trust Flashcards

1
Q

What are the three essential components for the validity of a trust of personal property?

A

A trustee, a beneficiary, and trust property.

Most MEE answers highlight this key principle regarding trust validity.

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2
Q

What is the role of a trustee in a trust?

A

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.

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3
Q

In a private express trust, what is required of beneficiaries?

A

Beneficiaries must be definite and ascertainable.

The same person cannot be the sole trustee and sole beneficiary.

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4
Q

What does trust property (trust res) refer to?

A

Trust property must be identifiable.

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5
Q

What is the default rule under the Uniform Trust Code (UTC) regarding trusts revocability.

A

A trust is revocable unless the instrument expressly states otherwise.

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6
Q

Under what conditions can a settlor terminate a trust?

A

If all beneficiaries are in existence and all agree to the termination.

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7
Q

Can an irrevocable trust be terminated after the settlor’s death?

A

Yes, if both income beneficiaries and remaindermen unanimously consent and no material purpose of the trust remains.

Claflin v. Claflin case illustrates this principle.

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8
Q

What is a pourover will?

A

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.

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9
Q

What distinguishes a discretionary trust?

A

The trustee has discretion to decide when to make a distribution to a beneficiary, who cannot demand any part of the income or principal.

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10
Q

What is the purpose of a support trust?

A

The trustee must pay what is necessary for the beneficiary’s support.

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11
Q

What does a spendthrift trust do?

A

Restrains both the voluntary and involuntary transfer of a beneficiary’s interest.

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12
Q

Who are favored creditors that may reach a beneficiary’s distribution in a spendthrift trust?

A
  • 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)
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13
Q

What is a charitable trust?

A

A trust created for a charitable purpose benefiting the community and must have numerous not readily identifiable individuals.

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14
Q

What is cy pres in the context of a charitable trust?

A

A doctrine allowing modification or termination of a charitable trust if the original purpose becomes unlawful, impracticable, or impossible.

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15
Q

What defines an honorary trust?

A

A trust without a charitable purpose or definite beneficiary, often to take care of a thing (e.g. cemetery plot).

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16
Q

What is the duty of loyalty for a trustee?

A

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.”

17
Q

What does the duty of care entail for a trustee?

A

Administering the trust as a prudent person would, using reasonable care, skill, and caution.

18
Q

What is the Uniform Prudent Investor Act (UPIA)?

A

An act stating that a trustee must administer the trust as a prudent person would using reasonable care.

19
Q

What is the hallmark of prudent investing for a trustee?

A

Duty to diversify.

20
Q

What remedies are available for a breach of trust?

A
  • Suspending or removing a trustee
  • Decreasing compensation
  • Compelling performance of trust duties
  • Compelling payment of damages
21
Q

What is a general power of appointment?

A

The beneficiary can exercise the power in favor of an unlimited class of people.

22
Q

What is a special (or limited) power of appointment?

A

The beneficiary can only exercise the power in favor of a limited class of people.

23
Q

What does the rule of convenience state regarding class gifts?

A

The class closes when at least one member is entitled to distribution.

24
Q

What is the UPC approach to class gifts?”per stirpes”

A

Each living beneficiary takes their share, and a deceased beneficiary’s share passes to their surviving descendants.

25
Q

Under common law, what happens to a gift or remainder to a deceased beneficiary?

A

It goes to whomever the instrument specifies or as per intestacy if the gift has already vested.