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California Supplement to Bar Exam > California Trusts > Flashcards

California Trusts Flashcards

1
Q

DELETE Trust (California)

A

A fiduciary relationship where one party (the trustee) holds legal title to property for the benefit of another (the beneficiary) who holds equitable title.

Example sentence: John created a trust for his daughter, with his brother as the trustee.

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2
Q

Types of Trusts (California)

A

Express Trusts (created intentionally) and Implied Trusts (arise by operation of law).

Example sentence: Express trusts are commonly used for estate planning purposes.

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3
Q

Express Trusts (California)

A

Trusts created intentionally by the settlor.

Example sentence: Sarah established an express trust to protect her assets for her grandchildren.

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4
Q

Private Express Trusts (California)

A

Created to benefit private, non-charitable beneficiaries.

Example sentence: The private express trust was set up to ensure the financial security of the family members.

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5
Q

Charitable Trusts (California)

A

Created for charitable purposes or to benefit qualified charitable beneficiaries.

Example sentence: The charitable trust was established to support educational initiatives in underprivileged communities.

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6
Q

Implied Trusts (California)

A

Trusts that arise by operation of law.

Example sentence: The court recognized the implied trust based on the circumstances of the case.

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7
Q

Constructive Trusts (California)

A

Imposed to deprive a wrongdoer from retaining improperly obtained property.

Example sentence: The court imposed a constructive trust to remedy the fraudulent actions of the defendant.

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8
Q

Resulting Trusts (California)

A

Imposed irrespective of wrongdoing when circumstances require it, typically when a settlor transfers full legal title but fails to transfer full equitable title.

Example sentence: The resulting trust was established to clarify the intended distribution of the property.

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9
Q

Principal Players (California)

A

Settlor, Trustee, and Beneficiary.

Example sentence: The principal players in the trust relationship have distinct roles and responsibilities.

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10
Q

Settlor (California)

A

Sets up the trust.

Example sentence: The settlor carefully outlined the terms of the trust in the legal document.

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11
Q

Trustee (California)

A

Administers, manages, and owns legal title to the trust property.

Example sentence: The trustee is responsible for ensuring the trust assets are invested wisely.

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12
Q

Beneficiary (California)

A

Receives equitable title to the trust property.

Example sentence: The beneficiary has the right to receive the income generated by the trust assets.

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13
Q

Capacity (California)

A

The legal ability to create a trust; the settlor must be at least 18 years old and of sound mind.

Example sentence: The settlor’s capacity to create a trust is essential for the validity of the trust.

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14
Q

Intent (California)

A

The settlor’s intention to create a trust at the present time.

Example sentence: The settlor’s clear intent to establish a trust was evident in the trust document.

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15
Q

Formalities (California)

A

Legal requirements for creating a trust, such as writing and signing.

Example sentence: The trust document complied with all the formalities required by law.

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16
Q

Valid Purpose (California)

A

The trust must be created for a lawful purpose.

Example sentence: The court examined whether the trust had a valid purpose before approving its establishment.

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17
Q

Ascertainable Beneficiary (California)

A

A beneficiary who can be identified at the time the trust is created.

Example sentence: The ascertainable beneficiary was named in the trust document to ensure clarity.

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18
Q

Active Duties (California)

A

A trustee must have active duties to perform in administering the trust.

Example sentence: The trustee diligently carried out their active duties in managing the trust assets.

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19
Q

Declaration of Trust (California)

A

A settlor declares that they hold property in trust for certain beneficiaries.

Example sentence: The declaration of trust clearly outlined the settlor’s intentions and responsibilities.

20
Q

Inter Vivos Trust (California)

A

A trust created during the settlor’s lifetime.

Example sentence: The inter vivos trust allowed the settlor to transfer assets to beneficiaries while still alive.

21
Q

Testamentary Trust (California)

A

A trust created by a will that takes effect upon the settlor’s death.

Example sentence: The testamentary trust ensured the orderly distribution of assets according to the settlor’s wishes.

22
Q

Secret Trust (California)

A

A trust where the will gives no indication of the existence of the trust.

Example sentence: The secret trust was revealed only after the settlor’s death, surprising the beneficiaries.

23
Q

Semi-Secret Trust (California)

A

A trust where the will indicates the existence of the trust but fails to lay out all necessary terms.

Example sentence: The semi-secret trust required additional clarification to determine the beneficiaries’ rights.

24
Q

Pour-Over Trust (California)

A

A will that directs the transfer of the decedent’s property into a trust established either by the testator during their lifetime or by another person.

Example sentence: The pour-over trust ensured the seamless transfer of assets into the established trust.

25
Q

Trustee’s Powers (California)

A

The legal powers granted to the trustee to manage and administer the trust property.

Example sentence: The trustee’s powers were clearly defined in the trust instrument to guide their decision-making.

26
Q

Express Powers (California)

A

Powers specifically granted to the trustee in the trust instrument.

Example sentence: The trustee exercised their express powers to make investment decisions on behalf of the trust.

27
Q

Implied Powers (California)

A

Powers that are necessary or appropriate to carry out the terms of the trust.

Example sentence: The trustee utilized their implied powers to address unforeseen circumstances in trust administration.

28
Q

Prudent Investor Rule (California)

A

A rule requiring the trustee to invest and manage trust assets as a reasonable and prudent investor would.

Example sentence: The trustee adhered to the prudent investor rule to ensure the long-term growth of the trust assets.

29
Q

Duty of Loyalty (California)

A

A trustee’s obligation to act in the best interest of the beneficiaries.

Example sentence: The trustee’s duty of loyalty prevented any conflicts of interest in trust management.

30
Q

Self-Dealing (California)

A

When a trustee acts in their own interest rather than in the interest of the beneficiaries.

Example sentence: The trustee’s self-dealing behavior led to legal action by the beneficiaries.

31
Q

Conflict of Interest (California)

A

A situation where the trustee’s personal interests could conflict with their duties to the beneficiaries.

Example sentence: The conflict of interest required the trustee to recuse themselves from certain trust decisions.

32
Q

Duty to Diversify (California)

A

A trustee’s obligation to diversify the trust’s investments to spread risk.

Example sentence: The duty to diversify helped protect the trust assets from market fluctuations.

33
Q

Earmark Assets (California)

A

The requirement to keep trust property separate from the trustee’s own property.

Example sentence: Earmarking assets ensured the clear distinction between trust assets and personal assets.

34
Q

Accounting (California)

A

The trustee’s duty to keep accurate records of trust administration and provide them to beneficiaries.

Example sentence: The trustee’s meticulous accounting practices enhanced transparency in trust management.

35
Q

Impartiality (California)

A

The trustee’s duty to treat all beneficiaries fairly and without bias.

Example sentence: The trustee demonstrated impartiality in distributing trust proceeds to all beneficiaries.

36
Q

Duty to Co-Trustees (California)

A

The obligation of each trustee to prevent and address breaches of trust by co-trustees.

Example sentence: The duty to co-trustees encouraged collaboration and accountability in trust administration.

37
Q

Surcharging the Trustee (California)

A

Holding the trustee personally liable for losses to the trust caused by their breach of duty.

Example sentence: The court considered surcharging the trustee for the financial losses incurred due to their breach of duty.

38
Q

Removal of Trustee (California)

A

The process of removing a trustee for failure to perform their duties.

Example sentence: The beneficiaries initiated the removal of the trustee due to their failure to fulfill their obligations.

39
Q

Liability to Third Parties (California)

A

The trustee’s responsibility for contracts and torts involving the trust property.

Example sentence: The trustee’s liability to third parties required careful consideration in trust management.

40
Q

Income Beneficiary (California)

A

A beneficiary who is entitled to receive income generated by the trust property.

Example sentence: The income beneficiary received regular payments from the trust’s investment returns.

41
Q

Principal Beneficiary (California)

A

A beneficiary who is entitled to receive the trust property itself, also known as a remainderman.

Example sentence: The principal beneficiary inherited the trust property upon reaching a specified age.

42
Q

Discretionary Trust (California)

A

A trust where the trustee has discretion over how much, if any, of the trust property is distributed to beneficiaries.

Example sentence: The discretionary trust allowed the trustee to allocate funds based on the beneficiaries’ needs.

43
Q

Spendthrift Trust (California)

A

A trust that restricts the beneficiary’s ability to transfer their interest and protects it from creditors.

Example sentence: The spendthrift trust shielded the beneficiary’s inheritance from potential creditors.

44
Q

Modification (California)

A

Changing the terms of a trust.

Example sentence: The modification of the trust was necessary to accommodate changing circumstances.

45
Q

Termination (California)

A

Ending the trust and distributing its property.

Example sentence: The termination of the trust required approval from all beneficiaries.

46
Q

Revocation (California)

A

The settlor’s ability to terminate a trust, which is generally presumed unless the trust is expressly made irrevocable.

Example sentence: The settlor considered revocation of the trust due to changing family circumstances.

47
Q

Cy Pres Doctrine (California)

A

A doctrine allowing modification of a charitable trust when its original purpose becomes impractical or impossible to achieve.

Example sentence: The court applied the cy pres doctrine to ensure the charitable trust’s continued effectiveness.

California Supplement to Bar Exam (8 decks)

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