Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CA Bar Exam- Ca Subjects > Trusts > Flashcards

Trusts Flashcards

You may prefer our related Brainscape-certified flashcards:
MBE flashcards
1
Q

Trusts: General Defintion

A

A trust is a fiduciary relationship in which one person, trustee, holds legal title to specific property owned by the settlor under a fiduciary duty for the benefit of one or more designated beneficiaries.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Trust: Private Express Trust

A

Intent (intend the document to serve as a trust, mere precatory words are insufficient)

Res (trust must be funded by property that the settlor has existing interest in the property, future interest okay)

Beneficiary (must be ascertainable and definite at the time their interest come to enjoyment)

Legal Purpose (not illegal, criminal, or violative of RAP)

Trustee (must have duties, but will not fail for lack thereof)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Trust: Intervivos Trust

A

An instrument that takes effect during the settlor’s life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Trust: Declaration of Trust

A

Settlor herself is the trustee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Trust: Conveyance in Trust

A

Settlor and trustee are different.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Trust: Testamentary Trust

A

An instrument that takes effect upon the settlor’s death as established in settlor’s will.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Trust: Secret Trust

A

Exists when settlor agrees with beneficiary of a will that the beneficiary will hold property in trust for another. A constructive trust on behalf of the intended beneficiary will be constructed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Trust: Semi-Secret Trust

A

If someone gives a gift to a person “in trust” but does not name an intended beneficiary there is no trust, instead a resulting trust results.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Trust: Beneficiary’s Right to Transfer Interest Generally

A

Absent a statute or trust provision, a beneficiary may freely transfer interest in trust and creditors may reach beneficiary’s interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Trust: Discretionary Trust

A

A discretionary trust is one where the trustee is given discretion whether or not to distribute income or principal.

The beneficiary has no right to payment and may not compel distribution.

The beneficiary’s interests are not assignable and cannot be reached by creditors, however creditors may attach the beneficiary’s interest but cannot compel distribution. A trustee with notice must pay the creditors first.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Trust: Spendthrift Trust

A

A spendthrift provision precludes the beneficiary from voluntarily or involuntarily transferring interest AND precludes creditors from reaching a beneficiary’s interest.

*Invalid if settlor is the beneficiary.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Trust: Spendthrift Trust Creditor Exceptions

A

Notwithstanding a spendthrift clause, creditors for claims of dependents, government, and persons supplying necessaries will be able to reach the beneficiary’s interest.

Few states allow tort creditors too.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Trust: Support Trust

A

A support trust provides only so much of the income or principal as necessary to provide for health, education, maintenance, and support.

  • Not assignable.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Trust: Modification/Revocation of Trust By Settlor

A

A settlor may revoke or amend a revocable trust as long as it is not prohibited by the trust, some states require that the settlor reserve the power to revoke.

Settlor may revoke an irrevocable trust only with consent of all vested/contingent beneficiaries.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Trust: Modification/Termination by Beneficiary

A

Beneficiaries may modify or terminate a trust if

  • all beneficiaries agree;
  • all beneficiaries are legal competent; AND
    - settlor consents OR 
- modification does not impair settlor's material                       
  purpose for the trust
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Trust: Equitable Deviation

A

A court may deviate from the administrative terms of a trust if there is a change of circumstances unanticipated by the settlor and the deviation is necessary to achieve the settlor’s purpose.

UTC allows modification of administrative and dispositive terms.

17
Q

Trust: Charitable Trust

A
  1. Intent
  2. Trust Property
  3. For the benefit of the public generally or indefinite class of members of the public
  4. Charitable Purpose (relief of poverty, advancement of education, science, art, or religion, promotion of health, accomplishment of government)
  5. Trustee

State attorney general enforces the trust.

18
Q

Trust: Cy Pres Doctrine

A

If the charitable trust cannot be carried out as written and the court finds that the settlor intended general charitable intent modify the trust’s method of achieving that intent. If specific charitable intent is found, the trust fails.

19
Q

Trust: Trustee’s Power

A

A trustee may exercise express power and implied power (those necessary to carry out terms)

Powers may be imperative (mandatory) or discretionary (trustee determines based on judgment).

20
Q

Trust: Trustee Primary Duties

A
  1. Duty of Administer
  2. Duty of Loyalty
  3. Duty to Perform
  4. Duty to Account
  5. Duty of Care
  6. Duty to Earmark
  7. Duty to Segregate
  8. Duty of Impartiality
  9. Duty to Invest
21
Q

Trust: Duty to Administer

A

A trustee owes a duty to administer the trust according to the terms of the trust.

22
Q

Trust: Duty of Loyalty

A

A trustee owes the beneficiaries of a trust a duty of undivided loyalty and must not enter into any transaction in which the trustee is directly or indirectly dealing with the trust in their individual capacity.

may set aside, recover profits, affirm transaction.

23
Q

Trust: Duty to Perform Personally

A

A trustee is prohibited from delegating duties unless duty is unreasonable to perform alone.

24
Q

Trust: Duty to Account

A

Trustee must keep accurate records and render accounting upon demand.

25
Q

Trust: Duty of Care

A

A trustee owes a duty to the beneficiaries to exercise the degree of care, skill, and caution exercised by a reasonably prudent person.

26
Q

Trust: Duty to Earmark

A

Property must be labeled as the trustee.

27
Q

Trust: Duty to Separate

A

Trustee must not commingle.

28
Q

Trust: Duty of Impartiality

A

If there are more than one beneficiaries, the trustee must act impartially and must not favor one beneficiary over another.

29
Q

Trust: Duty to Invest (Uniform Prudent Investor Act)

A

Under the UPIA, a trustee must exercise reasonable care, skill, caution, and prudence when investing and managing trust assets.

Prudence is measures as to the portfolio as a whole, therefore, the overall investment strategy must have reasonably suited risk and return objectives.

Trustee may delegate investment functions but only if a prudent trustee of comparable skills would delegate.

30
Q

Trust: Remedies for Breach of Fiduciary Duty

A

A beneficiary may seek to surcharge the trustee (make trustee personally liable) or remove the trustee.

Equity will not enforce the trust if the beneficiary consented to or joined in the breach of the trust.

31
Q

Trust: Honorary Trust

A

It is not a legal trust because it does not have ascertainable beneficiaries or create a societal benefit? Thus, it just asks that beneficiaries honor the settlor’s wishes. Typical examples are a pet trust or grave site trust.

Note they usually violate RAP, so courts sometime strike the gift or let them last for 21 years.

32
Q

Trust: Resulting trust

A

Arise by implication of law based on the presumed intent of the parties and benefits the settlor’s or his heirs.

33
Q

Trust: When does a Resulting Trust Arise?

A
  1. Private express trust ends on its own terms
  2. Private express trust fails because there is no beneficiary or becomes illegal
  3. Charitable trust fails, and cy pres cannot be used
  4. Trust has excess corpus for its purpose
  5. Purchase money resulting trust
  6. Semi-secret trusts (i.e., will makes a gift to a trust but doesn’t name a beneficiary - parol evidence permitted)
34
Q

Trust: Purchase Money Resulting Trust

A

When X furnishes consideration for acquisition of property but, with X consent, title is taken in name of Y, a resulting trust is presumed unless person receiving title can rebut that it is a gift or debt. However, if X and Y have a personal relationship, a gift will be presumed.

35
Q

Trust: Constructive Trust

A

Not a legal trust - just a remedy against unjust enrichment.

Arise when:

  1. Self-Dealing Trustee
  2. Will created with fraud in the inducement or undue influence
  3. Semi-Secret Trust
  4. Real Estate Trust that fails SOF

CA Bar Exam- Ca Subjects (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions