Low - Trusts

Question 1

Types of Trust

Answer 1

Inter vivos: created during settlor’s lifetime

Testamentary: created through provisions of settlor’s will, takes effect upon settlor’s death

Question 2

Resulting trust

Answer 2

implied by law based upon presumed intent of parties
Arises when: (1) private express trust has no beneficiary or missing important provision concerning handling of property (2) charitable trust ends b/c of impossibility or impracticability (3) buyer pays consideration for real prop, but seller transfer title to property to 3P or (4) will makes gift to a person to hold as trustee but fails to name beneficiary (semi-secret trust)

Question 3

Discretionary trust

Answer 3

trustee has absolute discretion & power to determine distribution - must be in good faith & not abusing power

Question 4

Spendthrift Trust

Answer 4

provision prevents transfer of beneficiary interest - valid only if restrains: (1) voluntary and (2) involuntary transfers.. Interest may not be sold/assigned by beneficiary & creditors cannot reach
Creditor can reach if: (1) judgment creditor who provided services for protection of interest (2) creditor furnishes necessities (3) order for child support/alimony (4) state/fed govt (5) settlor retains interest (6) mandatory distribution

Question 5

Rights of Creditors

Answer 5

court may authorize by attachment of present or future distribution to beneficiary UNLESS interest is subject to spendthrift provision

Question 6

Modification of Trust

Answer 6

by settlor: (1) expressly reserved power to modify or (2) power to revoke trust
Other ways: (1) ct modification if necessary to preserve trust due to unforeseen circumstances (2) all beneficiaries consent AND court determines modification is not inconsistent with trust purpose

Question 7

Termination of Revocable Trust

Answer 7

revocable by default UNLESS expressly stated.
May be revoked by: (1) compliance w/any method of revocation provided in trust instrument or (2) writing signed by settlor that is delivered to trustee during lifetime

Question 8

Duty and Liability of Co-Trustee

Answer 8

Both are responsible for administering trust and do not breach duty
Liable for wrongful acts of another co-trustee if: (1) participates in, approves, conceals breach by co-trustee (2) negligently enables co-trustee to commit breach (3) fails to take reasonable steps to compel a co-trustee to redress breach or (4) improperly delegates administration to co-trustee

Question 9

Fraud and Undue Influence - Trust

Answer 9

trust may be set aside. same elements as contesting a will