Right To Distributions Flashcards
Is it beneficiaries interest in trust property alienable?
Yes, unless the statute or the trust instrument limits this right. It is also subject to involuntary alienation. A beneficiaries creditors may reach trust principle or income only when such amounts become payable to the beneficiary or subject to her demand.
What is a support trust?
Directs the trustee to use his discretion to pay income or principal as necessary to support the trust beneficiaries. Necessities include essentials, but also anything to maintain the standard of living to which the beneficiary is accustomed.
Creditors cannot reach the assets of a support trust, except the extent that a provider of a necessity to the beneficiary can be paid directly by the trustee.
What is a discretionary trust?
When the trustee is given complete discretion regarding whether or not to apply payments of income or principal to the beneficiary.
Creditors can only reach the beneficiaries interest if the discretion to pay has been exercised.
When does the beneficiary of a fully discretionary trust have standing?
When the actions or inactions of the trustee constitute a clear abuse of discretion. Otherwise, the trust beneficiary lacks standing to challenge trustee’s other actions.
What is a mandatory trust?
When a trustee has no discretion regarding payment; instead, the trust document explains specifically, in detail how and when the trust properties to be distributed. Is the most restrictive type of trust
What is a spendthrift trust?
An express restriction on the beneficiaries power to voluntarily or involuntarily transfer his equitable interest. It applies as long as the property remains in the trust, and it is in applicable after it has been paid out to the beneficiary.
Creditors cannot reach if the spendthrift clause prohibiting so, but most states allow certain classes to reach A beneficiaries assets, notwithstanding a spendthrift clause, for children and spouses entitled to support and holders of federal or state tax liens.
