Trusts Flashcards
1
Q
Support Trust
A
- Trustee is required to apply so much of the trust as is necessary for the beneficiary’s support
- Trustee does not have discretion to refuse
2
Q
Discretionary Trust
A
- Trustee has discretion whether to apply or withold payment to beneficiary
- Beneficiary cannot interfere with the exercise of trustee’s discretion absent abuse of power (bad faith or dishonesty)
3
Q
General Duties of a Trustee
A
- Fiduciary duties as trustee (manage, invest, safeguard, administer)
- Duty to preserve trust property and make it productive
- Duty to make sure the trust produces income for Daughter’s support
- Duty of loyalty to remaindermen
4
Q
Terminating a Trust - Beneficiaries’ Rights
A
- All beneficiaries consent
- Modification will not interfere with a material purpose of the trust
- Spendthrift provision - can’t terminate unless Settlor joins in (inherently precludes interference with a material purpose)
5
Q
Creating a Valid Trust
A
- Must be a Settlor who:
- Intending to create a trust for a
- Valid trust purpose
- Delivers the trust property to the trustee
- To hold for the benefit of one or more beneficiaries
6
Q
Settlor’s Promise to Create a Trust in the Future is Valid Only If:
A
- Supported by consideration; or
- He manifests anew an intention to create the trust when the assets come into existence
7
Q
Pour-Over Gift From Will to Trust
A
- Traditional View: Trust must exist (or be simultaneously executed) at the time the will is executed
- Prevailing View: Trust may be established after the will is executed but before the testator’s death
- Unfunded: Irrelevant
8
Q
Revocability of Trust
A
- UTC: Revocable unless expressly made otherwise
- Common Law: Irrevocable unless expressly made otherwise
9
Q
Can Trustee’s Duties Be Enlarged After Acceptance?
A
- No, unless provided for otherwise (revocable trust usually also means amendable)
10
Q
Power of Appointment (and 3 kinds)
A
-
Authority created in a donee enabling the donee to designate, within the limits prescribed by the donor of the power, the persons who shall take certain property and the manner in which they shall take it
- General power of appointment: Exercisable in favor of the donee, her estate, her creditors, or the creditors of her estate
- Special power of appointment: Exercisable in favor of a specified class not including the donee etc.
- Testamentary power: exercisable only by the donee’s will because Settlor wishes to limit the class of objects to children and issue
11
Q
What happens when a portion of a trust fails?
A
- Resulting trust in favor of Settlor or his successors in interest
12
Q
How Specific to Beneficiaries Need to Be?
A
- Susceptible of identification by the time their interests are to come into enjoyment
- Class gift: Sufficiently/reasonably definite
13
Q
Cy Pres Doctrine
A
- Settlor manifests a general charitable intent (presumed in UTC)
- The original specific charitable purpose is no longer possible or practical
14
Q
Disclaiming an Interest in a Trust
A
- Express writing within a reasonable time
- Passes as though disclaimer predeceased the interest
15
Q
UPIA Investment Duties of Trustee
A
- Prudent investor standard: reasonable care, skill, & caution
- Prudence measured by overall strategy
- Must diversity unless special circumstances
