Quiz

Question 1

Class Gift

For purposes of RAP, a class gift vests when:
(1) the class _______, and
(2) all ___________ for every member of the class are _________.

Answer 1

closes
conditions
satisfied

Question 2

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 ___________.

Answer 2

capacity
intent
named
purpose
property
formalities

Question 3

NOTE: In the event that a trustee dies, resigns, is removed, or _____ __ ___, the court will appoint a replacement rather than the trust _______.

Answer 3

fails to act
failing

Question 4

True or False?

A trust needs to be funded at the time that the trust documents are signed and cannot be funded later.

Answer 4

False.

A trust doesn’t have to be funded at the time the trust documents are signed. It can be funded later.

Question 5

A person cannot be [BOTH] the sole _________ and the sole ________ of a trust. If this happens, the trust will __________.

Answer 5

beneficiary
trustee
Terminate

Question 6

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…

Answer 6

frustrated
charitable

the settlor’s intent

Question 7

A __________ creditor of a beneficiary of a trust can only attach its judgment to __________ from the trust if it has a valid……?

Answer 7

Judgment
distributions

spendthrift provision

Question 8

A judgment creditor of a beneficiary of a ___________ trust can attach its judgment to trust property only after ___________ to the beneficiary.

Answer 8

spendthrift
distribution

Question 9

A creditor of a beneficiary of a trust can compel distributions be made only to the extent that the __________ can under the _____ __ ___ ______.

Answer 9

beneficiary
terms of the trust

Question 10

A creditor of a beneficiary of a ____________ trust cannot compel distributions.

Answer 10

discretionary

Question 11

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.

Answer 11

discretionary

Question 12

Trustee Duty of Care

A trustee must exercise the degree of c___, s____, and p________ of a ___________ investor investing his own what?

Answer 12

care, skill, and prudence
reasonable
Property

Question 13

Pour-over Provision in a Will

A pour-over provision in a will gifts property to a previously ___________ trust but does not ______ a trust.

Answer 13

established
create

Question 14

A pour-over provision will fail if it gifts to an inter vivos trust that was (1) __________ or (2) ________ prior to the testator’s ____.

Answer 14

terminated
revoked
Gift

Question 15

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.

Answer 15

absolute
discretion
manner

Question 16

Spendthrift Trusts

A spendthrift provision in a trust prohibits the _______ or ____ of a beneficiary’s interest in that trust.

Answer 16

transfer
sale

interest

Question 17

A spendthrift provision is valid only if it prohibits both __________ and __________ t_________s.

Answer 17

voluntary
involuntary
transfers

Question 18

Creditors generally cannot attach a beneficiary’s _______ in a spendthrift trust or ____________ from a spendthrift trust.

Answer 18

interest
distributions

Question 19

Generally, creditors can collect from a beneficiary of a ____________ trust only after a distribution from the trust is made to the beneficiary.

Answer 19

spendthrift

Question 20

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.

Answer 20

services
Protection
necessities
alimony
state or federal
self-settled

Question 21

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.

Answer 21

good faith
terms and purpose
broad discretion

Question 22

Trustee Duty to Administer

The trustee must administer the trust until when?

Answer 22

until the trust terminates

Question 23

Trustee Duty of Loyalty

A trustee must administer the trust ________ in the _________ of the ___________.

Answer 23

solely
interests
beneficiary

Question 24

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]?

Answer 24

authorized
approves
commence
statutory period
releases
consents
ratifies
before the person became trustee.

Question 25

Common Law Rule Against Perpetuities

A gift must vest, if at all, within __ years of a life __ _____ at the time of the ______.

Answer 25

21
in being
grant

Question 26

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.

Answer 26

Modern
Death
Interest

Question 27

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.

Answer 27

Contingency
21

Question 28

The Prudent Investor Rule requires that the trustee not engage in ______ _____ investment, that the trustee _________ trust assets, and that the trustee keeps the trust ___________.

Answer 28

Overly risky
Diversifies
Productive

Question 29

The trustee of a discretionary trust must exercise his or her administration in _____ ______

Answer 29

good faith