Fiduciary & Trust Section #2 Formal Requisites Of Establishing Account

Question 1

Steps of due diligence

Answer 1

1. Establishing account
2. Investigating account ~ follow PATRIOTS Act
3. Account acceptance
   a. Review document
   b. Determine situs
   c. Analyze sensitive trust provisions
   d. Review administrative provisions
   e. Review trust assets
   f. Review prior fiduciary administration-at least 3 years accountings and tax returns
   g. Trustee compensation
   h. Character & integrity of beneficiaries
4. Funding account ( including proper pricing)
5. Transfer of assets
6. Proper deposit insurance coverage
   a. Rev trusts insured up to $250k per unique beneficiary
   b. Irrev trust - all accounts owned by trust added up and insured up to 250k

Question 2

Written agreements

Answer 2

Variety needed to establish account
must satisfy CIP, anti money laundering, other regulatory requirements

Question 3

Trust situs

Answer 3

Home jurisdiction of trust

Question 4

Importance of trust situs

Answer 4

Determines what court has jurisdiction if disputes arise

Determines which state receives tax payments

Question 5

Factors determine trust situs

Answer 5

1. Document
2. Location of trustee
3. Place where trust records are maintained
4. Place where trust assets are managed

Question 6

How can situs be changed

Answer 6

Receive beneficiary consent

Decanting to new trust with new situs

Question 7

Acceptance of fiduciary appointment

Answer 7

UTC _ comply with acceptance procedures in document

• accepting trust property
• exercise powers of trustee

**sufficient delay in acceptance = rejection

Question 8

Conditions that result in trustee vacancy

Answer 8

1. Rejection of powers
2. Death of individual trustee
3. Dissolution of corporate trustee
4. Resignation
5. Removal

Question 9

Lack of trustee

Answer 9

Trust will not fail

Trustee will be appointed by the court

Question 10

Trustee resignation

Answer 10

Usually requires beneficiary consent or court approval

Question 11

Trustee removal

Answer 11

Legal incapacity
Unfitness for office
Conflict of interest
Failure to provide accountings
Gross underperformance of assets
Commission of a crime
Expressing preference of 1 beneficiary over another
Failure to co-operate with co-trustee

Question 12

Successor trustee

Answer 12

May exercise all powers granted to original trustee unless trust states otherwise

Question 13

Disclaiming interest

Answer 13

Acceptance of interest assumed unless disdained within time frame dictated by state statute

Beneficiary must not have received property or any benefit from property

Beneficiary may not change mind after disclaiming interest