Definitions

Question 1

Inter vivos Trust

Answer 1

Settlor transfers property during lifetime.

Question 2

Testamentary Trust

Answer 2

The intention to create a trust and the other elements of a trust (benes, res, purpose) must be ascertainable by the terms of a will/codicil itself.

Question 3

Power of Appointment

Answer 3

A discretionary power given to an executor created by the will to appoint benes of a testamentary trust

Question 4

Elements of a Trust

Answer 4

1. Settlor’s intent
2. Trust purpose
3. Res
4. Trustee
5. Beneficiary

Question 5

Secret Trust

Answer 5

A trust which does not appear on the face of a will, but where the devisee has orally promised the testator to use the property for another person.

Question 6

Semi-Secret Trust

Answer 6

The will mentions the trust but does not specify the benes or any terms of the trust.

Question 7

Spendthrift Trust

Answer 7

Prohibits benes interest from voluntary (bene’s action) or involuntary (creditor’s action) transfer.

Question 8

Support Trust

Answer 8

A provision inside a private express trust that provides that the trustee shall pay income and principal as necessary to provide for the bene’s education or support.

Question 9

Discretionary Trust

Answer 9

A provision inside a private express trust that gives the trustee sole discretion to distribute or withhold payments of income or principal to or from a beneficiary.

Question 10

Blended Trust

Answer 10

A trust created for a group of persons and the interest of one member is inseparable from the interest of others.

Question 11

Protective Trust

Answer 11

Ordinary trust that pays out income regularly, but which contains a “forfeiture” provision, that upon an attempted alienation of beneficiary’s interest, becomes a discretionary trust to apply the income for the benefit of any or all of a group that included the original beneficiary.

Question 12

Charitable Trust

Answer 12

Effect of the trust instrument is to promote the welfare of mankind or the public at large, of a community, or of some other class of persons which is indefinite as to numbers and individual entities.

Question 13

Cy Pres Doctrine

Answer 13

Court will put trust funds to “next best use, in accord with the dominant charitable purpose of the donor.”

Question 14

Honorary Trust

Answer 14

A non-charitable, specific purpose trust, which has no bene with standing to enforce it.

Question 15

Trust created by Operation of Law

Answer 15

Court imposed to prevent unjust enrichment.

Question 16

Resulting Trust

Answer 16

Created when and express private trust fails.

Question 17

Purchase Money Resulting Trust

Answer 17

A trust that results from one person providing the consideration for the purchase of property but consents that title is taken in name of another person.

Question 18

Constructive Trust

Answer 18

Created by courts to prevent injustice or unjust enrichment.

Question 19

Trustee’s Duty of Due Care

Answer 19

Trustee is obligated to act with that degree of care, skill and prudence, which would be exercised by a reasonably prudent person in managing “an enterprise of like character and with like aims to accomplish the expressed purpose of the trust.”

Question 20

Prudent Investor Rule

Answer 20

Trustee must act in good faith with reasonable prudence at the time of each individual investment.

Question 21

Three Remedies Available to Trust Benes

Answer 21

1. Damages
2. Removal of Trustee - Injunction
3. Constructive Trust

Question 22

Seven Duties of Trustee

Answer 22

1. Duty of due care
2. Duty of loyalty
3. Duty to preserve trust property
4. Duty to earmark and segregate property
5. Duty of personal performance
6. Duty to secure and safeguard property
7. Duty to account