Basics

Question 1

What is a trust

Answer 1

A fiduciary relationship that holds legal title to specific property under a fiduciary duty to manage, invest, safeguard, and administer the trust assets and income for benefit of the beneficiary

Question 2

Who holds the legal interest?

Answer 2

held by the trustee and they recieve no benefit

Question 3

Rolls of the trustee

Answer 3

1) must deal with the property with reasonable care
2) must maintain the utmost degree of loyalty and
3) personally responsible if their conduct falls beneath the required standards

Question 4

who holds the equitable or beneficial interest

Answer 4

held by the beneficiary who receives the benefits of ownership as set forth in the trust

Question 5

who is the settlor

Answer 5

the creator of the trust

Question 6

How is a trust created?

Answer 6

1. by transferring legal title to the trustee and
2. transferring equitable title to a beneficiary

Question 7

benefits of a trust

Answer 7

1. flexible distribution of assets
2. protection against settlor’s incompetence
3. professional management
4. probate avoidance
5. tax benefits

Question 8

What is an express trust and what are the two kinds?

Answer 8

created by express intention of the settlor
private: private beneficiaries (certain ascertainable people)
Charitable: charitable beneficiaries (indefinite class of persons or public in general)

Question 9

What trusts are created by the operation of law

Answer 9

1. Resulting trust: arise from presumed intention of the owner of property
2. Constructive trust: equitable remedy used to prevent unjust enrichment