Trusts Flashcards
Trustee Discretion
a court will not ordinarily question a trustee’s exercise of a discretionary power, particularly when the trustee is granted absolute and uncontrolled discretion. See RESTATEMENT (SECOND) OF TRUSTS § 187, cmts. g & j.
However, even when a trustee is granted absolute and uncontrolled discretion, her actions may be reviewed for abuse of discretion.
But when the trustee’s decision is based exclusively on personal reasons unrelated to the settlor’s goals, the trustee’s decision may be overturned
Trustee Fiduciary Duty
A trustee has a fiduciary duty to carry out the terms of the trust established by the settlor; failure to do so constitutes a breach of trust
It is a fundamental trust concept that trustees have a duty of loyalty to trust beneficiaries. See RESTATEMENT (SECOND) OF TRUSTS § 170(1); UNIF. TRUST CODE § 802(a). The duty of loyalty includes the duty not to engage in self-dealing, such as purchasing property from the trust without court approval. The prohibition on self-dealing applies even if the purchase price is fair and reasonable. S
Charitible Trust Exception - Cypres
although a settlor or the settlor’s estate is generally entitled to the return of any trust property that cannot be distributed in accordance with the terms of the trust, an exception applies to charitable trust dispositions that reflect a general charitable intention. See RESTATEMENT(SECOND) OF TRUSTS §§ 411, 413; RESTATEMENT (THIRD) OF TRUSTS § 8, cmt. g. In such a case, a court should exercise its cy pres power and direct distribution of the failed disposition to another charity. See RESTATEMENT (SECOND) OF TRUSTS § 399; RESTATEMENT (THIRD) OF TRUSTS § 67.
Until recently, it was necessary to demonstrate that the settlor had a general charitable intention before the cy pres doctrine could be applied. See RESTATEMENT (SECOND) OF TRUSTS§ 399. However, the latest Restatement of Trusts adopts the position that there should be apresumption that the settlor had a general charitable intention. See RESTATEMENT (THIRD) OF TRUSTS § 67, cmt. b; accord UNIF. TRUST CODE § 413.
Fraud in a will
A will or provision in a will procured by fraud is invalid. Fraud occurs when a testator is deceived by a misrepresentation and is thereby led to execute a will that the testator would not otherwise have made. Most courts additionally require a finding that the misrepresentation was made with the intent to deceive the testator and for the purpose of influencing the testamentary disposition
If the court finds that the will was tainted by fraud or undue influence, it may invalidate the entire will or only those portions “infected” by the fraud or undue influence
Power in a will - how to exercise
Whether a power is effectively exercised depends on the donee’s intent and any formalities mandated by the donor. S
under the majority approach, also followed by the Restatement of Property, a residuary article in a donee’s will that makes no reference to a power of appointment is not an effective exercise of a general power.
Simultaneous death act
under the Uniform Probate Code and the Simultaneous Death Act, she survived Testator because she survived him by 120 hours. If the state has the old version of the Uniform Simultaneous Death Act, Friend might be deemed to have predeceased Testator if they are viewed as having died in a common accident or disaster. In such a case, Charity takes as well.]
Doctrine of integration
Under the doctrine of integration, a multi-page will is valid even if only the last page is executed as long as the proponent of the will can establish that all pages were physically present and together when the testator and witnesses signed the last page of the will and that each page was intended by the testator to be part of his will.
Durable health care POA
A durable health-care POA empowers a designated agent to make health-care decisions for the principal in the event of the principal’s incapacity
Unless a durable POA specifies otherwise, a designated agent is empowered to make health-care decisions for the principal whenever the principal lacks capacity; the power is not limited to a particular illness or for a particular time period
In the absence of specific instructions, a designated agent shall make decisions for the principal “in accordance with the agent’s determination of the principal’s best interest . . . [considering] the principal’s personal values to the extent known to the agent.
Had the patient not executed a durable health-care power, a majority of the siblings would have had to agree upon health-care decisions for their mother. See id. § 5(e). However, when, as here, an agent has been designated by the patient, the agent may act on behalf of the patient without consulting family members who are not designated agents of the patient.
State laws governing durable health-care powers of attorney typically insulate an agent who has acted in good faith from civil and criminal liability. See, e.g., UNIF. HEALTH-CARE DECISIONS ACT § 9(b) (“An individual acting as an agent . . . is not subject to civil or criminal liability . . . for health-care decisions made in good faith.”). A health-care decision includes directions “to provide, withhold, or withdraw . . . all other forms of health care.” Id. § 1(6). Health care means “any care, treatment, service or procedure to maintain, diagnose, or otherwise affect an individual’s physical . . . condition.” Id. § 1(5).
Moreover, medical ethicists do not typically regard withholding of treatment as the cause of death, and this perspective has found judicial support.
no further inquiry rule
Because of the so-called “no-further-inquiry” rule, the fact that the trustee paid a market rate is irrelevant to the conclusion that the trustee engaged in self-dealing. Id. at 531–532. See also Restatement (Third) of Trusts § 78(2) (“the trustee is strictly prohibited from engaging in transactions that involve self-dealing or that otherwise involve or create a conflict between the trustee’s fiduciary duties and personal interests.”). As
Duty of prudent administration
Both the Restatement of Trusts and the Uniform Trust Code impose on trustees a “duty of prudent administration.” See Restatement (Third) of Trusts § 77 (“The trustee has a duty to administer the trust as a prudent person would, in light of the purposes, terms, and other circumstances of the trust”);
UTC - reasonable steps to control and protect the property
The Uniform Trust Code further provides that a “trustee shall take reasonable steps to take control of and protect the trust property.
repairs made to income or principal
A trustee has a duty to administer the trust “diligently and in good faith, in accordance with the terms of the trust and applicable law.”
Under the Uniform Principal and Income Act, “all . . . ordinary expenses incurred in connection with the . . . preservation of trust property . . . including ordinary repairs” are allocated to income. Extraordinary repairs are allocated to principal.
No contingencies - vested remainders
Under the terms of the trust, the testator created a life estate in Albert and a remainder interest in Betty. Under the common law, Betty’s interest was vested because it was subject to no contingencies (such as “to Betty if she survives Albert”) t
