express, resulting (presumed intent of prop owner), and constructive (not intent but constitute equitable remedy).

Question 2

Express trusts in PA governed by the Uniform Trust Act, which requires

Answer 2

Trust meet statutory requirements, trustee acts in good faith, purpose of trust lawful, power of court to modify/terminate, effect of spendthrift provision.

Question 3

Elements of express trust

Answer 3

Settlor; signed writing with present intent; to create trust in competent trustee; definite beneficiary; and sole trustee and sole beneficiary are NOT same person.

Question 4

How May settlor demonstrate present intent to create trust?

Answer 4

Manifested in writing (essential). Oral trusts are unenforceable.

Delivery of deed may manifest intent.

Must be manifested while settlor owns property.

Question 5

What is effect of precatory language in trust?

Answer 5

“It is my hope that…”

Default no trust created. But may be overcome if directions are definite and precise, failure to impose trust results in unnatural disposition.

Question 6

Beneficiaries of trusts

Answer 6

Necessary to validity of trust; beneficiary must be definite.

Question 7

What is a disclaimer?

Answer 7

Beneficiary may disclaim interest in trust by filing written instrument.

No official time period, but to avoid taxes must be made within 9 months.

Question 8

How does divorce effect trust?

Answer 8

Unless contrary to intent, it will revoke all gifts and fiduciary appointments in favor of former spouse.

Question 9

What result of trust made for interest in property?

Answer 9

Interest must be in legal existence.

Question 10

How can a settlor create an express trust?

Answer 10

Transfer of property during lifetime (inter vivos); by will (testamentary); by written declaration or written exercise of power of appointment.

Question 11

What are three benefits of charitable trusts (how are they more liberal)?

Answer 11

1. Must have indefinite beneficiaries
2. Cy pres doctrine applicable
3. May be perpetual

Question 12

What is required to form a testamentary trust?

Answer 12

To create trust by will, need formalities, true intent and essential terms of trust must be ascertained in TERMS OF WILL. Or incorporated by reference.

Question 13

What is the rule regarding indefinite beneficiaries and charitable trusts?

Answer 13

They must be formed with indefinite beneficiaries, unlike default rule.

Question 14

How can one transfer a beneficiary interest?

Answer 14

Voluntary assignment; involuntary assignment

Question 15

Is a trust freely alien able?

Answer 15

Yes, to extent the beneficiary can transfer other property.

Question 16

Do creditors have rights to property in trust?

Answer 16

Yes, interest of insolvent trust beneficiary can generally be reached in appropriate proceedings to satisfy claims of creditors.

However, creditor can only reach debtors interest and not the trust property.

Question 17

What are spendthrift trusts?

Answer 17

Trust where beneficiary is unable voluntarily or involuntarily transfer his interest in the trust. (Typically maintenance payments).

Question 18

What are the exceptions to spendthrift clauses?

Answer 18

Cannot create spendthrift trust for settlor; spendthrifts do not preclude claims for support/alimony/necessities; do not preclude claims by the government.

Question 19

General modification rule of trusts?

Answer 19

Trust terminates automatically at expiration of trust term.

Settlor can revoke or amend a trust unless terms expressly state irrevocable.