MEE Flashcards
A trust is a ____ between the ____.
fiduciary relationship; trustee(s) and the trust beneficiaries
When a trust is created, titled to property is divided between ____ and ____ title.
legal; equitable
The trustee holds ____ to the property and becomes the ____ for the property.
legal title; owner of record
The beneficiary holds ____ to the property and is entitled to the ____.
equitable title; financial benefits of the property
There are three main parts involved in the creation of a trust:
(1) settlor
(2) trustee
(3) beneficiary
The settlor is the person who ____.
creates the trust (usually the person who places the original assets into the trust)
The trustee is the person who ____.
holds the assets of the trust for the benefit of the beneficiaries
The trustee ____ the trust and its assets under the terms of the trust.
manages
The beneficiary is the person who is ____.
entitled to the assets or profits of the trust
A valid express trust is created if the following five elements are met:
(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
Under the common law (majority view), a trust is ____ unless the settlor ____.
irrevocable; expressly retains the right to revoke or amend the trust
Under the Uniform Trust code (minority view), a trust is ____ unless the trust ____.
revocable; expressly provides otherwise
A testamentary trust is created through ____ and does not come into existence until ____.
provisions of the settlor’s will; the settlor dies (must meet the same formalities as the will)
The creditors of the beneficiary of a trust has ____ in the trust property than the rights of the beneficiary.
no greater rights
If the trust prevents a beneficiary from receiving the trust principal, then his creations have ____.
no right to reach the trust principal either
While the creditors cannot go after the principal, the may go after the ____ if there are no spendthrift provisions.
interest income
Once trust income is paid to the beneficiary, a creditor may ____ in order to satisfy a claim.
initiate appropriate proceedings to reach that income
Trustees and beneficiaries can request that the court permit a ____ from ____ in the trust instrument.
deviation; administrative provisions
A court will permit a deviation if the purpose of the trust:
(1) satisfied
(2) become unlawful
(3) impossible to carry out
If it becomes unlawful, impossible, or impracticable to carry out the purpose of a charitable trust, the ____ doctrine allows the court to ____.
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
In a minority of jurisdiction, the settlor is ____ to modify or revoke the trust instrument without ____.
free; express authorization to do so
A trust may be terminated if:
(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
As a fiduciary, the trustee must:
(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
Pour over will makes a ____.
gift to a trust
Discretionary Trust:
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)
Support Trust:
trustee must pay what is necessary for the beneficiary’s support
Spendthrift Trust:
restrains the voluntary and involuntary transfer of a beneficiary’s interest
Charitable Trust:
trust created for charitable purpose
Resulting Trust:
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)
Testamentary Trust:
trust created in a will or in a document incorporated by reference into a will
