Quiz Flashcards
Class Gift
For purposes of RAP, a class gift vests when:
(1) the class _______, and
(2) all ___________ for every member of the class are _________.
closes
conditions
satisfied
Formation of a valid express trust requires:
(1) a definitive beneficiary,
(2) a settlor with __________ to form the trust,
(3) the ______ to create a trust,
(4) a ________ trustee
(5) a valid _______,
(6) that it be funded with ___________, and
(7) compliance with applicable state ___________.
capacity
intent
named
purpose
property
formalities
NOTE: In the event that a trustee dies, resigns, is removed, or _____ __ ___, the court will appoint a replacement rather than the trust _______.
fails to act
failing
True or False?
A trust needs to be funded at the time that the trust documents are signed and cannot be funded later.
False.
A trust doesn’t have to be funded at the time the trust documents are signed. It can be funded later.
A person cannot be [BOTH] the sole _________ and the sole ________ of a trust. If this happens, the trust will __________.
beneficiary
trustee
Terminate
Cy Pres
If the purpose of a charitable devise or bequest to a person or trust is _________ , and if the testator had a general _________ intent in making the devise or bequest, then a court may modify the charitable devise to be as near as possible in line with…
frustrated
charitable
the settlor’s intent
A __________ creditor of a beneficiary of a trust can only attach its judgment to __________ from the trust if it has a valid……?
Judgment
distributions
spendthrift provision
A judgment creditor of a beneficiary of a ___________ trust can attach its judgment to trust property only after ___________ to the beneficiary.
spendthrift
distribution
A creditor of a beneficiary of a trust can compel distributions be made only to the extent that the __________ can under the _____ __ ___ ______.
beneficiary
terms of the trust
A creditor of a beneficiary of a ____________ trust cannot compel distributions.
discretionary
A court may order distribution from a ___________ trust to satisfy a judgment against the beneficiary for unpaid child or spousal support AND order the distribution be made to the child, spouse, or former spouse.
discretionary
Trustee Duty of Care
A trustee must exercise the degree of c___, s____, and p________ of a ___________ investor investing his own what?
care, skill, and prudence
reasonable
Property
Pour-over Provision in a Will
A pour-over provision in a will gifts property to a previously ___________ trust but does not ______ a trust.
established
create
A pour-over provision will fail if it gifts to an inter vivos trust that was (1) __________ or (2) ________ prior to the testator’s ____.
terminated
revoked
Gift
Discretionary Trusts
A discretionary trust is one in which the trustee has _________ power and _________ to determine when, how much, and in what m_______ the trust property is distributed to beneficiaries.
absolute
discretion
manner
Spendthrift Trusts
A spendthrift provision in a trust prohibits the _______ or ____ of a beneficiary’s interest in that trust.
transfer
sale
interest
A spendthrift provision is valid only if it prohibits both __________ and __________ t_________s.
voluntary
involuntary
transfers
Creditors generally cannot attach a beneficiary’s _______ in a spendthrift trust or ____________ from a spendthrift trust.
interest
distributions
Generally, creditors can collect from a beneficiary of a ____________ trust only after a distribution from the trust is made to the beneficiary.
spendthrift
Spendthrift Trust
Creditors can reach a beneficiary’s interest in a spendthrift trust only if:
1) it is a judgment creditor who provided __________ for the ___________ of a beneficiary’s interest in the trust;
2) in some states, the creditor furnished ____________;
3) orders for child support or _______;
4) _______ or _________ government claims; or
5) the trust is a ____-_______ trust.
services
Protection
necessities
alimony
state or federal
self-settled
Trustee Duty to Administer
A trustee must administer the trust in _____ ______ and in accordance with the t____ and p______ of the trust even where the trust grants ______ _________ to the trustee.
good faith
terms and purpose
broad discretion
Trustee Duty to Administer
The trustee must administer the trust until when?
until the trust terminates
Trustee Duty of Loyalty
A trustee must administer the trust ________ in the _________ of the ___________.
solely
interests
beneficiary
Trustee Duty of Loyalty
A trustee may not engage in self dealing except when:
1) the self-dealing is _________ by the terms of the trust;
2) the court _________ the self-dealing;
3) the beneficiary failed to _________ a judicial proceeding within the s_________ p________;
4) the beneficiary r_________ the trustee from liability, c________ to the self-dealing, or r_______; or
5) the transaction happened [when]?
authorized
approves
commence
statutory period
releases
consents
ratifies
before the person became trustee.
Common Law Rule Against Perpetuities
A gift must vest, if at all, within __ years of a life __ _____ at the time of the ______.
21
in being
grant
Common Law Rule Against Perpetuities
Under _______ modifications of the rule against perpetuities, a gift is valid if it actually vests within 21 years following the _____ of some life in being at the time the _______ was created.
Modern
Death
Interest
Common Law Rule Against Perpetuities
Some states have by statute provided that courts will reduce any age ___________ that violates the rule against perpetuities to __ years.
Contingency
21
The Prudent Investor Rule requires that the trustee not engage in ______ _____ investment, that the trustee _________ trust assets, and that the trustee keeps the trust ___________.
Overly risky
Diversifies
Productive
The trustee of a discretionary trust must exercise his or her administration in _____ ______
good faith
