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Trusts > Express Private Trusts > Flashcards

Express Private Trusts Flashcards

1
Q

In Virginia, trusts are governed by the…

A

Uniform Trust Code (“UTC”)

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2
Q

The elements for a valid express trust are:

A
  1. Settlor with capacity to convey title to the trustee;
  2. An intention to create trust;
  3. One or more ascertainable beneficiaries;
  4. Present disposition of identifiable property;
  5. A lawful purpose.
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3
Q

Is a trustee required to create a valid trust?

A

No, but there must be a trustee with active duties for the trust to operate.

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4
Q

Can the sole trustee and sole beneficiary be the same person?

A

No

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5
Q

Can an unborn person be a beneficiary of a trust?

A

Yes, if they will be identifiable at the time their interest comes into enjoyment.

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6
Q

Does the anti-lapse statute apply to trusts?

A

Yes, but only if the trust instrument or provision is revocable immediately before the settlor’s death.

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7
Q

A divorce decree or annulment will…

A

Revoke all beneficial interests in favor of the settlor’s former spouse, unless the instrument provides otherwise.

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8
Q

When is a class of beneficiaries allowed?

A

So long as the individual members of the class are readily ascertainable at the time trust property is distributed.

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9
Q

Trust property may be any property that the settlor…

A

has the power to convey.

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10
Q

If a tenancy by the entirety is transferred to a trust, the immunity from creditors will not be lost if…

A
  1. The couple remains married;
  2. The property continues to be held in trust, and
  3. It continues to be their property.
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11
Q

A trust may be established for any purpose that is not…

A

unlawful, contrary to public policy, or impossible to achieve.

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12
Q

Normally, a total restraint on marriage is void as against public policy, however…

A

a partial restraint on marriage is valid– for example, requiring marriage within a particular faith or condition changing the beneficiary upon the original beneficiary’s remarriage.

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13
Q

Settlor places property in trust “for Aiden for life, if he divorces Roberto, otherwise to Chastity.” Is this a valid trust?

A

Probably not, because encouraging divorce is likely against public policy.

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14
Q

Is writing required to create a trust?

A

In Virginia, no writing is required to create a trust, even if real property is involved.

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15
Q

The terms of an oral trust must be proved by…

A

clear and convincing evidence.

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16
Q

If a trustee dies, becomes incapacitated, resigns, or is removed, what happens to the trust?

A

Nothing. A trust will not fail for lack of trustee, the court will appoint a successor trustee.

17
Q

The qualifications of a trustee are that the trustee must be:

A
  1. Of legal age;
  2. Competent;
  3. Have capacity to enter into contracts.
18
Q

A nonresident individual can be named as a trustee, with the requirement that they…

A

appoint a resident agent for service of process.

19
Q

A person accepts a trusteeship by…

A
  1. Substantially complying with the acceptance terms in the trust instrument;
  2. Accepting delivery of trust property; or
  3. Exercising trust powers or performing trust duties, or
  4. Indicating acceptance.
20
Q

Before accepting a trusteeship, the person designated may may…

A

preserve, inspect, or investigate trust property without accepting.

21
Q

If a trusteeship is not accepted within a reasonable time…

A

it is presumed to be rejected.

22
Q

A settlor must intend to impose…

A

enforceable duties on the trustee.

23
Q

An individual trustee (is/is not) required to post a bond.

A

Is not – UNLESS the court finds that a bond is needed to protect the beneficiary’s interests, or required by the terms of the trust.

24
Q

A bank qualified in Virginia (is/is not) required to post a bond for trusteeship…

A

is not – ever, even if the bond is required by the terms of the trust.

25
Q

What compensation is a trustee entitled to?

A

The compensation as specified in the trust instrument, or if none, to reasonable compensation.

Additionally, a trustee is entitled to any reimbursement for expenses incurred in the trust’s administration.

26
Q

A successor trustee is subject to…

A

all of the original trustee’s duties, liabilities, and responsibilties.

27
Q

A trustee may resign by:

A

EITHER:

  1. Giving 30 days’ notice to the settlor (if living), all co-trustees, and all qualified beneficiaries; or
  2. By obtaining court approval.
28
Q

Who can request for a trustee to be removed?

A
  1. The court (on its own motion;
  2. The settlor;
  3. A co-trustee;
  4. A beneficiary; or
  5. the Attorney General.
29
Q

Grounds for removal of a trustee include:

A
  1. A serious breach of trust;
  2. Lack of cooperation among co-trustees;
  3. Unfitness, unwillingness, or persistent failure to administer the trust effectively; or
  4. A substantial change of circumstances.
30
Q

If the settlor had knowledge of grounds for removal before appointing the trustee, the court…

A

may not act if the grounds for removal were known to the settlor, and the settlor appointed the trustee anyways.

31
Q

If the sole trustee and the sole beneficiary are the same individual and hold precisely the same interests…

A

titles merge and the trust terminates.

32
Q

An express trust can be created by:

A
  1. Inter vivos or testamentary transfer to a trustee;
  2. Self-declaration of trust; or
  3. Exercise of a power of appointment.
33
Q

While trusts are generally valid donative transfers, a promise to create a trust in the future…

A

is not enforceable without consideration.

34
Q

The Virginia “opt-out” rule allows for…

A

one to opt out of the default RAP provision in trusts, thus validly creating a perpetual trust.

35
Q

Virginia has enacted the Uniform Statutory Rule Against Perpetuities, which provides that an interest is valid if:

A
  1. It is valid under common law RAP (certain to vest no later than 21 years after the death of some life in being at the interests creation); or
  2. The interest actually vests or terminates within 90 years after the interest’s creation.

Trusts (8 decks)

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