General Considerations Flashcards
What is a settlor?
The person who creates the trust
What is a revocable trust?
A revocable trust can be terminated by the settlor at any time.
What is an irrevocable trust?
An irrevocable trust cannot be terminated.
Which type of trust is presumed? Irrevocable or revocable? (CL, UTC)
CL: Trust presumed to be irrevocable unless otherwise stated.
UTC/Majority: Trust presumed revocable unless it expressly states that it’s irrevocable.
Mandatory Trust
A mandatory trust requires the trustee to distribute all trust income.
Discretionary Trust
The trustee is given the power to distribute income at his/her discretion.
The trustee does not abuse discretion unless he acts dishonestly or in a way not contemplated by the trust creator.
Are trusts subject to the RAP?
Yes, but not charitable trusts.
Some jurisdictions follow the wait and see approach, which refrains from invalidating future interests until it is clear that they will not vest within the perpetuities period.
What is a trustee?
A trustee holds legal interest or title to the trust property.
What are income beneficiaries?
Receive income from the trust (e.g. profits from a business held by a trust)
What are remainder beneficiaries?
Entitled to the trust principal upon termination of the trust.
What is a declaration of trust?
Settlor is also the trustee
