Trusts

Question 1

Trust Created By:

Answer 1

• Declaration by owner
• Transfer of property during owner’s life to trustee
• Transfer by owner in will
• Power of appointment
• Enforceable promise

Question 2

What is a Trust?

Answer 2

Relationship where Trustor give a Trustee rights to hold legal title of property under fiduciary duty for benefit of beneficiary.

Question 3

Trust Validity Requires:

Answer 3

1. Settlor’s intent
2. Trust property
3. Legal purpose
4. Ascertainable beneficiaries
5. Court can appoint trustee (need not be named)

Question 4

Express Trust?

Answer 4

All validity requirements met.

Question 5

Testamentary Trust?

Answer 5

In will

Question 6

Pour-Over Trust?

Answer 6

From pour-over will.

Question 7

Secret Trust?

Answer 7

No intent on face but gift to beneficiary to hold in trust for another.

Question 8

Semi-Secret Trust?

Answer 8

Gift to beneficiary to hold in trust but does not name beneficiary. Majority view is resulting trust; minority view is extrinsic evidence.

Question 9

Spendthift Tust?

Answer 9

Beneficiary cannot alienate his interest; protected from most creditors.

Question 10

Support Trust?

Answer 10

For beneficiaries health, education, maintanence; protected from creditors

Question 11

Discretionary Trust?

Answer 11

Trsutee can distribute/withhold from beneficiary

Question 12

Charitable Trust?

Answer 12

Charitable purpose and benefits society; if cannot be done, cy pres (court tries to sub); if not, then resulting trust.

Question 13

Honorary Trust?

Answer 13

No charitable or private beneficiary; invalid except care for pets or cemetary plots; resulting trust

Question 14

Totten Trust?

Answer 14

Beneficiary takes money left over in bank account

Question 15

Resulting Trust?

Answer 15

Implied in fact; goes back to settlor’s estate.

Arises from:
* purpose of trust ends
* Trust fails
* Illegal trust
* Excess corpus
* Purchase money resulting trust
* Semi-secret

Question 16

Constructive Trust?

Answer 16

Applied to prevent unjust enrichment for fraud, self-dealing, etc.

Question 17

Powers of Trustee?

Answer 17

1. Enumerated
2. Implied (to do what needed to carry out)

Question 18

Duties of a Trustee (AND I DID SLIDE)?

Answer 18

• Account and inform
• Not to Delegate unless uses skill and care
• Impartiality
• Due care
• Investigate (due care)
• Diversity (due care)
• Segregate and earmark
• Loyalty - no self-deal and no conflicts
• Invest prudently
• Defend action
• Enforce claims

Question 19

Liabilities of Trustee?

Answer 19

• Personally liable for violating trustee duties
• Liable for torts and contracts within scope

Question 20

Trusts - Transfer/Duties of Third Parties?

Answer 20

• Transfer to BFP cuts off beneficiary’s interest
• Transfer to non BFP can be set aside by beneficiary
• Third Party can hold property as constructive trust if knowingly receives trust property

Question 21

Allocation?

Answer 21

Unless otherwise:
* Income to beneficiaries
* Principal to remainderman
* Trustee uses best judgment

Question 22

Trusts - Modification/Revocation?

Answer 22

• Majority: Settlor can modify or revoke only if right reserved
• Minority: Settlor can modify or reven even if right not reserved
• Court can modify to meet settlor’s intent or for cy pres

Question 23

Trust Termination?

Answer 23

• Trustee cannot terminate
• Beneficiaries can terminal if all compenent, all consent, and doesn’t frustrate purpose of trust
• Court can terminate if trust purpose frustrated or impossible
• Lapse and antilapse apply

Question 24

Breach of Trustee Duties - Remedies?

Answer 24

• Trustee cannot offset losses where one breach is loss but another breach is profit
• Damages
• Constructive trust
• Tracing
• Equitible lien
• Remove trustee
• Surchage for resulting loss