Trusts 10-19 Flashcards
When may an Irrevocable Trust be terminated?
The settlor and all of the beneficiaries agree to do so while the settlor is still alive;
All of the beneficiaries agree, and it will not frustrate the purpose of the trust; OR
By operation of lawthrough merger (trustee is sole beneficiary) or passive trust (all trust property has been transferred to the beneficiary).
Priority: Medium
How may a Revocable Trust be revoked?
Compliance with any method of revocation provided in the trust instrument; OR
If the instrument doesn’t provide a method, then the trust can be revoked by a writing signed by the settlor and delivered to the trustee during the lifetime of the settlor.
Priority: Low
What does the Duty of Care require of the Trustee?
To manage the trust as a reasonably prudent personwould in his own dealings.
Priority: HIGH
What does the Duty of Loyalty require of the Trustee?
To refrain from self-dealing;
Administer the trust in the best interest of the beneficiaries; AND
Give the same care and deference to each beneficiary.
Priority: HIGH
How is a Trustee given powers?
Their powers can be expressly granted in the trust OR implied.
*A Trustee has a duty to distribute the trust incomeand assets in accordance with the directions in the trust instrument.
Priority: Medium
What does the Prudent Investor Rule require a Trustee to do?
To exercise the degree of care, skill, and prudence of a reasonable investorinvesting in his own property.
This includes diversifying assets, avoiding risky investments, and keeping trust assets productive.
Priority: Medium
What factors does a court consider in assessing whether a Trustee abided by the Prudent Investor Rule?
The distribution requirements of the trust;
The general economic conditions;
The role the investment plays in the trust’s overall investment portfolio; and
The trust’s need for liquidity, regularity of income, and preservation of capital.
Priority: Medium
When is a Co-Trustee liable for wrongful acts of another Co-Trustee?
If she:
Participates in, approves of, or conceals breach of trust by a co-trustee;
Negligently enables a co-trustee to commit a breach;
Fails to take reasonable steps to compel a co-trustee to redress a breach of trust; OR
Improperly delegates the administration of the trust to a co-trustee.
Priority: Low
What is the remedy against a Trustee that breaches her duties?
She may be removed AND held liable for:
Any loss/depreciation in the value of the trust;
Any profit made by her through the breach; AND
Any profit that would have accrued to the trust but for the breach.
Priority: Medium
