Trusts

Question 1

Under the Uniform Trust Code, as adopted by VA, a trustee may resign by giving _________ days’ notice to the settlor (if living), all co-trustees, and all qualified beneficiaries (other than beneficiaries under a revocable trust)

Answer 1

30

Question 2

Under the Uniform Trust Code, as adopted by Virginia, a trust will fail if (select all that apply):

I. Its enforcement involves the commission of a crime

II. Its enforcement involves the commission of a tort

III. It was created with the intent to defeat the settlor’s creditors

IV. It was based on illegal consideration

Answer 2

All the above

Question 3

This type of trust contains a provision prohibiting voluntary and involuntary transfer of a beneficiary’s interest, which might read as follows: “No interest of any beneficiary herein shall be transferable by the beneficiary, nor shall such interest be reachable by the benefi-ciary’s creditors by garnishment, attachment, or other legal process.”

Answer 3

Spendthrift trust

Question 4

Under the Uniform Trust Code, as adopted by Virginia, how is it possible to create a perpetual trust in Virginia?

Answer 4

The Rule Against Perpetuities does not apply to any trust if the trust instrument, by its terms, provides that the Rule Against Perpetuities shall not apply to the trust. As a result, the Rule Against Perpetuities is a default rule that applies absent a contrary provision. Therefore, to create a perpetual trust in Virginia, the trust instrument must indicate that the Rule Against Perpetuities does not apply to the trust. [See Va. Code Ann. §55.1-133—“Application of the Rule Against Perpetuities to nondonative transfers”]

Question 5

A trust in which the trustee’s discretionary power to make distributions is tied to a standard such as “support” or “maintenance” is called a ________ trust

Answer 5

Support trust

Question 6

Generally, a trustee in Virginia may be removed on any one of the following grounds:

I. Commission of a serious breach of trust. II. Unfitness, unwillingness, or persistent failure to administer the trust effectively. III. Unanimous vote of the beneficiaries. IV. Lack of cooperation among co-trustees that impairs the administration of the trust.

Answer 6

A trustee may be removed on any one of the following grounds: (i) commission of a serious breach of trust; (ii) lack of cooperation among co-trustees that impairs the admin-istration of the trust; (iii) unfitness, unwillingness, or persistent failure to administer the trust effectively; or (iv) substantial change in circumstances so that removal is in the best interest of all beneficiaries. [See Va. Code Ann. §64.2-759(B)—“Removal of trustee”]

Question 7

What particular words are required to express an intent to create a trust in Virginia

Answer 7

The use of the words “trust” or “trustee” is not necessary. Moreover, the fact that the words “trust” or “trustee” were used does not compel a finding that a trust was created. [See Burton v. Irwin, 212 Va. 104 (1971)]

Question 8

Unlike most states, Virginia recognizes oral trusts with respect to both real and personal property as long as the existence and terms of the trust are established by what standard of proof?

Answer 8

Clear and convincing evidence

Evidence of an oral trust

Question 9

Under the Uniform Trust Code, as adopted by Virginia, examples of these kinds of trusts include trusts for maintenance of cemetery plots and trusts for pets

Answer 9

Honorary trusts

Under the common law, these are called “honorary trusts” because there is no benefi-ciary who can enforce the trust by bringing an action against the trustee. The trustee is on her honor to carry out the trust. However, under the Uniform Trust Code, as adopted by Virginia, the trust is enforceable by someone named in the trust instrument or appointed
by the court. [See Va. Code Ann. §§64.2-726, -727—“Trust for care of animal” and “Noncharitable trust without ascertainable beneficiary,” respectively]

Question 10

If through the passage of time or changed circumstances the stated charitable purposes of a trust can no longer be accomplished, or if the named charitable beneficiary goes out of existence, under what doctrine may a court redirect the trust to a purpose “as near as possible” to the charitable endeavor initially contemplated by the settlor?

Answer 10

Cy pres

Under the cy pres doctrine, the court will direct that the trust property be applied to another charitable purpose as close as possible to the original one, rather than permit the trust to fail. [See Va. Code Ann. §64.2-731(A)—“Cy pres”]