Trusts

Question 1

What capacity is required in settlor?

Answer 1

Capacity to convey title to trustee

Question 2

What capacity is required in trustee?

Answer 2

Contractual capacity

Question 3

What is the effect of a trust w/o a designated trustee?

Answer 3

Trust will not fail. Court will appoint suitable trustee.

Question 4

How may a designated trustee accept his position as trustee?

Answer 4

By signature, or by conduct (performing trust duties/exercising trust power) – unless environmental law investigation

Question 5

What is the standard for removal of trustee?

Answer 5

Basis must be so extreme that ability of trustee to faithfully perform trust duties is compromised

Question 6

What is the statute of uses?

Answer 6

In Michigan, no trust arises if the “named trustee” has no powers or active duties. In this case, beneficiary has full legal title rather than equitable trust interest.

Question 7

What is Michigan’s alternative vesting period?

Answer 7

Under MUSTRAP, valid if interest actually vests or terminates w/in 90 years after interest’s creation (wait-and-see approach)

Question 8

When is a restraint on marriage permissible?

Answer 8

When it is a partial restraint, rather than a total restraint; or, when its purpose is to pay support during widowhood

Question 9

Validity of oral trusts of personal property

Answer 9

Valid for tangible and intangible personal property only if established by C&CE

Question 10

When may a guardian or conservator revoke a trust on behalf of settlor?

Answer 10

If authorized by trust instrument AND court approves

Question 11

When may an agent under durable POA revoke a trust?

Answer 11

If authorized by trust instrument or POA

Question 12

What is the time period for contesting validity of a trust?

Answer 12

Earlier of: 2 years from settlor’s death or 6 months from being given notice of trust and copy of terms that may affect that person’s interests

Question 13

What is a durable power of attorney?

Answer 13

Authorization for an agent to act on behalf of principal; not affected by principal’s incapacity, but terminates upon death

Question 14

What is a springing durable power of attorney?

Answer 14

POA becomes effective upon disability or incapacity, but terminates upon death

Question 15

What is the standard for a “charitable purpose”?

Answer 15

Must confer substantial amount of social benefit for education, religion, education, health, relief of poverty, research, or governmental purpose

Question 16

What are the requirements for a charitable trust?

Answer 16

1. Must be for charitable purpose and 2. Beneficiaries must be unidentified

Question 17

What is the doctrine of cy pres?

Answer 17

If specific charitable purpose no longer exists, and there is a general charitable purpose that can still be purposed, court will instruct trustee to pay income to org carrying on activities “as near as possible” to named charity’s operation

Question 18

How long is a reversion interest in a charitable trust valid?

Answer 18

50 years from settlor’s death

Question 19

How long is an honorary trust valid?

Answer 19

If for the care of an animal, for the life of the animal. For other reasons, up to 21 years.

Question 20

What are the elements required for imposition of constructive trust?

Answer 20

Wrongful conduct + unjust enrichment

Question 21

What is the MI slayer statute?

Answer 21

Killer forfeits interest in V’s estate, treated as though predeceased V. Killer’s descendants may still take by representation.

Question 22

What if beneficiary under will engaged in abuse of the elderly?

Answer 22

Abuser forfeits interest in V’s estate, treated as though predeceased V. Abuser’s descendants may still take by representation.

Question 23

What are the exceptions to validity of spendthrift trusts in MI?

Answer 23

1) Child or former spouse w/ court order for support or maintenance, 2) Judgment creditor who provided services to protect beneficiary’s trust interest, 3) Claims involving US or state of MI, 4) Any interests retained by settlor (unless APT)

Question 24

What are the requirements for a qualified APT?

Answer 24

Settlor must sign qualified affidavit stating: 1) transfer won’t make him insolvent, 2) no intent to defraud creditors, 3) no knowledge of threatened or pending court actions, 4) not in arrears in child support >30 days

Question 25

When may creditors reach the assets of a qualified APT?

Answer 25

Under Uniform Fraudulent Transfer Act, within 2 years of when obligation incurred, upon showing by C&CE that transfer was made in bad faith or w/ intent to defeat, delay, or defraud creditors

Question 26

What are the 6 requirements for a valid trust?

Answer 26

1) Settlor has capacity, 2) Settlor shows intent, 3) Definite beneficiary or charitable, 4) Trustee has duties to perform, 5) Trust property or consideration, and 6) Same person is not sole trustee and sole beneficiary