Trusts

Question 1

Splitting of Ownership in a Trust

Answer 1

The legal interest - trustee
Equitable (beneficial) interest - beneficiary

The beneficiary is the person who enforces the trust and the person the trustee owes duties toward.

Question 2

Settlor

Answer 2

The person who create the trust by supplying the intial trust property.
Also called trustor, grantor, and donor.

Question 3

Trust Property

Answer 3

A trust must hold property. Also called the principal, corpus, trust
estate, and res

Question 4

Duty of Trustee

Answer 4

A trustee is a fiduciary and thus:
(1) must deal with the property with reasonable care;
(2) must maintain the utmost degree of loyalty; and
(3) is personally responsible if their conduct falls beneath required standards.

Question 5

Two types of Express Trusts

Answer 5

Private—private beneficiaries (certain ascertainable persons)

Charitable—charitable beneficiaries (indefinite class of persons or the public in general)

Question 6

Trusts Created by the Operation of Law

Answer 6

Resulting Trusts - Resulting trusts arise from the presumed intention of the owner of the property.
Constructive Trusts - Constructive trusts are an equitable remedy used to prevent unjust enrichment.

Question 7

What are the 8 elements of a valid Express Trust?

Answer 7

(1) a settlor with capacity to convey,
(2) who has a present intent to create a trust relationship (split legal and equitible title),
(3) names a competent trustee with duties (inter vivos only),
(4) names a definite beneficiary,
(5) the same person is not the sole trustee and beneficiary
(6) the trust contains property
(7) the trust has a valid purpose (not illegal, against public policy, or violative of the RAP
(8) complies with the mechanics and formalities

If no property when instrument executed, trust arises when funded and intent remanifested.

Question 8

Requirements for Intent to create a trust

Answer 8

• Capacity is the same as for a will (lower than contract)
• Intent may be manifested by written or spoken words or by the conduct of the settlor—unless the Statute of Wills or the Statute of Frauds applies.
• Intent must be expressed at the time the settlor owns the property.
• The settlor’s intent must be that the trust take effect immediately, not at some future time (otherwise it is a gratutious promise).
• Precatory language does not create a trust. Must be definite and precise.
• Failure to name a trustee, or a promise to name a trustee
  in the future, may evidence a lack of present intent and
  prevent delivery of the res.

Question 9

Beneficiary requirement for a trust

Answer 9

• An ascertainable beneficiary is necessary to the validity of every trust except charitable and honorary trusts
• A beneficairy can disclaim. If a valid disclaimer is made, the trust is read as though the disclaimant was deceased as of the relevant date.
• Beneficiaries may be “definite” even though not yet ascertained (for example, unborn children). Beneficiaries must be ascertainable (cannot be to “friends”)
• Under the UTC, a settlor may empower the trustee to select the beneficiaries from an indefinite class. Failure to exercise the power gives rise to a resulting trust in favor of the settlor or their successors.
• If a trust fails for lack of a beneficiary (for example, because the beneficiaries are not ascertainable), a resulting trust in favor of the settlor or their successors is presumed

Question 10

disclaimer of a trust

Answer 10

• If a valid disclaimer is made, the trust is read as though the disclaimant was deceased as of the relevant date.
• cannot dislcaim if beneficiary has exercised any dominion or control over the interest or accepted any benefits under the trust.

Question 11

Anti Lapse Statutes and Trusts

Answer 11

• Most anti lapse statues apply only to testamentary gifts.
• Therefore, the default rule is that the law will not apply the benefits of a trust to the children of relative beneficiaries who die before their interest matures.
• However, several states and the UPC do apply the anti-lapse statute to future interests created in trusts

Question 12

Divorce and Trusts

Answer 12

A final decree of divorce or annulment revokes all beneficial gifts and fiduciary appointments in favor of a former spouse. The UPC and several states have extended the “divorce revokes” rule to beneficiary designations of individuals who are related to the former spouse but not the settlor.

Question 13

Requirement of Trust purpose

Answer 13

A trust may be created for any purpose unless it is:
* Illegal
* Impossible
* Intended to defraud the settlor’s creditors or based on illegal consideration
* against public policy

Question 14

What if there is a conditition violative of public policy in a trust?

Answer 14

Whether it is a condition precedent or subsequent, the condition is invalidated but the trust continues without it.

Question 15

Trusts and RAP

Answer 15

RAP generaly applies. Howerver, many states have abolished trusts from RAP.

Question 16

Trustee Requirement for Trusts

Answer 16

• Even if trustee dies, refuses to accept appointment, or resigns. The court will appoint a successor trustee unless it is against the trustees intent.
• If trustee duties are not spelled out in the trust agreement, court will imply duties.
• Anyone who has capacity to acquire and hold property for their own benefit and has capacity to administer that property may be a trustee. A trustee is entitled to reasonable compensation and reimbursement of expenses
• In an inter vivos trust the settlor can be the trustee.

Question 17

Grounds for removal of a trustee

Answer 17

Grounds for removal include:
(1) a serious breach of trust;
(2) serious lack of cooperation among co-trustees;
(3) unfitness, unwillingness, or persistent failure to administer; or
(4) a substantial change in circumstances.

The basic factor considered is whether continuation in office would be detrimental to the trust.

Question 18

relation back of trustee responsiblity

Answer 18

A testamentary trust is treated as if it were in existence as of the settlor’s death, and the trustee’s acceptance “relates back” to that date. It is thus possible for a trustee, by accepting, to become liable (in their fiduciary capacity) on tort claims arising prior to the time the trustee accepted.

Question 19

mechanics and formalities of inter vivos trust (is writing required?)

Answer 19

• Transfer (Delivery) of Property to Trustee.
• writing required for trusts of land (statute of frauds). Note an otherwise invalid oral trust of land may be enforced by imposing a constructive trust.
• Most states do not require a writing for a trust of personal property but oral trusts of personal property may be established only by clear and convincing evidence.
• If the holder of the legal title acts as if they are a trustee, part performance will preclude the Statute of Frauds defense.
• Parol Evidence Rule - Most states allow extrinsic evidence where an ambiguity appears on the face of the writing

Question 20

Mechanics and formalities of pour over trust

Answer 20

• Under traditional view, to create a valid pour over trust the trust must have been established or executed at the time of the will’s execution.
• under the modern view, a settlor can make gifts by will to a trust—even an amendable and revocable trust—established or executed during their lifetime. The trust must be clearly identified from language in the will.
• Property goes into the trust as the trust exists at the date of the testator’s death - so modifications can be made up to that point even though the trust has already been executed.
• The trust may remain unfunded during the settlor’s lifetime. The pour-over property can be the initial trust funding if 1) The trust is identified in the will, and 2) The trust is executed before the testator’s death
• Such a trust can be created by someone else! Even if unfunded

Question 21

revocability of inter vivos trust

Answer 21

• Under the UPC an inter vivos trust is revocable by the settlor
• Power to revoke also inlcudes power to amend or make later additions

Question 22

Testamentary trust

Answer 22

• Testamentary trusts are created for the first time through the settlor’s valid will.
• Trust terms must come from the will itself, from a writing incorporated by reference into the will, or from the exercise of a power of appointment created by the will.

Question 23

what is a “secret trust”?

Answer 23

• A sectret trust occurs when the settlor agrees with a will beneficiary that the beneficiary will hold the property in trust for someone else—and relies on the beneficiary’s promise—but the will does not state the trust nature of the gift.
• If the intended beneficiary can establish the settlors intentions with clear and convincing evidence the court will impose a constructive trust.
• A constructive trust will be imposed in even if the will beneficiary did not make the promise until after the will was executed.
• Reliance of the testator is the key element.

Question 24

What is a semi secret trust?

Answer 24

• Also a kind of failed testamentary trust
• The will makes a gift that is clearly supposed to be a trust, but fails to name the beneficiary.
• The gift fails, and the named trustee holds the property as a resulting trust for the testator’s successors in interest.
• Extrinsic evidence not allowed to determine intended beneficiary.

Question 25

Can a beneficiary transfer their interest in a trust?

Answer 25

• Absent restrictions by statute or by the trust instrument (such as a spendthrift provision), a beneficiary may freely transfer their interest in the trust. The assigned interest remains subject to all previous conditions and limitations.
• Default - the beneficiary’s creditors may reach the beneficiary’s interest in the trust. The interest is subject to judicial sale. To avoid this, a court may order the trustee to pay the beneficiary’s income to the creditors until the debt is satisfied

Question 26

What is a discretionary trust?

Answer 26

• In a discretionary trust, the trustee is given discretion whether to apply or withhold payments of income or principal (or both) to a beneficiary.
• Generally, creditors cannot reach a discretionary trust but may be entitled to proceeds if the trustee decides to make a payment to the beneficiary.

Question 27

What is a spendthrift trust?

Answer 27

• A spendthrift trust precludes the beneficiary from voluntarily or involuntarily transferring their interest in the trust, and the beneficiary’s creditors are precluded from reaching it to satisfy their claims.
• This is a valid restraint on alienation.
• The beneficiary’s creditors cannot reach the beneficiary’s trust interest until income or principal has been paid to the beneficiary.
• Exception: A creditor can generally reach a spendthrift trust if the settlor is a beneficiary.
• A restriction on involuntary alienation only would probably be invalid.

Question 28

What is a “domestic asset protection trust”

Answer 28

• In most states, a settlor cannot use a spendthrift trust to protect their own property from their own creditors by naming themselves as a beneficiary.
• Some states allow this.

Question 29

What is a support trust?

Answer 29

• A support trust directs the trustee to pay only so much of the income or principal (or both) as is necessary for the beneficiary’s support.
• The trustee is required to pay or apply so much of the trust as is necessary for the support of the beneficiary, especially the income.
• May be mandatory or discretionary.
• Support trusts are non-assignable and impliedly spendthrift.
• If no details in the trust agreement, the level of support is decided by the court based on the settlor’s intent.

Question 30

Can the creditors of a trustee reach a trust?

Answer 30

No. They have only a personal claim against the trustee.

Question 31

What happens if a trust is terminated?

Answer 31

If the trust is terminated the trustee must wind down the trust and distribute the trust property to the remainder beneficiares or as agreed by the beneficiaries.

Question 32

When may a trust be terminated/modified by the beneficiaries?

Answer 32

Beneficiaries may terminate the trust
* When the settlor revokes it with consent of all the beneficiaries
* When the all of the beneficiares consent AND no material purpose of the trust would thereby be frustrated.

All beneficiaries must consent, including **unborn **and unascertained beneficiaries, as well as beneficiaries of future interests, no matter how uncertain or contingent. Most state do not allow guardians to constent to termination on behalf of unborn beneficiaries.

The following provisions in a trust usually preclude termination/modification by beneficiaries based on a violation of material purposes:
* Support of beneficiary
* Spendthrift provision
* Payment at certain ages
* Payment at certain dates
* Discretionary trust

Question 33

When may a trust be terminated by operation of law?

Answer 33

The trust may terminate by operation of law:
* when the trust property has been exhausted
* If legal and equitable titles merge

Question 34

When may a trust terminate by its own terms?

Answer 34

The trust may terminate by its own terms:
* when term or expiration date in the agreement has occured.
* when all of the purposes of the trust have been accomplished or have become unlawful, contrary to public policy, or impossible to achieve.

Question 35

When may a trust be terminated/modified by the settlor?

Answer 35

• Generally an inter vivos trust is revocable during the life of the settlor.
• If the trust is irrevocable by its terms, then the settlor can revoke it only with consent of all the beneficiaries

Question 36

When may a trust be terminated/modified by the court?

Answer 36

the trust may be terminated by the court:
* if modification by agreement of beneficiares is available and the intests of the nonconsenting beneficiares could be adequately protectted.
* if uninanticipated circumstances threaten the purposes of the trust.
* if continuation of the trust is impraticable or wasteful.
* if the value of the trust is insufficient to justify administering it.

Question 37

When may a trust be terminated/modified by the trustee

Answer 37

• somes states: if trust property is less than $50,000 and the amount is insufficient to justify the cost of administration. Must provide beneficiaries with notice.
• the trustee can combine several trusts into one trust or divide one trust into several trusts, provided doing so does not frustrate any purposes of the trusts or impair the rights of any beneficiary. Must provide beneficiaries with notice.

Question 38

When may a trust be subject to judicial reformation?

Answer 38

In some states, the court can reform the terms of a trust to reflect the settlor’s intent if a mistake in the terms is shown by clear and convincing evidence.

Question 39

The sources of the trustees power

Answer 39

1. Express power from terms of trust
2. Powers granted by state law
3. Implied powers necessary to manage trust including the powers to:
   * Sell trust property
   * Lease trust property
   * Incur reasonable expenses
   * Hire agents
   * Mortgage trust property
   * Repair

Question 40

The powers of joint trustees

Answer 40

Unanimity preferred.
In many states joint trusteees may act by majority if unanimity cannot be reached

Question 41

What are mandatory trustee powers?

Answer 41

• Trustees are required to exercise mandatory or imperative powers.
• If a trustee fails or refuses to perform under an imperative power, a court will, upon petition, order the trustee to exercise the power as required by the trust instrument

Question 42

Discretionary trustee powers

Answer 42

• Powers that the trustee may use.
• Trustee must exercise a discretionary power in good faith.
• The beneficiary of a discretionary trust cannot interfere with the exercise of the trustee’s discretion unless the trustee abuses her power.
• Exercise of discretionary power is still reviewable by court, but usually only in cases of bad faith or dishonesty.

Question 43

Trustee’s duty to administer trust

Answer 43

trustee must:
* personally administer the trust in good faith, prudently, and** in accordance with the terms and purposes of the trust instrument and the interests of the beneficiaries**.
* Act impartially with respect to multiple beneficiaries.

Question 44

Trustee’s duty of loyalty

Answer 44

• Basically a duty of fairness toward beneficiaties .
• Agent cannot put their interests or the interests of third parties above the interests of the beneficiaries in their management of the trust.

For example, the trustee:
* cannot deal with trust in their individual capacity
* cannot buy or sell trust assets
* may not sell property of one trust to another trust of which they are also a trustee.
* may not borrow trust funds nor loan their personal funds to the trust
* cannot use trust assets to secure a personal loan.
* cannot personally gain through their position as trustee.
* cannot invest in its own stock as a trust investment.

remember:
* these duties also apply to transactions with close relatives, representatives, or interests of the trustee.
* a trustee’s good faith or actual benefit to the trust is irrelevant.
* Beneficiary may be able to void the violative transaction

Question 45

Beneficiary’s Rights in Case of Prohibited Transaction by Trustee

Answer 45

A transaction involving trustee self-dealing is voidable by the beneficiary affected by the transaction unless:
(1) a court or the terms of the trust approved it;
(2) the beneficiary failed to bring suit within the prescribed time period;
(3) the beneficiary gave their consent, ratification, or release; or
(4) it involves a contract or claim arising before the trustee became trustee

Question 46

Trustee’s Duty to report

Answer 46

A trustee must:
(1) provide the qualified beneficiaries with the trustee’s details
(2) respond to beneficiary requests for information ; and
(3) furnish an annual accounting of the trust.

Question 47

Trustee’s duty to Separate and Earmark Property

Answer 47

• Trust assets must be kept physically separate from trustee’s personal assets and assets of other trusts; i.e., no commingling.
• Trustee is liable for any resulting losses or profits

Question 48

Trustee’s duty to Preserve and Make Trust Property Productive

Answer 48

• Trustee must use reasonable care to invest the property (prudent investor rule), collect claims due, lease or manage land, record documents, pay taxes, and secure insurance.
• Trustee is liable for losses resulting from breach and for any profit that would have accrued to the trust but for the breach, plus interest

Question 49

Trustee’s investment responsibilities - Uniform Prudent Investor Act (UPIA).

Answer 49

As a default, Trustee’s investment responsibilities are governed by the Uniform Prudent Investor Act (UPIA).
Standard of Care – A trustee must exercise reasonable care, skill, and caution when investing and managing trust assets.
Portfolio Approach – Prudence is Evaluated as to Overall Investment Strategy, not individual investments
Factors Considered in Making Investment Decisions – inlcude purpose of the trust, general economic conditions, tax consequences, role in overall portfolio income, appreciation, etc.
Diversification – A trustee generally must diversify the investments
Relevance of Skill of Trustee - A skilled trustee, professional trustee, or attorney may be held to a higher standard. A lack of skill does not excuse compliance with basis standards.
Review of trust property - If imprudent investments are discovered by a successor trustee, the successor trustee must bring the trust into compliance and may need to sue the prior trustee for breach of duty.
Impartiality - trustee must not preference one beneficiary over another. This inlcudes preserving the trust for future beneficiaries.
Delegation – A trustee may delegate investment and management functions but a trustee must act prudently in 1) deciding to delegate 2) selecting an agent and scope of delgation, 3) reviewing the delegation.

Notes:
* Compliance with the UPIA is determined in light of the facts and circumstances existing at the time of the trustee’s decision or action. Substantial compliance is sufficent.
* Watch for a fact pattern containing a revocable trust and a settlor directing the trustee to make nondiverse investments. Because the trustee of a revocable trust owes their duties to the settlor in many states, such a directive may relieve the trustee of their duty to diversify.
* social investing not allowed as a default.

Question 50

Questions to ask when determining compliance with the fiduciary obligation

Answer 50

• Was the act one that the trustee was authorized to perform by the instrument, by state law, or by implication?
• If the act was proper to perform, did the trustee do so with the appropriate care, skill, and caution?

Question 51

Beneficiaries Remedies for Trustees Breach of Trust

Answer 51

The Court may order:
1. Specific performance of the trustee’s duties
2. Enjoinment of breach
3. payment of money or restoration of property
4. suspension or removal of trustee

Question 52

Remedies to beneficiares for self dealing by the Trustee

Answer 52

The beneficiary may have a choice of the following remedies:
* Affirm the transaction if the trust profited
* Set aside the transaction if the trust lost money
* Trace and recoup profits from the trustee if the trustee profited

Question 53

Damages to beneficiaries for Trustee’s breach of Trust

Answer 53

The trustee is liable to the beneficiaries for the greater of:
* The amount necessary to restore the trust property and distributions to what they would have been absent the breach, or
* The trustee’s profit from the breach

Question 54

When is a Trustee not liable for breach of trust?

Answer 54

A trustee is not liable to a beneficiary for a breach of trust if:
(1) the trustee acted in reasonable reliance on the terms of the trust; or
(2) the beneficiary validly consented to the conduct, released the trustee from liability, or ratified the transaction

Question 55

The effect of exculpatory clauses in a trust agreement

Answer 55

Exculpatory clauses are void if they relieve the trustee of liability or breach of trust committed in bad faith or with reckless indifference

Question 56

When may a trustee be removed?

Answer 56

The court may remove a trustee on its own motion or upon request by the settlor, a beneficiary, or a co-trustee.
Basically, a court has broad discretion to remove a trustee if the trustee’s continuation in office would be detrimental to the trust, for example, for the following reasons:
* Incapacity
* unfitness
* serious breach of trust
* serious conflict of interest
* insolvency
* extreme hostility with beneficiaries
* lack of cooperation with co-trustees

Question 57

Is a Trust a legal entity?

Answer 57

A trust is not a legal entity like a partnership/corporation. It cannot sue or be sued.

Question 58

Liability for Contracts on Behalf of Trust estate

Answer 58

• The general rule is that a trustee may sued on the contract in the trustee’s fiduciary capacity.
• A third party may sue the trustee personally only if the trustee, in entering into the contract, failed to reveal the fiduciary relationship.
• The trustee is entitled to indemnification or reimbursement from trust property for properly entered transactions.

Question 59

Liability for Contracts on Behalf of Trust estate

Answer 59

• A third party injured in tort can sue the trust estate by proceeding against the trustee in their fiduciary capacity.
• The third party may also sue the trustee personally for their own torts, but not by reason of respondeat superior.

Question 60

Allocation of reciepts and expenses between income and principal accounts (adjustment power)

Answer 60

Uniform Principal and Income Act (UPAIA) contains the default allocation rules and gives the trustee an adjustment power to reallocate investment portfolio return by characterizing items such as capital gains, stock dividends, etc., as income rather than principal if the trustee deems it appropriate or necessary to carry out the trust purposes. Trustee should use balancing test to decide to what extent to exercise the adjustment power.

Question 61

Which recipts are characterized as income for a trust?

Answer 61

• rents
• interest
• cash dividends
• proceeds from insurance against loss
• 10% of payment from a pension
• 10% of proceeds received from a liquidating asset (e.g., patents, copyrights)
• 10% of proceeds received from a working interest (e.g., oil and gas interests)

Question 62

which expenses are characterized as negative income for a trust?

Answer 62

• 50% of regular compensation of the trustee and investment services
• 50% of all expenses for accountings, judicial proceedings, and other matters affecting income and remainder interests
• Ordinary expenses
• Insurance premiums covering loss of a principal asset

Question 63

Which recipts are characterized as principal for a trust?

Answer 63

• proceeds from sale of trust assets
• Stock dividends & captial gains
• proceeds from a life insurance policy
• 90% of payment from a pension
• 90% of proceeds received from a liquidating asset (e.g., patents, copyrights)
• 90% of proceeds received from a working interest (e.g., oil and gas interests)

Question 64

which expenses are characterized as negative principal for a trust?

Answer 64

• 50% of regular compensation of the trustee and investment services
• 50% of all expenses for accountings, judicial proceedings, and other matters affecting income and remainder interests
• Expenses of a proceeding that concerns a principal interest
• Payments on the principal of a trust debt
• Estate taxes
• Disbursements related to environmental matters

Question 65

Rules for a Charitable Trust

Answer 65

a charitable trust:
* must have a charitable purpose (poverty relief, eduction, religion, health, government purposes, etc.)
* does not require specific language to create
* must have indefinite beneficiaries who are not narrowly limited (may name a specific charity as the beneficiary because the ultimate beneficiaries are indefinite).
* may be perpetual in duration
* the cy pres doctrine applies to charitable trusts (“equitable approximation” of intent) the court has discretion to determine the settlor’s primary charitable intent.
* RAP does not apply to charitible trusts.
* enforcement can generally be brought by settlor, a qualified beneficiary, or the state’s attorney general.

Question 66

What is an honorary trust

Answer 66

• A trust that is not for a charitable purpose and has no private (human) beneficiaries.
• Honorary trusts are commonly established for the benefit of pets or for the maintenance of burial places.
• the trust is enforceable by someone named in the trust instrument or appointed by the court.
• unless for the life of an animal, may not be enforced for more than 21 years.
• Excess distributed to settlor or successors.

Question 67

What is a resulting trust?

Answer 67

A resulting trust can be created:
* to carry out the settlors intent if the settlor failed to create an express trust, the intended benificiary is dead or cannot be located, or cy pres cannot be applied to a charitable trust
* a trust’s purpose is fully satisfied yet there is excess corpus,
* a party supplies of purchase money to a seller, but a third party takes title to the purchased item with the understanding that the third party is holding the title for the supplier of the purchase money (claiming party must prove with clear and convincing evidence that they supplied the consideration. This creates a rebuttable presumption for the trust unless the parties are closely related.

details of a resulting trust:
* The settlor is the beneficiary of a resulting trust.
* If the settlor is deceased, the settlor’s successors in interest (heirs or beneficiaries under the settlor’s will) are the beneficiaries.
* a resulting trust will not be formed if (1) the trust instrument specifically or implicitly provides for disposition of trust property when the trust has failed or been completed; (2) the settlor was given consideration for their original transfer in trust; (3) the settlor created the trust for an illegal purpose.

Question 68

What is a constructive trust?

Answer 68

This is not a trust. It is an equitable remedy designed to prevent unjust enrichment in cases such as:
* theft and conversion,
* fraud,
* duress,
* undue influence,
* breach of a fiduciary duty,
* breach of promise by one in a confidential relationship,
* homicide with slayer statute,
* homicide joint tenancy,
* breach of promise by the decedent’s devisee or heir to hold property for the benefit of a third person.

Notes:
* Essentially one party took something from another that cannot be staightforwardly returned.
* A constructive trust must be requested as a remedy in a court action.
* A constructive trust is not automatic; it must be pled and proved.
* Acts necessary to establish a constructive trust must be proved by clear and convincing evidence.
* Once the court has declared such a trust to exist, the trustee’s sole duty is to convey legal title to the beneficiary.

Question 69

successor trustee

Answer 69

A trustee who succeeds the original trustee - may be defined in the trust agreement.

Question 70

what is the power of appointment?

Answer 70

the power of appointment is an authority created in a donee enabling the donee to designate, within any limits prescribed by the donor of the power, the persons who shall take certain property and the manner in which they shall take it.

Question 71

What is a general power of appointment?

Answer 71

the donee may exercise the power of appointment in favor of anyone including herself, her estate, her creditors, or the creditors of her estate

Question 72

what is a special power of appointment?

Answer 72

the donee may exercise the power of appointment in favor of a specified class of persons not including herself/creditors

Question 73

What is a testamentary power?

Answer 73

• A testamentary power is a power exercisable by a donee only through their will, because the settlor wishes to limit the class of objects to his children and issue of decreased children.
• You can create a special testamentary power of appointment to allow you wife to leave some assets of a trust to your children in her will.

Question 74

what is a special power of appointment?

Answer 74

the donee may exercise the power of appointment in favor of a specified class of persons not including herself/creditors