Jd - Trusts

Question 1

Requirements to crest a trust

Answer 1

Present intent to create a trust; trustee; beneficiary; trust property

Question 2

Settlor

Answer 2

Person making trust

Question 3

Intent to create trust?

Answer 3

Present sense

Question 4

Duty of care

Answer 4

Requires trustee to invest and manage the trusts assets as prudent invested would

Question 5

Analysis of trustee investments

Answer 5

Should not be evaluated in isolation but in context of the portfolio as a whole and as a part of an investment strategy

Question 6

Duty of loyalty

Answer 6

Required the trustee to administer the trust solely in the interest of the beneficiaries. Trustee may NOT engage in self dealing regarding the trust assets.

Question 7

No further inquiry rule

Answer 7

Court will not inquire about the trustees motivation or the fairness of the action and will only seek to determine the measure of damages

Question 8

Trustee transactions subject to “No Further Inquiry” rule

Answer 8

Personally buying or selling trust assets
Taking an opportunity belonging to the trust
Purchasing its own corporations stock

Question 9

Duty to allocate property to principal and income

Answer 9

Dictated whether receipts earned during the administration of the trust should be allocated to the income or the principal.

Question 10

Proper allocations to principal and income (PLEAD)

Answer 10

Money received from principal asset
Life insurance proceeds
Eminent domain awards
All property other than money recieved from an entity
Distribution of stock

Question 11

Proper allocations to principal and income (RIM)

Answer 11

Rental income
Interest
Money

Question 12

Revocabilty

Answer 12

UTC: an inter vivid trust is presumed to be revocable unless their instrument expressly states otherwise

Question 13

If a trust is revocable …

Answer 13

The settlor may terminate the trust at any time.

Question 14

If the trust is irrevocable…

Answer 14

The settlor may terminate the trust if all beneficiaries are in existence, and all agree.

Question 15

After the settlor dies …

Answer 15

An irrevocable trust can be terminated if both the income beneficiaries and the remainder man unanimously consent, and if there is no material purpose of the trust yet to be performed

Question 16

Cy press

Answer 16

CL doctrine that is part of utc. If 1. A particular charitable purpose has become unlawful, impracticable or impossible
2. No alternative charity is named in the trust and
3. The court finds that the settlor had a general, rather than a specific, charitable purpose, then the court may apply the doctrine of cy press and direct that the trust property be distributed in a manner consistent with the settlor’s general charitable intent.

Question 17

Power appointment

Answer 17

Enables the beneficiary to designate who will receive specific trust or estate property.

Question 18

Types of appointment

Answer 18

A general power and a special power

Question 19

General power of appointment

Answer 19

provides for an unlimited class of people in favor of whom the beneficiary can exercise a power of appointment

Question 20

Special or limited power of appointment

Answer 20

Provides for a limited class people in favor of whom the beneficiary can exercise a power of appointment

Question 21

Appointments to impermissible appointees are

Answer 21

Invalid

Question 22

Pourover will

Answer 22

A will makes a gift to a trust. Valid so long as the trust is identified in the will and the terms are incorporated in a writing executed before or concurrently with the execution of the will

Question 23

Discretionary trust

Answer 23

Trustee has discretion to decide when to make a distribution to a beneficiary. Beneficiary cannot demand any disbursements. Neither can a creditor, except for child support or alimony in some states

Question 24

Beneficiary right in discretionary trusts

Answer 24

The beneficiary cannot demand any part of the income or principal and cannot ask the court to compel a distribution unless the trustee abuses their duscretuon

Question 25

Support trust

Answer 25

Trustee must pay what is necessary for the beneficiary’s support. “Support” is fact dependent

Question 26

Spendthrift trust

Answer 26

Type of trust restrains both the voluntary and involuntary transfer of a beneficiary’s interest. The only creditors that can reach a beneficiary’s distribution before it reaches the beneficiary are child or spousal support creditors, a judgment creditor who has provided services for the protection of a beneficiary’s interest in the trust, the state or the US or a creditor with a claim for necessaries

Question 27

Charitable trust

Answer 27

Created for a charitable trust. The beneficiaries must be a large number of individuals who are not readily identifiable - cy press may save trust

Question 28

Settlor

Answer 28

Creates the trust

Question 29

Beneficiary

Answer 29

Benefits from the trust

Question 30

Trustee

Answer 30

Manages the trust

Question 31

Testamentary trust

Answer 31

A trust created by a will