LAS 208 - Week 10 Class Notes - Test 2 - Sheet1

Question 1

6 situations in which a trust will be terminated

Answer 1

1. trust purpose has been fulfilled
2. after a period of time (e.g., child reaches a certain age) (happens by resulting trust if no provision made)
3. revoked by trustor (if revocation is allowed)
4. legal and equitable title merge, thus, no longer a need for a trust
5. beneficiaries agree to terminate
6. court termination (emergency)(e.g., creditors threatening a trust of a folded newspaper)

Question 2

4 requirements for beneficiaries to agree to terminate a trust

Answer 2

1. trustor is deceased or agrees
2. material purpose of the trust will not be frustrated
3. all beneficiaries agree
4. all beneficiaries are BORN (otherwise, cannot agree!)

Question 3

A charitable trust benefits (1) instead of (2), so there are (3) that apply.

Answer 3

1. the community at large
2. private beneficiaries
3. special rules

Question 4

5 eligible purposes for a charitable trust

Answer 4

1. relief of porverty
2. education
3. religion
4. promotion of health
5. accomplishment of charitable purpose

Question 5

For charitable trusts, relief of poverty would be food, clothing, shelter, etc. for (1)–a classification that may include (2) would not be charitable. This classification, however, would not (3).

Answer 5

1. those in need
2. wealthy children (e.g., “Children Without Fathers)
3. destroy the trust

Question 6

The education requirement of charitable trusts is NOT confined to (1), because (2). Even a trust to disseminate (3) could fall under this–though, not a trust to (4).

Answer 6

1. the poor
2. knowledge benefits society
3. disseminate political views (by “knowledge” standard”
4. support a political party

Question 7

The religion requirement of a charitable trust generally follows the definition of (1), so (2) is not included–but the latter may fall under the education requirement!

Answer 7

1. recognition of a supreme being

2. atheism

Question 8

Promotion of health for the sake of charitable trusts is the relief of (1) and (2). It need not be for the (3).

Answer 8

1. pain
2. sickness
3. poor

Question 9

The “accomplishment of a charitable purpose” requirement must have a (1) that is not so narrowly deifned as to designate only a (2) for a (3). In other words, (4) as a whole is ok, but not a trust for 60 cats in a particular house.

Answer 9

1. class
2. few individuals
3. private benefit
4. “stray cats”

Question 10

Where a trust includes both a charitable and non-charitable beneficiary, the trust counts as (1). A charitable trust can have (2), unlike a private trust!

Answer 10

1. non-charitable (e.g., ASU students + my ASU daughter)

2. indefinite beneficiaries (“the poor”) (private = “my friends”)

Question 11

The trustor in a charitable trust has (1) than anyone else. Generally the (2) enforces charitable trusts–not the (3) or, obviously, (4).

Answer 11

1. no greater interest
2. attorney general
3. trustor
4. beneficiaries

Question 12

A charitable trust can be (1), unlike a private trust, which can only be (2) as per the rule against perpetuities.

Answer 12

1. perpetual

2. 500 years

Question 13

If a charitable trust fails, it still may qualify as a (1), at which point it will require (2). If that fails, a (3) will be brought in.

Answer 13

1. private trust
2. definite beneficiaries
3. resulting trust

Question 14

(1) is the reason the trustor acted, where (2) is the ultimate thing for which the trust was created.

Answer 14

1. motive

2. purpose

Question 15

The motive (e.g., to cheat the government out of taxes) of a trust does not determine (1) and (2) of the trust–only (3) determines these!

Answer 15

1. nature
2. validity
3. purpose

Question 16

With a charitable remainder trust, the (1) receives (2) form the trust; at death the (3) goes to (4).

Answer 16

1. trustor
2. income
3. remainder (corpus)
4. charity

Question 17

The Cy Pres doctrine provides for a charitable trust with an (1), in which case the funds go to a (2)

Answer 17

1. impracticable purpose (e.g., charity no longer exists)

2. similar charity

Question 18

A specialized/special needs trust is for (1) who are (2) or (3). Because these children receive (4), any money going to them in charity is (5).

Answer 18

1. children
2. mentally impaired
3. physically impaired
4. state funds
5. taken by the state

Question 19

An honorary trust is a (1) with no (2)–for example, to fund maintenance of a grave.

Answer 19

1. noncharitable trust

2. no beneficiaries

Question 20

An administrator of an estate as named in a will is a (1). One appointed by a court in intestacy is a (2)

Answer 20

1. executor

2. personal representative

Question 21

Nothing gets done without the (1)! Even if an exec. Is named, nobody represents the estate until (2)!

Answer 21

1. executor/pers. Rep.

2. the court issues the letters testamentary

Question 22

The estate is not recognized as a legal (1), though, it will acquire a (2).

Answer 22

1. person

2. federal tax ID number

Question 23

A representative is not considered an (1) of the estate because there is no (2). Instead, the rep. is regarded as the (3) of (4) despite that the ownership is not (5) and terminates at the end of the (6). Until termination of appointment, a rep. has the same power over (7) as an (8) would, but the property is held in (9)

Answer 23

1. agent
2. principal
3. owner
4. personal property
5. beneficial
6. administrative process (closing of the estate)
7. title
8. absolute owner
9. trust for benes/heirs

Question 24

The personal representative if an (1) of the (2), which has control over the rep’s (3) and (4).

Answer 24

1. officer
2. court
3. duties
4. responsibilities

Question 25

The personal representative/exec. must have (1)--meaning (2) and (3).

Answer 25

1. capacity to contract 2. sound mind 3. age

Question 26

The designation of an executor in a will must be (1). Something like "(2)" is not ok, but something like "(3)" would be. Appointment can be (4), and you can have (5). An attorney drafting a will can (6) but shouldn't! The executor gets power to act from (7), not from the will.

Answer 26

1. definitive 2. one of my sisters 3. minister of the church (only one--whoever it is at time of death) 4. conditional/contingent (if A can't do it, then B) 5. co-executors 6. appoint himself 7. letters of appointment

Question 27

The PR/exec. Gets power (1) after letters of appointment. He may (2) in some states--act and then have acts (3) by letters of appointment that come later. Because a pers. Rep (e.g., spouse, kids) may be doing that job for the first time in his life, many hire (4).

Answer 27

1. immediately 2. relate back 3. ratified 4. attorneys

Question 28

A representative stands in the shoes of the (1)--in that he can (2) or (3). He can (4) or (5) even after accepting his assignment. The trustor can require the executive to (6) or waive that requirement, since the money comes out of (7). The (8) can also agree to waive it. (9) never have to post bond.

Answer 28

1. decedent 2. sue 3. be sued 4. resign 5. be removed 6. post bond 7. the estate 8. heirs 9. banks

Question 29

Bond in AZ is required unless (1), (2),or if (3), OR if (4).

Answer 29

1. the will expressly waives it 2. all heirs file a waiver with the court 3. personal rep. is a national banking association 4. the estate falls under the small estate statute

Question 30

The bond amount is an (1) of the (2) plus (3) plus (4) minus (5). The amount for the real property can be removed from the bond amount if (6)

Answer 30

1. estimate 2. personal property 3. real property 4. income for the year 5. encumbrances 6. the will says the real property can be sold only by the court

Question 31

The first duty of the PR/exec. Is to (1) within (2). This info can be delivered by (3) to the (4)--even if the mail (5).

Answer 31

1. notify all of the heirs 2. 30 days 3. first-class mail 4. last known address 5. is returned (proof you tried)

Question 32

After notifying heirs, the PR/exec. Must (1) within (2). This can be (3)--the important thing is to file the initial list within the deadline. The list contains the (4) of the items as of (5).

Answer 32

1. file a probate inventory 2. 90 days 3. amended 4. market value 5. the date of death

Question 33

The probate list will be separated by (1) and (2); (3) and (4); (5) and (6). This is done so (7) can be figured separately from actual value.

Answer 33

1. real 2. personal 3. joint 4. separate 5. community 6. non-community 7. taxable property

Question 34

Even some (1) assets come into the estate for taxation purposes--the (2) is what passes without probate.

Answer 34

1. non-probate | 2. title

Question 35

(1) is paid by heirs; (2) is paid by the estate.

Answer 35

1. Inheritance tax | 2. Estate tax

Question 36

Per Arizona law, a probate inventory may be (1). The (2) will still see it, and copies must be sent to (3) and (4)

Answer 36

1. sealed 2. clerk 3. heirs 4. anyone with interest who asks for a copy

Question 37

The PR/exec. Is paid a (1) but may choose to waive the fee by filing a (2). This is a good idea for spouses, etc. because (3).

Answer 37

1. " reasonable amount" 2. written renunciation 3. the fee is income, so is taxed, where inheritance for a spouse is not

Question 38

A guardianship/conservatorship can be for a (1), who may file an objection if he is (2), or for an (3), which means (4) or (5)

Answer 38

1. minor 2. 14+ 3. incapacitated person 4. mentally impaired 5. physically impaired

Question 39

In AZ, if no conservator is appointed, the (1) takes over. If a conservator is appointed after that, the guardian must (2) and (3)

Answer 39

1. guardian 2. turn over the assets 3. account to the court

Question 40

Guardians/conservators are entitled to (1) but must get (2). The court is more concerned with (3) than minors because (4).

Answer 40

1. compensation 2. court approval 3. guardianship of incapacitated adults 4. minors may grow out of the guardianship

Question 41

2 things required for a conservative to be appointed for an adult

Answer 41

1. person cannot manage property effectively | 2. the person has property that will be wasted/dissipated unless proper management is provided

Question 42

The court will try to follow the (1) in appointing guardians

Answer 42

1. code priority