Trust

Question 1

Preamble

Answer 1

TX Trust Code applies to all trust in TX except to the extent the trustees powers are expanded or limited by the settlor, gives broad fiduciary powers to the trustee.

Question 2

Spendthrift Trust Def

Answer 2

1. protects Bs from creditors
2. prohibits voluntary/involuntary assignment
   3) full effect in TX
   4) except Ks for necessities, child suppler, interest by settlor, fed’l tax liens
   5) must expressly state CT

Question 3

Jurisdiction and Venue over Trust Dispute

Answer 3

1) DC & probate acts have concurrent jurisdiction for inter vivos
2) probate its have exclusive juris over testamentary trust
3) residence of T or multi Ts then the situs of the trust

Question 4

Limitations on a Trustee

Answer 4

1) can’t borrow funds
2) use trust funds as collateral for personal loan
3) buy/sell assets to itself
4) loan funds ti trust
5) profs from serving as T
6) breach fiduciary duties

Question 5

Trustees Powers

Answer 5

1) trust code gives broad fiduciary powers
2) they can do whatever the question ask them to do
3) anything a fee simple owner can do

Question 6

Req of a Trustee

Answer 6

1) legal capacity to deal w/ property

2) capacity to contrast and execute deeds

Question 7

How a Trustees Investment Performance Measured

Answer 7

1) Uniform Prudent Investor Act
2) time investment was made
3) UPIA based on Modern Portfolio Theory
4) looks to total return
5) maintain investment strategy
6) adjustment powers
7) allocate capital gains

Question 8

When Ct Can Terminate Trust Early

Answer 8

1) petition from T or B
2) provisions fulfilled
3) becomes illegal
4) impossible to fulfill
5) changed circs
6) compliance would defeat or substantially impair purpose of trust

Question 9

When B Can Bring Action Against 3P that Injured Trust

Answer 9

1) T unwilling/unable

2) T participated

Question 10

If Multi Ts, How Can One Protect Himself

Answer 10

1) don’t participate

2) dissent in writing

Question 11

Powers Trustee has After Trust Terminated

Answer 11

1) wind up

2) distribute proceeds to Bs

Question 12

Honorary Trust Def

Answer 12

1) benefits things that are not ppl
2) upheld if it performs
3) if it fails, then its a resulting trust
4) subject to RAP, 21 yrs

Question 13

Constructive Trust Def

Answer 13

1) not a trust
2) actually an equitable remedy
3) wrongful conduct
4) unjust enrichment

Question 14

How Trustee Resigns

Answer 14

1) gets ct approval
2) show no longer appropriate to serve
3) provides an accounting

Question 15

Charitable Trust Req

Answer 15

1) list same req for a regular trust
2) for charitable purposes
3) substantial amount of social benefit
4) cannot benefit on individual or just a small group of ppl

Question 16

Req for Valid Oral Trust

Answer 16

1) must be solely personal property
2) same req as a regular trust
3) trustee is 3P

Question 17

When Does COA Begin Against Trustee & What is Limitation Period

Answer 17

1) w/in 4 yrs of T repudiation
2) T dying
3) resigning
4) after accounting full disclosure

Question 18

Trust Req

Answer 18

1) settlor has legal capacity
2) delivers
3) res (property)
4) to trustee
5) for benefit of Bs
6) w/ internet
7) for lawful purpose
8) usually in writing

Question 19

Result of Trustee Breaching Fiduciary Duty

Answer 19

1) action to remove
2) B can ratify transaction
3) sue for resulting loss/surcharge suit
4) no further inquiry rule