Trust Administration

Question 1

What is the Trustee duty?

Answer 1

A trustee has fiduciary duty to administer the trust in the best interest of the beneficiaries, a breach might result in personal liability of the trustee

Question 2

What are T’s powers?

Answer 2

express power to revoke or modify
implied T has implied power to contract, sell, lease, or transfer trust property

Question 3

Duty of Care

Answer 3

T must administer trust in good faith (subjective standard)

T’s discretion can be challenged if T failed to excrerise good judgement if any special skills heightened standard

Question 4

Duty of loyaty

Answer 4

objective standard: no fraud or bad faith is required for breach
no self dealing, no conflict of interest

Question 5

What does self dealing include

Answer 5

buy or sell trust assest from himself
transfer property between trust
borrow funds
use trust assest to secure a personal loan
engagae in prohibited transaction with friends or relative

Question 6

When will the court no inquiry further into T actions?

Answer 6

If there is self dealing, it constitutes irrebutttale presumption

Question 7

What is exception to the “no further inquiry”

Answer 7

even if the terms or beneficiaries authorize self dealing, the transaction must be fair and reasonable otherwise T will be in breach

Question 8

Delegation

Answer 8

Modern Law allows T to delegate duties if it is unreasonable to expect T to perform the task but T must oversee decision making

Question 9

What is Prudent Investor Rule

Answer 9

T has duty to invest & manage prudently

Question 10

What is duty of impartiality

Answer 10

T must balance interest of present and future beneficiaries by investing property to produce preserving principal

Question 11

Duty to inform

Answer 11

T must keep the beneficiaries informed about the trust property

Question 12

Duty to Account

Answer 12

T must periodically account to beneficiaries unless waived by settlor

Question 13

What are remedies for breach?

Answer 13

beneficiaries can remove the trustee, sue damages, ratify, tracing(may force T to sue 3P to trace or recover)

Question 14

What are third party rights for breach?

Answer 14

T may be liable in contract or tort to third party

t can seek indemity if acting within scope of duties

Question 15

What is remedial trust?

Answer 15

imposed by law can be resulting or constructive

Question 16

Resulting trust

Answer 16

avoid unjust enrichment, the trustee is required to convey the property to settlor under: failure to express trust, incomplete dispoosition of trust

Question 17

What is duty of prudence

Answer 17

trustee may delegate responsibility if it would be unreasonable for the settlor to require the trustee to perform

critical function can not be delectable

Question 18

Duty to oversee decision

Answer 18

trustee can delegate the determination of management and investment strategies

Question 19

prudent investor rule

Answer 19

trustee to act as prudent investor would when investing property, expertise reasonable care, causation, and skill

Question 20

factors to consider in determining compliance a reasonable prudent investor

Answer 20

trust disturbution requirements
general economic conditions
investment in relation to trust overall investment portfolio
trust need for liquidity, income regularity, and preservation or appreciation

Question 21

what other duties does trustee owe

Answer 21

duty to diversify, duty to make property productive, duty to be impartial

Question 22

What are beneficiaries right to enforecement

Answer 22

lost profits, interest or other obligation that are affected because of breach or trust beneficiaries may sue the trustee and seek damages or removal or trustee for breach

Question 23

liability for other acts

Answer 23

co-trustee minty liable

liable If predecessors breach if he failed to address it or was negligent in delivering property

Question 24

third party liability

Answer 24

the trustee is personally liable on contracts entered into and for torts while acting as trustee

if property is transferred improperly to third party who is not BFP beneficiary or successor may have the transaction set aside

Question 25

resignation of trustee

Answer 25

30 days notice to qualified beneficiaries living settlors, and co trustee

Question 26

removal

Answer 26

by court because Trustee is incapable of performance or materially breaching duty

Question 27

future interest

Answer 27

GOR retains reveries, possibility or reverter, or right of reentry, beneficiary si given remainder or executory interest

Question 28

class gifts

Answer 28

share of deceased class member is paid to that class members surviving issue

Question 29

Personal Representative

Answer 29

executor name in will or administrator appointed by court

Question 30

what is priority for appointment

Answer 30

person named in will; serving spouse who is devisee, other devisees, serving spouse, other heirs, any creditor

Question 31

what are principal dutues

Answer 31

provide notice to legatees, heirs, claimants
inventory, collect, manages assest
recieve and pay claims of creditors
distribute remaining assets

Question 32

Fiduciary Duty of Personal Representative

Answer 32

owes highest duty of loyalty and care

CL: may be perosnally liable for actions of estate
UPC: can only be sued in representative capacity for breach of fiduciary duty

Question 33

Powers of Appointment

Answer 33

power to decide whom property is given can be general or specify

general: no restriction or conditions on expertise of the power
SPecial: places limitation n holders expertise of power

Question 34

What is scope of authority for power of appointment

Answer 34

any instrument can be used to excuse power unless donor says otherwise

testamentary power of appointed excised via will (need more then residuary clause in the will)

Question 35

Powers of Attorney

Answer 35

General agent can handle all affairs when the principle is unable to do so
special agent powers limited to specific function or situation

Question 36

scope of authority for power of attorney

Answer 36

agency continues until dealth of principal even if principal becomes incapacitated, fudicary duties, liability for intentional misconduct, revocation at any time