Trusts Flashcards
Support Trust
A support trust is one in which the trustee is directed to pay or apply so much of the trust as is necessary for the support of the beneficiary. A support trust may be mandatory or discretionary.
Support is what the bene is accustomed to if not specified.
if discretionary, creditors can’t reach assets until distributed to the beneficiary.
discretionary trust
Trust in which the trustee is given discretion whether to apply or withhold payments of income or principal (or both) to a bene.
Creditors can’t reach assets until assets are distributed to bene.
Bene has no right to payment that they can enforce agaisnt the trustee unless trustee abuses (bad faith or dishonesty) their power in which case the court will intervene.
Spendthrift trust
A trust in which the bene is unable voluntarily or involuntarily to transfer his interest in the trust. Creditors generally are unable to collect or attach such rights.
An exception is made when the settlor is a bene of the trust and attempts to protect his own interest from creditors by the inclusion of a spendthrift clause.
Bene can’t force trustee to pay them directly but the trustee can choose to honor an assignement of the bene.
Termination by the settlor
Under the UTC a settlor can revoke or amend a trust unless the terms expressly state that it is irrevocable.
Some states follow the rule that a trust is irrevocable unless the settlor reserves the power to revoke in the trust.
Some states allow an irrevocable trust to be revoked upon written consent of all living persons with vested or contingent interests.
Termination of Trust
A trust will terminate automatically upon expiration of a term in the trust, when the purpose has been accomplished or become unlawful, contrary to public policy or impossible.
Termination by benes
Can be terminated or modified with consent of settlor and all benes, even if change conflicts with material purpose
Valid Trust
To create a valid trust there must be
* A settlor
* who intends to create a trust
* for a valid trust purpose
* who delivers the trust property
* to the trustee
* to hold for beneficiaries benefit.
If there is no assets when instrument executed, trust arises when funded and intent remanifested.
Trust won’t fail for lack of trustee, court will apoint.
