Trust characteristics

Question 1

what is a discretionary trust

Answer 1

trustee is given discretion whether to apply or withhold payments of income or principal to a beneficiary

Creditors can’t compel the trustee to make a distribution but if they have notice then make payments to creditors when they would release to beneficiary

Exception: child support, spouse, or former spouse the court can dictate a trustee to pay

Question 2

Spendthift trusts definition and characteristics

Answer 2

precluded the beneficiary from voluntarily or involuntarily transferring their interest in the trust and creditors are precluded from reaching it to satisfy claims

Characteristics:
1. beneficiary can’t transfer interest
2. creditors can’t attach beneficiary’s interest

Question 3

Limitations on spendthrift trust

Answer 3

Limitations:
1. typically settlor can’t be beneficiary
2. can’t be used to shield a beneficiary from judgments for family benefits or claims by the government

Question 4

support trust

Answer 4

directs the trustee to pay only so much of the income as is necessary to support beneficiary

Characteristics:
1. not assignable
2. standard of support is accustomed standard of living
3. creditors of trustee can’t reach trust

Question 5

Discretionary trust

Answer 5

trustee is given discretion whether to apply or withhold payments of income or principal (or both) to a baneficiary

Creditors can attach to beneficiary’s interest but can’t compel them to make distributions

Question 6

Intervivos trust

Answer 6

created while the settlor is alive by the settlor declaring themself trustee for another or by the transfer of property to another as trustee

Present intent must be manifested by conduct or words and if they create the trust before there is a res then the trust arises when res is required

Question 7

Define Pour Over gift from will to trust

Answer 7

Settlor can make gifts by will to a trust established during their lifetime as long as the trust is clearly identified from language in the will

Trust may remain unfunded during the settlor’s lifetime. Pour over property ccan be the intitial trust funding if: 1) trust is idenfied in the will and 2) the trust is executed before testators death

Question 8

Secret trust

Answer 8

Settlor agrees with a will beneficiary that the beneficiary will hold the property in trust for someone else but doesn’t state the nature of the gift

if you can prove with clear and convising evidence a promise to hold the property in trus tthen it will be created

Question 9

Smi secret trust

Answer 9

will makes a gift in trust but fails to name the beneficiary

the gift fails and the trustee holds the property for the testator’s successors