Express Private Trusts

Question 1

Elements of an Express Trust —

Answer 1

1) a settlor with capacity to convey; 2) a present intent to create a trust relationship; 3) a competent trustee with duties; 4) a definite beneficiary; and 5) the same person is not the sole trustee and sole beneficiary. There must also be a present disposition in trust of specific property then owned by the settlor and the trust must have a valid trust purpose.

Question 2

Express trusts are governed by what?

Answer 2

The Uniform Trust Code

Question 3

What are the types of trusts?

Answer 3

Express and implied

Question 4

How can present intent to create an express trust be manifested?

Answer 4

Written or spoken words.

Question 5

An oral express trust of personal property is __________.

Answer 5

valid

Question 6

Must the intent to create an express trust be communicated directly to the beneficiary?

Answer 6

No. Delivery of the deed to the trustee is sufficient.

Question 7

May a settlor convey property in express trust which he does not own?

Answer 7

No. The settlor must own the property in order to convey it in trust.

Question 8

A trust must take effect _____________.

Answer 8

immediately. There is no such thing as a future trust, though there can be a future interest in trust property.

Question 9

Does precatory language create an express trust?

Answer 9

No. Mere hopes, wishes or suggestions do not create a trust.

Question 10

If the trustee to a trust dies, refuses to accept, or resigns, what is the result?

Answer 10

The trust will not fail. The court will appoint a successor trustee unless it was evident that the trust was only to continue so long as the particular named trustee served.

Question 11

How does a person accept a trusteeship?

Answer 11

By substantially complying with the acceptance terms in the trust instrument; or accepting the delivery of trust property, exercising powers or performing duties as a trustee, or indicating acceptance.

Question 12

A person who is named as a trustee but who rejects it still has a responsibility to do what?

Answer 12

Preserve the trust property until someone else is appointed the trustee.

Question 13

If a trusteeship is not accepted within a reasonable time, it is deemed . . .

Answer 13

rejected.

Question 14

A settlor must intend to impose ________________ on the trustee.

Answer 14

enforceable duties

Question 15

Who can be a trustee?

Answer 15

Anyone who has capacity to acquire and hold property fr his own benefit and to administer the trust.

Question 16

Is a trustee entitled to compensation?

Answer 16

Yes, reasonable compensation.

Question 17

A court or a settlor, beneficiary, or co-trustee may remove a trustee for what purpose?

Answer 17

unfitness, unwillingness, persistent failure to administer, a serious breach of trust, or lack of cooperation.

Question 18

Trust —

Answer 18

an arrangement under which the trustee holds legal title to property for the benefit of the beneficiaries. The trustee has burdens and beneficiaries have benefits of ownership

Question 19

A trust cannot exist without . . .

Answer 19

someone to enforce it; i.e. a beneficiary.

Question 20

Qualified Beneficiary —

Answer 20

a beneficiary who, on the date the beneficiary’s qualification is determined, is 1) a current beneficiary; or 2) a first-line remainderman.

Question 21

Who can be a beneficiary?

Answer 21

Anyone, including natural and artificial persons, capable of taking and holding title to property can be a beneficiary of a private trust.

Question 22

Can someone accidentally be a beneficiary of a trust?

Answer 22

No. A beneficiary must be intended.

Question 23

Must notice be given to a beneficiary in order for a valid trust to be created?

Answer 23

No. Notice to the beneficiary is not required. Acceptance is required however.

Question 24

How can a beneficiary disclaim their interest in a trust?

Answer 24

Filing a written instrument with the trustee which disclaims the interest. This must usually be done within 9 months of the creation of the trust.

Question 25

What can prevent a beneficiary from disclaiming their interests in a trust?

Answer 25

Where the B has exercised any dominion or control over the interest.

Question 26

Escrow Arrangement —

Answer 26

a holder of property places the property in the possession of another for the purpose of giving the property to a third party. The person who the holder gives the property is the escrow agent, and they do not have title over the property.

Question 27

There must be ___________ beneficiaries in order to have a private trust.

Answer 27

definite

Question 28

Beneficiaries may be definite even though . . .

Answer 28

they are not ascertained.

Question 29

Beneficiaries to a trust must be ascertainable . . .

Answer 29

at the time their benefit comes into enjoyment.

Question 30

If a private trust exists for the benefit of a class, the class must be . . .

Answer 30

reasonably definite.

Question 31

Resulting Trust —

Answer 31

where a trust fails for lack of a beneficiary. The property goes back to the settlor. An implied reversion.

Question 32

Res —

Answer 32

the trust property. Where there is no res, there is no trust.

Question 33

Can a settlor place property in trust when the property is not legally held by the creator?

Answer 33

No. Interests in property not yet in legal existence cannot be held in trust.

Question 34

A trust’s res must be _______________ from other property of the settlor.

Answer 34

segregated/separated

Question 35

Can a debtor hold their own debt in trust?

Answer 35

No, but a debtor can declare himself trustee of particular property from which the debt is to be paid. The debt can be held in trust by another person.

Question 36

What purposes can cause a trust to be invalid?

Answer 36

Where the trust’s purpose is illegal, against public policy, impossible to achieve, or intended to defraud the settlor’s creditors or based on illegal consideration.

Question 37

What are the media in which a trust can be created?

Answer 37

1) inter vivos transfer; 2) inter vivos declaration of trust; or 3) by will.

Question 38

Inter Vivos Trust —

Answer 38

a trust which is made as a gift to another during the settlor’s lifetime.

Question 39

Generally, an express trust can be created by a settlor doing two things:

Answer 39

1) declaring himself trustee for another; or 2) transferring property to another as trustee.

Question 40

Most states do not require a writing for a trust of ____________________.

Answer 40

personal property

Question 41

Oral trusts may be established by __________________ evidence.

Answer 41

clear and convincing

Question 42

What kind of express trust must be written under the Statute of Frauds?

Answer 42

Trusts of land, which must be written, signed by the person entitled to impress the trust upon the property.

Question 43

Testamentary Trust —

Answer 43

language in a will which evidences testamentary intent to transfer property to a trustee to be held in trust for another. The word trust is often not used. Testamentary trusts are private express trusts.

Question 44

Generally, can a beneficiary assign their benefit in a trust?

Answer 44

Yes, absent a statute or language in the trust instrument prohibiting such an assignment.

Question 45

Can creditors of a beneficiary get to his intended benefit from a trust?

Answer 45

Yes. Absent restrictions by statute or by the trust instrument, the beneficiary’s creditors may levy on his beneficial interest.

Question 46

Spendthrift Trust —

Answer 46

a private express trust in which the trustee must make periodic payments to the beneficiary. It precludes the beneficiary from transferring his interest in a trust and prevents creditors from reaching it to satisfy their claims.

Question 47

Creditors to a beneficiary of a spendthrift trust cannot reach the benefits of the trust until what?

Answer 47

Until the income has actually been paid to the beneficiary.

Question 48

Can an assignee of a beneficiary’s interest in a spendthrift trust sue the trustee to enforce the transfer?

Answer 48

No. Assignees have no power to enforce an assignment. However, the trustee can agree to the assignment. The trustee can stop the assignment and continue to pay the intended beneficiary at any time.

Question 49

A spendthrift trust cannot be used to shield the beneficiary from whom?

Answer 49

The beneficiaries creditors if the beneficiary is the settlor, court orders to support a spouse or child, or the government.

Question 50

Discretionary trust —

Answer 50

the trustee is given discretion whether to apply or withhold payments of income or principal to a beneficiary.

Question 51

Can the benefits of a discretionary trust be assigned?

Answer 51

No

Question 52

Can the benefits of a discretionary trust be gotten to by creditors?

Answer 52

Only if the trustee makes payments to the beneficiary. The creditors cannot force the trustee to make payments to the beneficiary.

Question 53

Can the trustee to a discretionary trust be forced to make a payment?

Answer 53

No, unless the payment is for support of a child or spouse. The court can order that a trustee to make a payment to satisfy a spouse or child who is to be supported.

Question 54

Can a beneficiary to a discretionary trust force the trustee to make a payment?

Answer 54

No

Question 55

Support Trust —

Answer 55

a private express trust which directs the trustee to pay only so much of the income or principal as is necessary for the beneficiary’s support.

Question 56

A support trust is another form of _______________ trust but which has a support standard.

Answer 56

discretionary

Question 57

Can an oral promise to make a will devising personal property be enforced under the traditional rule?

Answer 57

Yes, by clear and convincing evidence. Oral promises to devise land require a writing under the SoF.

Question 58

Doctrine of Deviation from Trust Administrative Terms Due to Changed Circumstances —

Answer 58

where a change in circumstances prevents the specific method of accomplishing the primary intent of the testator, the court will reform the terms of the trust to accomplish the primary purpose by other means.

Question 59

Can the beneficiary of a spendthrift trust sell* his income interest?

Answer 59

Theoretically, yes.

Question 60

Discretionary Support Trust —

Answer 60

a trust where the testator conveys property or income to a trustee for the support of the beneficiary during B’s lifetime. The trustee has discretion in their making payments to the B, and can decide to not make payments to B if the B is capable of supporting themselves.