Transfer of Beneficiary Interest

Question 1

Effect of spendthrift Provision

Answer 1

Precludes termination of a trust

(1) shows the settlor’s material purpose AND
(2) manifests his lack of confidence in the judgment and management ability of beneficiary

Question 2

Discretionary Trusts effect

Answer 2

Trustee given discretion whether to apply or withhold payments of income or principal or both to the beneficiary

Question 3

Beneficiary right in Discretionary Trust

Answer 3

No rights to payment and cannot interefere with trustee discretion, UNLESS:
the trustee abuses his power

Question 4

Support Trust Effect

Answer 4

Directs the trustee to pay only so much of the income, or principal, or both, as is necessary for the beneficiary’s support

Question 5

Modification and Termination in general

Answer 5

upon expiration of the term speicfied in the instrument or when all of the purposes of the trust have been accomplished, unlawful, contrary to public policy ,or impossible

Question 6

Modification and Termination by the Settlor

Answer 6

UTC: can revoke or amend UNLESS terms expressly state that it is irrevocable

Traditional rule: trust is irrevocable unless settlor expressly reserves power to revoke or modify

Question 7

Modification and Termination by the Beneficiaries

Answer 7

(1) upon consent of settlor and all beneficiary REGARDLESS of whether material purpose is effected
(2) upon consent of all beneficiaries ONLY if no material purpose of the trust would thereby be frustrate