trust Flashcards
What are the three essential components for the validity of a trust of personal property?
A trustee, a beneficiary, and trust property.
Most MEE answers highlight this key principle regarding trust validity.
What is the role of a trustee in a trust?
A trustee manages the trust property and holds it for the benefit of the beneficiaries.
A trust will not fail for lack of a specifically appointed trustee; the court will appoint one.
In a private express trust, what is required of beneficiaries?
Beneficiaries must be definite and ascertainable.
The same person cannot be the sole trustee and sole beneficiary.
What must trust property be (trust res) refer to?
Trust property must be identifiable.
What is the default rule under the Uniform Trust Code (UTC) regarding trusts revocability.
A trust is revocable unless the instrument expressly states otherwise.
Under what conditions can a settlor terminate a trust?
If all beneficiaries are in existence and all agree to the termination.
Can an irrevocable trust be terminated after the settlor’s death?
Yes, if both income beneficiaries and remaindermen unanimously consent and no material purpose of the trust remains.
Claflin v. Claflin case illustrates this principle.
What is a pourover will?
A will that makes a gift to a trust, valid if the trust is** identified** in the will and terms are incorporated in writing executed** before or concurrently** with the will.
What distinguishes a discretionary trust?
The trustee has discretion to decide when to make a distribution to a beneficiary, who cannot demand any part of the income or principal.
What is the purpose of a support trust?
The trustee must pay what is necessary for the beneficiary’s support.
What does a spendthrift trust do?
Restrains both the voluntary and involuntary transfer of a beneficiary’s interest.
Who are favored creditors that may reach a beneficiary’s distribution in a spendthrift trust?
- Child or spousal support creditor
- Judgment creditor providing services for the protection of the beneficiary’s interest
- Claim of the state or United States (usually for taxes)
- Creditors with claims for necessaries (in some states)
What is a charitable trust?
A trust created for a **charitable purpose **benefiting the community and must have numerous not readily identifiable individuals.
What is cy pres in the context of a charitable trust?
A doctrine allowing modification or termination of a charitable trust if the original purpose becomes unlawful, impracticable, or impossible.
What defines an honorary trust?
A trust without a charitable purpose or definite beneficiary, often to take care of a thing (e.g. cemetery plot).
What is the duty of loyalty for a trustee?
A trustee has a duty to act in the best interest of the beneficiaries.
or to administer the trust solely in the interest of the beneficiary.”
What does the duty of care entail for a trustee?
Administering the trust as a prudent person would, using reasonable care, skill, and caution.
What is the Uniform Prudent Investor Act (UPIA)?
An act stating that a trustee must administer the trust as a **prudent person **would using reasonable care.
What is the hallmark of prudent investing for a trustee?
Duty to diversify.
What remedies are available for a breach of trust?
- Suspending or removing a trustee
- Decreasing compensation
- Compelling performance of trust duties
- Compelling payment of damages
What is a general power of appointment?
The beneficiary can exercise the power in favor of an unlimited class of people.
What is a special (or limited) power of appointment?
The beneficiary can only exercise the power in favor of a limited class of people.
What does the rule of convenience state regarding class gifts?
The class closes when at least one member is entitled to distribution.
What is the UPC approach to class gifts?”per stirpes”
Each living beneficiary takes their share, and a deceased beneficiary’s share passes to their surviving descendants.
