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Constitution Law Bar Prep > trusts > Flashcards

trusts Flashcards

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1
Q

trust

A

fidcuiary (trustee) holds legal title to property and administers for beneficiaries on behalf of settlor

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2
Q

trustee fiduciary resp

A

reasonable care
loyalty
personal liability for actions in relation to trust

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3
Q

settlor

A

original owner of property in trust, former of trust

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4
Q

creation of a trust

A

settlor transfers legal title to trustee, trustee manages accodrding to wishes of settlor

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5
Q

types of express trusts

A

private

charitable

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6
Q

validity of trust (first question when given trust problem)

A 
intent
identifiable corpus:
ascertainable beneficiares
proepr purpose
mechaninc and formalites
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7
Q

intent to create trust

A

(1) a settlor
with capacity to convey, (2) a present intent to create a
trust relationship, (3) a competent trustee with duties, (4) a
definite beneficiary, and (5) the same person is not the sole
trustee and sole beneficiary.

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8
Q

must a trust have property

A

yes

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9
Q

what prevent capacity, and by extension, intent to create a trust

A

The settlor’s lack of legal capacity to convey, inter vivos
or at death, prevents a trust from arising, and undue influ
ence,
fraud, or duress renders the trust unenforceable

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10
Q

are formal words rq for formation of intent

A

no, no writing is req unless statute of frauds of wills

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11
Q

msut a settlor intend trust to form immediately, or can she postpone

A

must be immediate

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12
Q

can wishes of desire, hope, wish form a trust

A

presumptively no, but can overcome with
Definite and precise directions
•
Directions addressed to a fiduciary (for example, executor under a will)
•
A resulting “unnatural” disposition of property (for example, close relative will otherwise take nothing) if no trust imposed; or
•
Extrinsic evidence showing that the settlor previously supported the intended beneficiary

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13
Q

can split title of trustee with other

A

yes, so long as sole turstee and beneficiaries dont overlap

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14
Q

identifiable corpus

A

proeprty in trust must be ascertainable

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15
Q

res

A

trust property

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16
Q

can future interst be held in trust

A

yes, but must be in legal existence (future legal interest)

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17
Q

qualified beneficiary

A

current beneficiary

first line remainderman

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18
Q

notice needed for beneficiary

A

nope, but can be evidence of no trust existing

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19
Q

does beneficiary need to accpet trust

A

yes, can occur after formation

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20
Q

disclaiming benefit

A

written instrument with trustee most states

within 9 months (unless under 21)

estopped if excersied dominion over conferred benfit

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21
Q

divorce removes beneficiary/trustee status?

A

yes

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22
Q

when msut beneficiaries be ascertainable

A

when interest come into enjoyment

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23
Q

example of unascertainable class

A

future children
friends
people not known outside of settlor

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24
Q

what happens when a trustee dies, or rejects, or resigns

A

trust goes on, if settlor not around court will select a trustee

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25
Q

what must a trustee have to be a trustee

A

duties

26
Q

how can a trustee be removed

A

serious breach of trust
serious lack of cooperation
unfitness, failure
substantial change in circum

action raised by benefi, setlor, court itself, or cotrustee

27
Q

can a settlor be a trustee

A

yes; presnt declaration trust

28
Q

must res be segregated from other property

A

yes

29
Q

conveyance in trust

A

formation of trust with trustee other than settlor

conveynace of proeprty msut be out of settlor control; real property by deed, personal by delivery

30
Q

statute of fraud

A

applies for conveyance of real property/land

31
Q

can pour over property form a trust

A

yes
pour over property means property not devised in will (residual)

so long as
trust is id in will
trust is executed before testator death

32
Q

can a beneficiary transfer interest in a trust

A

yes, unless trust says no

33
Q

discretionary trust

A

trustee given discretion to deal with payments in trust

34
Q

creditors dealing with discretionary trust

A

can attach to beneficiary interest BUT cant compel trustee to send payments

35
Q

spendthrift trust

A

preculdes beneficiary from transfering interest AND creditors from reaching interest to satisfy claims UNTIL paid to beneficiary

36
Q

when is spendthrift trust ineffective

A

when creditor is beneficiary
against govt
against judgment for child support

37
Q

support trust

A

only for bene support
not assignable
impliedly spendthrift
limited to support, can supplement income but not replace

38
Q

when does trust expire

A

no more property
purpose of trust accomplished
term expires

39
Q

termination/modification of trust by beneficiaries

A

possible, but req all beneficiaries (including unborn/unascertainable)
cant frustrate material purpose of trust

material purposes:
support of bene
spendthrift
payment at certain age
payment at certain date
discretionary status
40
Q

can a court terminate/modify trust

A

yes, if

unanticipated circumstances threaten the trust

continuation is wasteful or impractical

value in trust is insufficient to justify cost of admin

41
Q

can a trustee modify/term trust

A

yes, if

less than 50k and not justify to admin

must wind up trust business

42
Q

trustee authority

A

express
by law
implied in admin of trust

43
Q

imperative power of trustee

A

must exercise or may be compelled by court to do so (pay people, express duty)

44
Q

duty of trustee

A 
duty to admin trust
duty of loyalty
duty of reasonable care
duty to report
duty to keep records
45
Q

duty of admin

A

admin trust in good faith and reasonable care

46
Q

duty of loyalty

A

no double dealing
get good vlaue for assets

To Act for the benefit of the trust express and implied wishes

47
Q

is a unquthorized transaction (by duty violaiton) voidable

A

yes, but beneficiaries must sue timely

48
Q

standard of care for trustees investing trust funds

A

reasonable care skill caution of an investor

viewed in total of fund, not single decisions

49
Q

some factors for prudent investment determination

A 
econ condition
effect of inflation
taxes
role of investment
expected return
need for liquidity
50
Q

is lack of skill an excuse for bad investing of trustee

A

no

51
Q

remedies for a trustee breach

A

injunction
specific performance
pay money to trust
remove/suspension

52
Q

remedy for self dealing

A

if trust makes money, keep the deal

if not, set aside transaction, and trace profits trustee gained

53
Q

when is a trustee not laible for breach

A

reasonble reliance on terms of trust

bene consented, relasesd from liablity, or ratified transaction

54
Q

difference between trust income and principal

A

trust income: net rental income, 10% wasting asset, allocation of loss repayment from insurance

principal: sale of a trust asset, sale of business, stock dividend 90% wasting asset, insurance policy

55
Q

expenses charged from principal

A

the
remaining one-half of the compensation of the trustee
and any person providing investment advisory or custo
dial
services to the trustee; the remaining one-half of all
expenses for accountings, judicial proceedings, and other
matters affecting both income and remainder interests;
payments on the principal of a trust debt; expenses of a
proceeding that concerns primarily an interest in principal;
estate taxes; and disbursements related to environmental
matters

56
Q

expenses coming out of income

A

one-half of the regular compensation of the trustee and
of any person providing investment advisory or custodial
services to the trustee; one-half of all expenses for account
ings,
judicial proceedings, and other matters affecting both
income and remainder interests; the entire cost of ordinary
expenses; and insurance premiums covering the loss of a
principal asset.

57
Q

charitable trust

A

must have
indefinite beneficiary
can be perpetual (forever)
must ahve a purpose that benefits the public

58
Q

what if the charitable trust cant be followed as written?

A

cy pres doctrine: follow the trust as closely as possible to find purpose

59
Q

do charitable trusts have to follow rules against perp

A

no

60
Q

constructive trust

A

must be requested

equitable action for unjust enrichment

Constitution Law Bar Prep (16 decks)

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