Introduction: parties to a trust

Question 1

1. What are the key elements of a trust?

Answer 1

1. What are the key elements of a trust?
   Trustee
   Beneficiary
   Property (res)

Question 2

2. Are trusts revocable?

Answer 2

2. Are trusts revocable?
   Trusts can be revocable or irrevocable.
   In NC, they are presumed revocable.
   If a settlor doesn’t revoke a trust prior to death, the property will be distributed through the trust and avoid probate.

Question 3

3. Discuss mandatory and discretionary trusts

Answer 3

3. Discuss mandatory and discretionary trusts
   Trusts can be mandatory or discretionary.

Mandatory trusts dictate how the trust should be distributed.

Discretionary trusts, the trustee determines how they are allocated.

Question 4

4. Discuss mandatory and default rules

Answer 4

4. Discuss mandatory and default rules

The NC Probate Code establishes mandatory rules: the trust must always be operated for the good of the beneficiary and in good faith.

Default rules discuss how the trust should be operated unless the trust document changes those.

Question 5

5. Who are the parties to the trust?

Answer 5

5. Who are the parties to the trust?

Settlor/Grantor: the person who creates the trust

Trustee: person who administers the trust.
Must accept the appointment. Can be court appointed.

Can be removed for (a) serious breach of trust, (b) failing to cooperate with co-trustees, (c) court determines removal is in the best interest of the beneficiaries due to the trustees unfitness, unwillingness or persistent failure to administer the trust effectively or, (d) the court finds that bc of a substantial change of circumstances, removal of the T best serves the interests of the Bs and is consistent with material purpose of the trust and a suitable successor T or co-T is available.

Beneficiary: trust operated for the benefit of the beneficiary. Can be named, a class, or unnamed and charitable, not charitable purpose such as care for a cemetery plot, or animal.

Question 6

Express trusts

Answer 6

1. Elements of a private express trust:

The settlor must have capacity and the intent to create a trust,

there must be trustee duties,

trust property,

an ascertainable beneficiary and a proper purpose (any legal purpose).

Question 7

Capacity to create a trust

Answer 7

2. Capacity to create a will/trust

Comprehend the natural objects of her bounty

Understand the kind, nature, and extent of her property

Know the manner in which she desires her act to take effect

Realize the effect the act will have on the estate

Question 8

Intent

Answer 8

3. Intent

Can be written or oral – the magic word is trust. Oral must be proved by clear and convincing evidence.

Question 9

4. Precatory trust

Answer 9

4. Precatory trust

Express trust that is created by language that suggests a wish.

Question 10

Ascertainable beneficiary

Answer 10

5. Ascertainable beneficiaries
   A noncharitable trust with a general or specific noncharitable purpose but w/out an ascertainable beneficiary can last 21 years.
   A trust for perpetual care of a cemetery plot may last indefinitely
   Trust for care of a pet does not need an ascertainable (human) beneficiary