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Fall 24 > Trust 2 > Flashcards

Trust 2 Flashcards

1
Q

statute of uses

A

If the trustee doesn’t have duties/responsibilities no trust, legal title will vest in the beneficiary. If the trustee has a power or duty relating to trust admin the trust stays

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2
Q

Exceptions to SOF

A

Totally oral trust if its only personal property, trustee isn’t settlor or beneficiary, and there’s evidence of trust intent that was mentioned before or at the time of the transfer

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3
Q

Defrauding Creditors

A

UFTA - You can’t transfer property if you’re insolvent

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4
Q

Bad Trust Remedies Creditors and Other

A

Set aside creditor amount OR
Void the trust
1) resulting trust to S (for mistake on S)
2) T gets the property (for bad conduct on S)
3) Remove improper restriction

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5
Q

Prudent Investor Standard Factors

A

PLDC
trust purposes, trust language, distribution requirements, circumstances generally

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6
Q

Trustee Power Sources

A

Instrument, statute, equity, court

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7
Q

Delegation Protections (Still have liability)

A

Agent = affiliate, require arbitration, shorten SoL

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8
Q

S authorization of Breach of Loyalty

A

S can waive self-dealing and conflicts, but construed strictly against T

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9
Q

T Standards for Breach

A

Strictly liable for breach regardless of good faith, fairness, T not benefiting

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10
Q

K Liability TX

A

T can K if within capacity; K plaintiff can recover directly from property

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11
Q

Notice Duty of Plaintiff (K)

A

to B by registered mail within 30 days of filing and at least 31 days before judgement
T has 10 days to get P all B info if asked

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12
Q

Tort Liability, Notice from P

A

P must tell B

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13
Q

How do we know how to allocate? P and I

A

S specific instructions, Trust Code, if neither to principal.
T can have discretion if fair and reasonable - follow the code its always reasonable

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14
Q

Capitol Gains

A

Principal

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15
Q

Interest Earned

A

Income

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16
Q

Rent

A

Income

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17
Q

Eminent Domain/Insurance Proceeds

A

Principal

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18
Q

Cash Dividends

A

Income

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19
Q

Stock Divided

A

Principal

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20
Q

Stock Split

A

Principal

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21
Q

Stock b/c of Merger

A

Principal

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22
Q

T adjustment Power General

A

Allow T to ignore basic rules under certain circumstances; no notice to B in TX

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23
Q

T Adjustment - Factors

A

NPSI
Nature Purpose Settlor intent, ID of Bs

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24
Q

When can’t a T adjust

A

S says no, T=B, T would benefit, adverse tax

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25
Q

T compensation

A

50/50

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26
Q

Accounting Expenses

A

50/50

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27
Q

Ordinary Repairs

A

Income

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28
Q

Capitol Improvements

A

Principal

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29
Q

Debt Payment

A

Initial - principal, interest - income

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30
Q

Insurance premiums

A

Income

31
Q

Property Tax

A

Income

32
Q

Depreciation (who pays)

A

T discretion

33
Q

When does T have to inform B?

A

When they are going to do something material and unusual

34
Q

When T has to inform B can be limited

A

Trust revocable, B under 25, B is remote and not eligible for current or end of trust distribution

35
Q

B accounting - how to ask

A

Written, T has 90 days, can only happen every 12 months

36
Q

Accounting Limitations

A

Trust is revocable, B isn’t able to get current distributions or when trust ends

37
Q

Statute Permission for Deviation

A

Purposes: fulfilled, impossible, illegal;
A change that: S didn’t know/couldn’t anticipate, Avoids waste/impairment, Achieve S’s tax objectives, not inconsistent with S intent - if all B consent
Continuing isn’t necessary to achieve material purpose of the trust and all Bs consent

38
Q

When TX allows reformation

A

Prevent Waste, impairment of purposes
Achieve trust purposes
Correct Scrivener’s error - even if unambiguous if there’s C and C evidence of S intent

39
Q

Jury trial for reformation and deviation

A

No

40
Q

S revoking

A

Presumes they can do whatever unless language says it is irrevocable
In writing or by trust

41
Q

T Revoking

A

S can grant
Division/Combo if identical terms
Cy Pres
Decanting

42
Q

B revoking

A

Other places have Claflin
TX says this can only happen if:
Court approval, change isn’t against material purpose and all B agree

43
Q

Claflin Rule

A

B can revoke if no material trust purpose remains unfulfilled

44
Q

S & B Modification/ termination

A

If S is alive and all B consent

45
Q

7 deadly ends of a trust

A

Express,
S
Uneconomical
Court
Merger
No Property left
All B dead

46
Q

Uneconomical - End of trust

A

Discretionary
Notice to anyone who is/can get money
Value under 50k
T says purpose doesn’t justify trust going on
No adverse tax
No conservation Easement

47
Q

Money Damages against T - Lost Value to Trust

A

No causation and no requirement that T benefited

48
Q

Money Damages against T - Profit made by T

A

Causation required and no requirement trust had a loss

49
Q

Other Money remedies against T

A

Lost Profits, Punitive for evil conduct, and any profit made by T even if no breach

50
Q

Remedies against T Removal 4 ways

A

Discretion for abuse/no fiduciary duty and trust suffered materially
T becomes incompetent or insolvent
Other Cause

51
Q

Consequences of T Misbehaving

A

No money
SOL removed - usually 4 years
Make them carry out trust
Injunction
More bond
Attorney Fees

52
Q

Criminal Remedies for T

A

For anything above negligence
Evil act - even if T doesn’t benefit
Greater than 300k = life sentence

53
Q

How can a new T be liable for an old one?

A

Known or should have known
Lets bad conduct keep going and doesn’t make old T fix it/sue

54
Q

Remedies against B if

A

Dealt with property wrong
Involved in the breach
fail to repay trust for loan/over distributing
Breach of K by saying they’ll give trust their money and not doing it

55
Q

How to prevent remedies

A

S approves in trust, mandatory arbitration, a valid release, court decree, SoL, Latches

56
Q

What S can’t Waive

A

valid trust
restrictions on exculpatory clauses
SoL
Duty of T to account for B money (current or on end of trust)
Good faith
Duty to inform
Powers of the court
In terrorem and good faith

57
Q

SOL for Trust Problem

A

4 years from discovery

58
Q

Requirement for valid release

A

18 and competent
for past or future conduct
can use virtual representation

59
Q

Trust Bank Account

A

T can add or remove money with no notice
No split of title
No duties
B can only get after T dies if they outlive them

60
Q

Resulting trust fact patterns

A

Express trust fails
Property has nowhere to go
Purchase money resulting trust

61
Q

What happens if express trust fails

A

S has property

62
Q

STEP 1 FOR EXAM

A

Type of trust

63
Q

STEP 2 FOR EXAM

A

Validity

64
Q

What to look at for validity

A

Intent
Consideration
SoF
RAP
Purpose
Capacity
Property
T
B

65
Q

STEP 3 FOR EXAM

A

Traits of trust
revocable
limits on B

66
Q

STEP 4 FOR EXAM

A

Has trust been changed?
parties or court

67
Q

STEP 5 FOR EXAM

A

Has trust been terminated?

68
Q

STEP 6 FOR EXAM

A

T conduct

69
Q

What to look at for T conduct

A

Powers (and did they exceed)
Effect of discretion
Delegation
Prudent Investor Standard
Respond to requests
Loyalty
3rd Parties
Allocation
Compensation

70
Q

STEP 7 FOR EXAM

A

If T acted wrong what remedies?

71
Q

What to look at for remedies against T?

A

Procedure - standing, venue, jurisdiction, virtual representation
Against T - money damages, removal, what you can get

72
Q

More on remedies general

A

Against B, 3rd parties
are remedies barred?

73
Q

STEP 8 FOR EXAM

A

Are there other trust like relationships?
trust bank account
resulting trust
constructive trust

74
Q

Grounds for constructive trust

A

Fraud
Abuse
Promises because of Death
Evil Conduct

Fall 24 (4 decks)

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