MEE

Question 1

A trust is a ____ between the ____.

Answer 1

fiduciary relationship; trustee(s) and the trust beneficiaries

Question 2

When a trust is created, titled to property is divided between ____ and ____ title.

Answer 2

legal; equitable

Question 3

The trustee holds ____ to the property and becomes the ____ for the property.

Answer 3

legal title; owner of record

Question 4

The beneficiary holds ____ to the property and is entitled to the ____.

Answer 4

equitable title; financial benefits of the property

Question 5

There are three main parts involved in the creation of a trust:

Answer 5

(1) settlor
(2) trustee
(3) beneficiary

Question 6

The settlor is the person who ____.

Answer 6

creates the trust (usually the person who places the original assets into the trust)

Question 7

The trustee is the person who ____.

Answer 7

holds the assets of the trust for the benefit of the beneficiaries

Question 8

The trustee ____ the trust and its assets under the terms of the trust.

Answer 8

manages

Question 9

The beneficiary is the person who is ____.

Answer 9

entitled to the assets or profits of the trust

Question 10

A valid express trust is created if the following five elements are met:

Answer 10

(1) settlor intended to create the trust
(2) there is trust property (the res)
(3) an ascertainable beneficiary exists
(4) trust has a trustee
(5) all parties comply with the requisite formalities

Question 11

Under the common law (majority view), a trust is ____ unless the settlor ____.

Answer 11

irrevocable; expressly retains the right to revoke or amend the trust

Question 12

Under the Uniform Trust code (minority view), a trust is ____ unless the trust ____.

Answer 12

revocable; expressly provides otherwise

Question 13

A testamentary trust is created through ____ and does not come into existence until ____.

Answer 13

provisions of the settlor’s will; the settlor dies (must meet the same formalities as the will)

Question 14

The creditors of the beneficiary of a trust has ____ in the trust property than the rights of the beneficiary.

Answer 14

no greater rights

Question 15

If the trust prevents a beneficiary from receiving the trust principal, then his creations have ____.

Answer 15

no right to reach the trust principal either

Question 16

While the creditors cannot go after the principal, the may go after the ____ if there are no spendthrift provisions.

Answer 16

interest income

Question 17

Once trust income is paid to the beneficiary, a creditor may ____ in order to satisfy a claim.

Answer 17

initiate appropriate proceedings to reach that income

Question 18

Trustees and beneficiaries can request that the court permit a ____ from ____ in the trust instrument.

Answer 18

deviation; administrative provisions

Question 19

A court will permit a deviation if the purpose of the trust:

Answer 19

(1) satisfied

(2) become unlawful

(3) impossible to carry out

Question 20

If it becomes unlawful, impossible, or impracticable to carry out the purpose of a charitable trust, the ____ doctrine allows the court to ____.

Answer 20

Cy Pres; modify the terms of the charitable trust “as near as possible” to the original intention of the settlor to prevent the trust from failing

Question 21

In a minority of jurisdiction, the settlor is ____ to modify or revoke the trust instrument without ____.

Answer 21

free; express authorization to do so

Question 22

A trust may be terminated if:

Answer 22

(1) revoked or expires pursuant to its terms

(2) material purpose of the trust has been satisfied or becomes unlawful, contrary to public policy, or impossible to carry out

(3) settler and all of the beneficiaries unanimously agree to terminate

(4) all of the beneficiaries agree and no material purposes for the trust remain

(5) termination will further the purpose of the trust due to circumstances that were not foreseen by the settlor

(6) court or trustee determines that the value of the trust property is too low to justify the cost of administration

Question 23

As a fiduciary, the trustee must:

Answer 23

(1) manage the trust property exclusively for the benefit of all the trust’s beneficiaries
(2) administer the trust in good faith pursuant to the terms and purposes of the trust

Question 24

Pour over will makes a ____.

Answer 24

gift to a trust

Question 25

Discretionary Trust:

Answer 25

trustee has discretion to decide when to make a distribution to beneficiary (beneficiary and beneficiary’s creditor cannot demand disbursements unless for child support/alimony)

Question 26

Support Trust:

Answer 26

trustee must pay what is necessary for the beneficiary’s support

Question 27

Spendthrift Trust:

Answer 27

restrains the voluntary and involuntary transfer of a beneficiary’s interest

Question 28

Charitable Trust:

Answer 28

trust created for charitable purpose

Question 29

Resulting Trust:

Answer 29

when the trust fails or there is an incomplete disposition of trust property

(the court may create a resulting trust requiring the holder of the property to return it to the settlor or to the settlor’s estate)

Question 30

Testamentary Trust:

Answer 30

trust created in a will or in a document incorporated by reference into a will