Trusts Flashcards
What is a trust?
Legal arrangement in which a settlor conveys property to a trustee to hold as a fiduciary for 1+ beneficiaries or for a charitable purpose
Who is a settlor?
Creator of the trust
Property of a trust is also known as:
- Trustus corpus
- Res
What is bifurcation of ownership?
- The trustee has legal title to the trust property AND
- The beneficiaries have equitable title
What are the key categories for trusts?
- Inter vivos OR testamentary
- Revocable OR irrevocable
- Private OR charitable
- Express OR implied
What is an inter vivos trust?
Created during settlor’s life
What is a testamentary trust?
Created by the settlor’s will
What does it mean when a trust is revocable?
The settlor can:
1. Revoke the trust AND
2. Take back the trust property
What does it mean when a trust is irrevocable?
A settlor cannot take the property back.
Is a testamentary trust revocable or irrevocable?
Not necessarily either
When is a trust private?
Trust is for 1+ ascertainable beneficiaries
When is a trust charitable?
Trust i for 1+ charitable purpoes
Both private and charitable trusts are _______ trusts.
Express
To create a private express trust requires:
- Intent to create a trust
- Specific trust property
- 1+ ascertainable beneficiaries
- In certain circumstances, a writing
The test for intent is _____.
Objective
For a private express trust, the settlor must manifest an intent to ________.
Create the fiduciary relationship w/ respect to property that is known by the law as a trust
For an inter vivos trust, how is intent manifested?
- If settlor is to be trustee, Declaration of Trust OR
- If third party is to be trustee, Deed of Trust
For a testamentary trust, how is intent manifested?
The will
A declaration/deed of trust must manifest ____________.
The settlor’s intent to create the trust
In order for a testamentary trust to be valid, the will must have been executed with _________.
The proper formalities under the Statute of Wills
In order to make an inter vivos irrevocable trust, the settlor must have ________ capacity.
Contract
In order to make an inter vivos revocable or testamentary trust, the settlor must have ________ capacity.
Testamentary
______ capacity is a lesser level of capacity than for contract.
Testamentary
Any charitable purpose that is not _____ or ______ is allowed.
Illegal
Contrary to public policy
A trust will be held invalid based on intent if:
- illegal
- Performance involves commission of tort/crime
- Contrary to public policy
What are precatory words?
Words expressing a wish/desire but not creating a legal obligation or affirmative duty
Will precatory words manifest intent to create a trust?
Typically, no.
Will precatory words manifest intent to create a trust?
Typically, no.
Other than express intent, a valid trust intent may be shown via:
- Definite/precise directions
- Directions addressed to fiduciary
- Unnatural disposition of property if no trust OR
- Extrinsic evidence of prior support of intended beneficiary by settlor
A trust must be funded with a valid interest in _________.
Property
For the property requirement of a trust, there must be a delivery of ____________ to the trustee.
A valid presently existing interest in the property
Delivery of a property to a trust can be:
- Actual
- Symbolic
- Constructive
What is actual delivery of property to a trust?
Hand-to-hand delivery of the property
What is symbolic delivery of property to a trust?
Some item representing ownership, including a written deed
What is constructive delivery of property to a trust?
Presenting the means to access the property, such as giving the trustee a key
What interests are prohibited as forming valid presently existing interest in property?
- Illusory property
- Mere expectancies
What is a pour-over will?
Will that devises some of the decedent’s estate to the then-acting trustee of an inter vivos trust created during settlor’s lifetime
All states allow pour-over wills to pour over into __________.
An unfunded inter vivos trust
At common law, a bequest to a trust required:
- Trust is already independently funded OR
- Trust is incorporated by reference
UTATA permit amendments to the trust even after the date of _______.
The will
Under UTATA, even if the will is executed prior to a trust amendment, the amendment will still govern ____________.
Property poured over to the trust
A trustee must have the capacity to:
- Acquire/hold property AND
- Administer such property
A trustee must have _____ duties.
Active
If there is no trustee, courts will appoint one unless ________.
Settlor intended otherwise
Courts will not allow an otherwise valid trust to fail for want of _________
A trustee
Who can be the beneficiary of a private express trust?
Any ascertainable person/group
If a beneficiary is too indefinite, no trust comes into being, because __________.
There would be no one to call the trustee to account and enforce the trust
Define beneficiary.
Ascertainable person/group:
1. For whose benefit trust funds may be expended AND
2. Who can sue to enforce fiduciary duties
A trust for the benefit of a class is valid if the class is reasonably ________.
Definite
When is a class reasonably definite for a trust?
There are one or more ascertainable beneficiaries who could call the trustee to account
If a class is reasonably definite, the trustee may exercise discretion in _________.
- Selecting the actual members to benefit
- Setting forth requirements for the members to be eligible
Unborn/future children or descendants are valid beneficiaries if ascertainable within _________.
The perpetuities period
Who will represent unborn or future child descendants in the interim?
An appointed guardian ad litem
The rule against perpetuities applies to __________ trusts.
Private express trusts
Interests in a trust are invalid under the Rule Against Perpetuities when __________.
They will not vest or fail within 21 years after the death of a life in being
What is a merger in terms of a trust?
If the sole trustee is the sole beneficiary, the legal and equitable interests “merge” and the trust terminates
What trusts do not have ascertainable beneficiaries but are valid all the same?
- Charitable trusts (for a charitable purpose)
- Honorary trusts (for a pet, grave maintenance)
When will a trust be required to be in writing?
- Includes valid will
- Trust holds land
Because writing is required for a valid will, a ________________ trust must always be in writing.
Testamentary
Why must there be writing for a trust holds land?
Statute of Frauds applies
What type of trust does not require writing?
Inter vivos trust of personal property
The requirements to create a charitable trust are the same as for a private trust, except that _______.
Instead of an ascertainable beneficiary, a charitable trust must be for the benefit of 1+ charitable purposes
What are allowable charitable purposes?
- Relief of poverty
- Advancement of education
- Advancement of religion
- Promotion of health, governmental, or municipal purposes OR
- Other purposes whose achievement is beneficial to the community
What political purposes ARE charitable?
Dissemination of political views
What political purposes are NOT charitable?
benefit to a political party
The rule against ______ does not apply to charitable trusts.
Perpetuities
Because a charitable trust may last forever, such a trust is more easily modified or terminated than a private trust under _______.
The cy press doctrine
Because a charitable trust must be for a charitable purpose rather than 1+ ascertainable beneficiaries, the law grants ___________ as parens patriae to enforce charitable trusts.
The state attorney general
A trust with neither a charitable purpose nor an ascertainable beneficiary can be upheld under common law as a ________ trust.
An honorary trust
What occurs in an honorary trust?
Trustee is “on her honor” to fulfill the settlor’s intent
Typical honorary trusts are for the care of _____ or _____.
A pet
A grave
If a trustee is unwilling to perform the duties required of a trustee, what occurs?
- Trust will fail AND
- The property passes on a resulting trust to the next taker
If a trust violates the rule against perpetuities, what options are available?
Trust is invalidated as inception
OR
Valid for 21 years
Either way, honorary trust endures for 21 years
Court may reduce the amount of property in an honorary trust if _______.
It is excessive for the purpose
A Totten trust is also known as a ___________ trust.
Tentative bank account trust
What occurs in a Totten trust?
Named beneficiary receives the remainder of a bank account at the time of trustee’s death
In a Totten trust, __________ serves as trustee and retains full control of the money in the account.
Bank account depositor
A Totten trust is revocable via:
- Withdrawal of funds
- Act manifesting intent to revoke OR
- Contradictory will
A Totten trust is more in the nature of _______ than a true trust.
An early form POD contract
What is a constructive trust?
Passive, temporary arrangement in which the trustee’s sole duty is to transfer the title/possession to the beneficiary
A constructive trust is a _____, not a true trust
Equitable remedy
A trustee of a constructive trust must account for:
- All profits from…
- All damages to…
…the property until it is conveyed
The party attempting to establish a constructive trust must do so according to what standard?
Clear and convincing evidence
Where a wrongdoer uses ____________ property to acquire other property, the wrongdoer holds the proper in constructive trust for the victim.
Wrongfully-obtained property
Where there is fraud, duress, or mistake of fact, the wrongdoer holds property in ____________ for the victim.
Constructive trust
The beneficiary of a fraudulent will is deemed a constructive trustee whose sole duty is to ____________ .
Transfer the property to the decedent’s heirs who would have taken but for fraud
When there is a breach of fiduciary duty, who becomes the constructive trustee?
Fiduciary who benefits improperly
What is the slayer rule?
When estate assets are distributed to the decedent’s killer, the wrongdoer holds any property as constructive trustee for person who would have received if killer predeceased the victim
Breach of promise will NOT give rise to a constructive trust unless:
- Fiduciary relationship between promisor/promisee
- Fraudulent promise
- Detrimental reliance by intended beneficiary
- Secret trust
- Promise to debtor by buyer at foreclosure sale
A secret trust arises when _______.
A will makes a gift that was made in reliance of beneficiary’s promise to hold the property in trust for the benefit of another
_______ defenses are available for constructive trusts.
Typical equitable defenses
What is a resulting trust?
An equitable reversionary interest that arises for example when a trust fails
A resulting trustee’s sole duty is to ________.
Convey the trust corpus back to the settlor/settlor’s estate
A resulting trust will arise when a private express trust terminates according to its own terms, but ________.
There is no provision governing how the trust’s remaining corpus will be distributed
A resulting trust will arise when a private trust fails due to lack of any ascertainable _________.
Beneficiary
What happens if a beneficiary of a private express trust is dead or cannot be found?
Resulting trust arises
A resulting trust arises when a private express trust fails because it is _____ or _____.
Void
Unenforceable
A resulting trust will arise when a charitable trust with specific intent fails for _____ or _____ AND ______ does not apply.
Impracticality
Impossibility
Cy pres
A purchase money resulting trust arises when ___________.
One party supplies consideration for the purchase of property, to which another party - with purchaser’s consent - takes legal title
Who is the trustee in a purchase money resulting trust?
Title holder
When must consideration be paid in a purchase money resulting trust?
Either when:
1. Trustee takes title OR
2. Before trustee takes title
Under a purchase money resulting trust, there is a rebuttable presumption that ___________.
The legal title holder is holding the property in trust for the purchaser
If there is ____________, there is a rebuttable presumption of a gift rather than a purchase money resulting trust.
Close personal relationship between the parties
What evidence is admissible to prove the existence of a secret trust
Parol evidence
A party attempting to establish a secret trust must do so by what standard?
Clear and convincing evidence
What is the remedy for a secret trust?
If a secret trust is proven to exist, then:
1. A constructive trust is imposed AND
2. Intended beneficiary receives the property outright
A semi-secret trust arises when _________.
A will makes a gift to a trustee as trustee but doesn’t name the beneficiary of the trust
Under majority rule, is a semi-secret trust valid?
No; the gift fails
Under the restatement rule, a semi-secret trust arguably results in __________.
Injust enrichment of the residuary or intestate takers
Who is the trustee in a purchase money resulting trust?
Title holder
Who is the beneficiary in a purchase money resulting trust?
Party who supplied the consideration
Beneficiary is permitted to voluntarily alienate her interest in a trust unless the interest is _______ or _______.
Discretionary
Subject to a spendthrift clause
A creditor may attach the beneficiary’s interest by __________.
Obtaining a judgment ordering the trustee to pay the creditor directly
The terms of a discretionary trust grant the trustee discretion over __________.
To whom, when, or how much trust income/principal to distribute to beneficiaries
Under a pure discretionary trust, a trustee has broad discretion to __________.
Pay/withhold trust income/principal to/from a beneficiary
What is voluntarily alienation in a pure discretionary trust?
Assignee will only receive distribution if the trustee exercises her discretion to make a distribution
Unlike a beneficiary, _______ or ______ cannot compel distribution under a pure discretionary trust.
An assignee
A creditor
if a trustee has notice of assignment under voluntary alienation of a pure discretionary trust, a trustee must _________ or be held personally liable.
Pay the assignee, not the beneficiary
What is involuntary alienation under a pure discretionary trust?
Creditor may attach the beneficiary’s interest but will only receive distribution if the trustee exercises her discretion to make a distribution
if a trustee has notice of creditor’s attachment under involuntary alienation of a pure discretionary trust, a trustee must _________ or be held personally liable.
Satisfy the creditor before paying the beneficiary
Under a pure discretionary trust, creditors may compel payments when _______ is the beneficiary of the trust.
the settlor
In a support trust, the trustee has the power to ________.
Distribute trust income/principal to the beneficiary only as necessary for the beneficiary’s support/maintenance
Whether the beneficiary’s other income will be considered in determining the amount of support in a support trust depends on _______.
The settlor’s intent
Under traditional law, if the terms of the trust are silent as to whether to consider beneficiary’s other income in a support trust, then ______.
Do not consider
Under modern law, if the terms of the trust are silent as to whether to consider beneficiary’s other income in a support trust, then ______.
Do consider
The rules for voluntary alienation and involuntary alienation in a support trust are the same as for a discretionary trust, except that _______.
supplier of necessities - and in some states, spouse and children - can recover through the beneficiary’s right to support
A spendthrift clause protects _________.
Beneficiary’s interest by prohibiting both voluntary and involuntary alienation of that interest
Spendthrift clauses generally prevent a creditor from:
- Attaching beneficiary’s interest AND
- Intercepting a distribution
A court will disregard a spendthrift clause and allow a preferred creditor to ____________.
Attach to a beneficiary’s future income/principal payments from the trust
A beneficiary’s preferred creditor has only as much of a right in trust assets as ________.
The beneficiary
Preferred creditors include:
- Government
- Dependents
- Persons supplying necessities
- Tort creditors
What does surplus do?
Attaches future payments to the beneficiary, despite a spendthrift clause, where the income to be paid exceeds what is needed to maintain the beneficiary’s “station in life”
Station in life is synonymous with ___________.
Standard of living
Under a majority view, is a spendthrift provision in a trust where the settlor is also the beneficiary valid?
No
Under traditional law, a trustee only has those powers that are expressly granted in ______.
Terms of the trust
In addition to powers expressly granted by the terms of a trust, most states also grant the trustee:
- Enumerated transactional powers
- All other powers of an outright owner
What are a trustee’s imperative powers?
Powers a trustee must exercise but which are subject to review for abuse of discretion
What are a trustee’s discretionary powers?
Powers the trustee may/may not exercise but which are subject to review for abuse of discretion.
Under the Restatement of Trusts, courts will control the trustee in the exercise of a power only where:
Trustee exercises power
1. In bad faith OR
2. for improper motive/acts beyond reasonable judgment
A trustee can petition a court for power to undertake an action that is ______________.
Not authorized under the terms of the trust
Under the common law, what percentage of votes are required for joint trustees to exercise their power?
Unanimous agreement
Under modern law, what percentage of votes are required for joint trustees to exercise their power?
Majority of joint trustees
Although a trustee today has extensive powers over the trust property, all such powers are held by the trustee in a _______ capacity.
Fiduciary
Primarily, a trustee has fiduciary duties of ____ and _____.
Loyalty
Prudence
A trustee must act as a reasonably prudent person would in _________, and in the sole interests of ________.
handling her own affairs
the beneficiaries
A trustee owes the beneficiaries a _________ level of loyalty.
Undivided
Any form of ________ or conflict of _________ is a breach of the duty of loyalty
self-dealing
interest
Borrowing _______ is a breach of a trustee’s duty of loyalty.
Trust funds
Using trust assets to secure _______ is a breach of a trustee’s duty of loyalty.
Personal loan
Loaning _____ funds to a trust is a breach of a trustee’s personal duty of loyalty.
Personal
May a trustee personally gain from her position as trustee?
No
Selling trust assets between multiple trusts which ___________ breaches a trustee’s duty of loyalty.
trustee is the trustee of
A trustee may not purchase trust assets even if ________.
Purchase price is fair
Sale of ______ to the trust breaches a trustee’s duty of loyalty.
Trustee’s own property
A corporate trustee’s investment in _______ breaches a trustee’s duty of loyalty.
Corporation’s own stock
What is the no-further inquiry rule?
There is no good faith or fairness defense that would allow self-dealing
If an exception to the “no further inquiry” rule applies, the trustee is subject to ________.
Exacting scrutiny for acting in the best interests of the beneficiary
What are the exceptions to the “no further inquiry” rule?
- Authorization by trust terms
- Authorization by beneficiary
- Authorization by judiciary
- Affiliated investment
Even if an exception to the “no further inquiry” rule applies, the trustee must __________.
Still act in good faith for the best interests of the beneficiaries
What are the remedies a beneficiary can choose when there is a loyalty breach?
- Recover profits from self-dealing
- Receive compensation for losses
- Set aside transaction
What is a trustee’s general duty of prudence?
A trustee must exercise the care, skill, and caution that a prudent person would in managing her own property under the circumstances
How do a trustee’s special skills/expertise affect their duty of prudence?
Will be held to a higher standard as befits their skills
A trustee must comply with the terms of ________.
The trust
All states have enacted the prudent investor rule, replacing the earlier _____ and _____ rules.
Legal lists
Prudent man
What are legal lists?
Lists of permitted investments for trustees and other fiduciaries
What are proper investments under the old legal lists rule?
- Government securities
- First mortgages on land
- High grade corporate bond
What are improper investments under the old legal lists rule?
- Unsecured loans
- Second mortgages on land
- Corporate stocks
- Unproductive land
- New businesses
What is the old “prudent man” rule?
Required a trustee to act as a reasonably prudent man would in investing his own property, trying to maximize return while preserving
Under the prudent man rule, each individual investment must be considered __________.
Individually
Under the prudent man rule, each individual investment is measured at what time?
Time of investment
Probably the most common version of the prudent investor rule is the _____________.
Uniform Prudent Investor Act
Under the prudent investor rule, any type of investment is permitted as long as _______.
The trustee acts prudently
Under the prudent investment rule, a trustee’s performance is measured by assessing ___________.
the entire trust portfolio
A trustee is required to diversity the trust’s investments unless _______.
The trustee reasonably determiens that the purpose of the trust is best served w/o diversification
How often is a trust best served without diversification?
Not often; it’s an exceptional case
At common law, what kind of delefation is allowed?
Only tasks which would be unreasonable for trustee to perform
Under modern law, a trustee may delegate if:
- Doing so is prudent under the circumstances AND
- Trustee exercises reasonable care, skill, and caution
Under modern law, a trustee must exercise reasonable skill, and caution in:
- Selecting the agent
- Instructing the agent
- Periodically monitoring the agent
What is the trustee’s duty of impartiality?
Acting impartially with due regard to beneficiaries’ various interests with respect to distribution, investment strategy, and other matters
The duty of impartiality requires a trustee to act with due regard to beneficiaries’ various interests.
What determines “due regard”?
Terms of the trust
Trusts commonly provide for ____ to be paid to a beneficiary for life, with the remainder _______ to be paid to another beneficiary at the life benficiary’s death
Income
Principal
Under traditional law, the allocation of trust property to income or principal is based on __________.
The form of the property
A life tenant is a _____ beneficiary?
Income beneficiary
What income is allocated to life tenants?
- Interest from bank accounts and bonds
- Cash receipts
- Certain insurance proceeds relating to loss of income
What expenses are allocated to a life tenant?
- Interest on debt
- Minor repairs
- Recurring taxes assessed against the principal
- Insurance premiums
- 1/2 of trustee’s & advisor’s compensation
- 1/2 of accounting & judicial expenses
What principal is allocated to remainderperson?
Underlying assets that are productive of income
Reaminderpersons receive receipts from entities as part of their due principal. What receipts will this include?
- Liquidating distributions
- Capital gains income
- Property other than money, such as stock splits/dividends
- Insurance proceeds
The principal assets that may be allocated to a remainderperson may include ______ awards.
Eminent domain awards
What expenses are allocated to a remainderperson?
- Principal portion of debt
- Major repair/improvements
- Insurance premiums
- Estate taxes
- 1/2 of trustee’s & advisor’s compensation, accounting, & judicial expenses
A trustee must not discriminate a between ____ and _____ beneficiaries
Present
Future
What is a trustee’s adjustment power?
Trustee has the power to reallocate income to principal or vice versa to show due regard to respective interests of beneficiaries
What is a unitrust?
“income” beneficiary receives an annual fixed percentage of the trust corpus; the “principal” beneficiary receives the rest
What is a trustee’s duty not to commingle trust property?
The trustee must separate trust assets and her own assets
What is a trustee’s duty to earmark trust property?
Duty to designate the property as being held in trust and not belonging to the trustee personally or otherwise
Under common law, what liability does a trustee bear for not earmarking?
Strict liability, regardless of whether the earmark was the cause of loss
Under modern law, what liability does a trustee bear for not earmarking?
Liable for damages caused by failure to earmark
What is a trustee’s duty to disclose?
Trustee is under a duty to keep/render accounts to the beneficiary
In administering the trust, the trustee must respond promptly to a request by a beneficiary for _________.
Information reasonably related to the beneficiary’s interest in the trust
The common law today recognizes a duty for the trustee to make affirmative disclosure to the beneficiaries any _____________.
Significant/unusual developments in the administration of the trust
If a beneficiary does not seasonably object to a trustee’s report/accounting, the trustee is released from liability as to _____________.
All matters fairly disclosed in the report/accounting
What remedies are generally available to a beneficiary for a trustee’s breach of duties?
- Damages
- Constructive trust remedy
- Tracing & Equitable lien on the property
- Ratify transaction
- Set aside transaction
- Remove trustee
A beneficiary may recover compensatory damages for a trustee’s breach of duties in order to __________.
Make whole the trust estate and distributions
A trustee cannot offset loss from one breach of duty with the gain from ___________.
Another breach of duty
What is an exculpatory clause?
Absolves the trustee of liability for damages
Exculpatory clauses are generally enforceable, but not for:
- Bad faith
- Reckless indifference OR
- Willful misconduct
What does an extended discretion clause purport to do?
Give the Trustee unfettered or sole discretion
An extended discretion clause entitles the trustee to ___________ but does not ___________.
Additional deference
Absolve the trustee of liabilty for abuse of discretion or failure to act in good faith
Under traditional law, a trustee is personally liable for all contracts the trustee enters into on behalf of the trust unless ________
The contract expressly relieves the trustee of liability
Under traditional law, a trustee is eligible for indemnification if the trustee:
- Acted within the scope of trustee’s power AND
- Is not personally at fault
Under modern law, when the other party to the contract enters into the contract with the knowledge that ________________, the trustee can only be sued in her representative capacity
The trustee is acting in her representative capacity
Under traditional law, a trustee is sued for torts in _______ capacity.
Personal
At traditional law, a trustee is personally liable for torts, meaning the victim may _________.
Reach the trustee’s personal assets
Under traditional law, a trustee is permitted to receive indemnification for torts if __________.
Trustee was not at fault
At modern law, a trustee is sued for torts in her personal capacity only if _________.
The trustee was personally at fault for the tort
At modern law, if ____________, a trustee is sued for torts in her representative capacity.
Trustee is not at fault
Even if a transaction involves a breach of trust, _________ will prevail over the beneficiaries
Third-party BFP
If there is a breach of trust, will BFP be liable for damages?
No
Transactions in breach of trust with non-BFPs can be set aside by _____ or _____.
A beneficiary
The trustee
A third party is not considered a BFP if:
A third party knew/should have known of the existence of the trust by reasonable inquiry
A third party who knowingly engages in a transaction in breach of trust may be liable for ________.
Damages
A trust ends when _________.
Pursuant to its terms, all trust property has been disbursed
Who can revoke a revocable trust?
The settlor
A settlor of a revocable trust may revoke the trust and _______.
Take back the trust property
Under the traditional view, a trust is presumed irrevocable unless:
- Settlor expressly reserved the right to revoke the trust AND
- Settlor complies with all provisions set forth in the trust instrument regarding revocation
Under the modern view, all trusts are presumed revocable unless __________.
The trust instrument explicitly states that it is irrevocable
Under the modern view, the trust may be revoked in any manner that _______.
Manifests revocatory intent
If the trust contains provisions prescribing how to revoke, those provisions are not to be read as exclusive unless _________.
Stated expressly so
Under a modern view, creditors of the settlor of a revocable trust can __________.
Recover against the trust property
Where a settlor can revoke the trust, the settlor can also _____ the trust.
Modify
Revocable trusts are generally amendable regardless of whether _______
The right to amendment was explicitly granted
An irrevocable private express trust may be modified/terminated if:
- Unanimous agreement between (still-living) settlor & all beneficiaries
- The Claflin doctrine
- Equitable deviation doctrine
A unanimous agreement between settlor and all beneficiaries is not available to terminate an irrevocable trust if _________
Settlor is dead
What is the Claflin doctrine?
Permits modification or termination if 1. All beneficiaries agree AND
2. Termination would not be contrary to a material purpose of the settlor
A _____ provision is usually material and thus blocks modification under the Claflin doctrine.
Spendthrift
The ______ of a discretionary trust is usually material and thus blocks modification under the Claflin doctrine.
Purpose
Postponement of _______ is usually a material purpose and thus blocks modification under the Claflin doctrine.
Enjoyment
The equitable deviation doctrine is also known as ________.
The doctrine of changed circumstances
What is the equitable deviation doctrine?
A trustee or beneficiary may request that the court modify a trust due to changed circumstances if:
1. Unknown & unanticipated changed circumstances AND
2. Continuing under existing terms would impair trust’s purposes
How does the modern view affect the equitable deviation doctrine?
Deviation would further the purpose of the trust
Cy pres only applies to _________.
Charitable truts
Cy pres means _________.
As near as possible
Cy pres allows the court to modify a charitable trust that would otherwise fail for:
- Impossibility
- Illegality OR
- Impracticality
Before applying cy pres, the court must determine that:
- A general charitable intent exists
- Specific intent has become impossible, illegal, or impractical.
How does the modern view affect the cy pres doctrine?
- General charitable intent is presumed
- Specific intent may be “wasteful,” not just impossible, illegal, and impractical
If cy pres fails because there is specific charitable intent, then _________.
Resulting trust
How often is a trust best served without diversification?
Not often; it’s an exceptional case
At common law, what kind of delefation is allowed?
Only tasks which would be unreasonable for trustee to perform
At common law, a trustee cannot delegate ________ management.
Investment
A third party who knowingly engages in a transaction in breach of trust may be liable for ________.
Damages
