Trusts

Question 1

Where an inter vivos trust is created, and where the settlor gives a vested future
possessory interest in the trust to a grantee, it is called a

Answer 1

Will subsitute

Question 2

Where the settlor has included a clause whereby all of the settlor’s assets at the time of
his death pour in to the trust for the benefit of the beneficiaries a

Answer 2

pour over will is created

Question 3

Omitted Child can force a share of intestate when

Answer 3

child is born or adopted after the trust is created

OR

settlor mistakenly believe child was dead

OR

did not know child existed

OR

AND
Child is omitted from the trust

Question 4

Limitations of Omitted Child forcing a share of the trust

Answer 4

knew child was alive and intended to keep him out of the will

provides for child another way

Left the estate to the omitted child’s parent

Question 5

A child’s intestate share in a modern per stripes system will be

Answer 5

= share split at the 1st level of inheritance

Question 6

Termination in a trust is determined on

Answer 6

whether the trust is revocable or irrevocable, but if the terms of the strust states a speific condition, the conrol controlls. It can also be terminated if the trust has been satisified and all ebeneficaries and trustees agree to end the trust

Question 7

An irrevocable trust is created where

Answer 7

the express language of the settlor states that the modification or termination can occur while the settlor is alive with the consent of all beneficaries and the proposed change will not interfere with the primary purpose of the trust

Question 8

Majority opinion regarding irrevocable or revocable trust trusts

Answer 8

revocable in CA and settlor does not need to expressly reserve the right to modify or terminate the trust

Question 9

Terminaiton of a irrevocable trust

Answer 9

either when the settlor and all of the beneficiaries agree while the settlor is still alive and it
will not frustrate the purpose of the trust, or a merger where the trustee has become the
sole beneficiary.

Question 10

A trustee has a number of duties to the beneficiaries of the trust. Among those duties
are

Answer 10

a) a duty of care,
b) a duty to distribute benefits in accordance with the trust,
c) a duty to treat beneficiaries equally,
d) and a duty to follow the settlor’s instructions.

Question 11

In What circumstances is the trustee allowed to use discretion in how to distribute the income of the trust namely

Answer 11

discretionary trust

support trust

Question 12

When are the trust duties to the beneficiary triggered

Answer 12

when the trustee accepts the poisition

Question 13

when the trust has breached their fiduciary duties what can occur to the trustee

Answer 13

they are personally held liable and may be removed

Question 14

Duty of care

Answer 14

A trustee has the duty to act as a reasonably prudent person in her dealings as trustee.
This includes investing reasonably, making reasonable distribution, and all other activities that a trustee conducts in her role as trustee. He has the duty to use any special skills he may have and to treat the trust property as his own in his care for it.

Question 15

Duty to distrubute in accordance with the trust

Answer 15

A trustee has a duty to distribute in accordance with directions given in the trust instrument. This duty is breached when the trustee acts in a way inconsistent with the specific instruction set forth by the settlor.

Question 16

Duty of loyalty

Answer 16

acting in good faith and in the best interests of the trust and beneficiaries. A trustee must not act for her own benefit.
Further, a trustee must not favor certain beneficiaries over others

Question 17

Other fudicary duties for trustee

Answer 17

duty to invest, provide accountings to the beneficiaries, label trust funds and keep trust funds separate from other funds

Question 18

Trust Creation - To be valid, an express private trust must have

Answer 18

a settlor, an ascertainable beneficiary, res, a valid purpose, and a trustee. However, the court will appoint a trustee if one is
not provided for, or the elected trustee declines to serve.

The a trust purpose must be able to be determined from the trust document, and must not be illegal.

The settlor gives the res to the trustee, who has legal title, to hold for the benefit of the beneficiary, who holds equitable title.

The trust need not be in writing unless required to by the statute of frauds, for example transferring an interest in land.

Question 19

who can be the beneficary in a trust

Answer 19

natural person, entity or government can be a beneficiary of
an express private trust

Question 20

what can be the res

Answer 20

any property or present interest

Question 21

Charitable trust

Answer 21

they must have a charitable purpose: something that
contributes to societal good, such as abating hunger, education generally, religion, or the like.

The beneficiaries of the trust must be indefinite, not a specific person

Question 22

Trustee powers are those

Answer 22

expressly granted in the document itself and implied in order to effect the purpose of the trust

Question 23

Duty of prudent investor

Answer 23

At common law a trustee was limited to a specified list of investments that he was approved to make. Now trustees are expected to diversify investments in order to
spread the risk of loss and the whole portfolio will be considered.

Question 24

duty to diversify- trustee also has a duty to diversify

Answer 24

the stock held by the trust.

Question 25

Income beneficaries are entitled to

Answer 25

recieve income from the trust like profits for the business

Question 26

A violation by a beneficiary of an express condition of the trust violatesthe trust purpose. The court will look to the

Answer 26

totality of the circumstances to determine whether the language was intended to merely express a wish on the party of the trustor, or rather if it is an express condition for receipt and use of funds.

Question 27

duty to inform beneficaries

Answer 27

The trustee also has the duty to keep beneficiaries reasonably informed about major decisions including the trust property.

Question 28

Removal as trustee can occur when

Answer 28

trustee who breaches his duties
death
incapacity
if a serious conflict exists with the beneficiary.

Question 29

What other damages can you get when a trustee breaches his duty

Answer 29

Monetary damages

Question 30

When a settlor puts money or other assets into trust and resreves the right to revoke, creditors of the settlors can reach these assets until

Answer 30

the settlor dies