Trusts

Question 1

Creation of Trust

Answer 1

Clearly states intention of settlor 
To transfer property to trustee for 
Benefit of one or more ascertainable bennys
Majority: trust presumed irrevocable
UTC and CA: trust presumed revocable

Question 2

Req of Trust

Answer 2

Intent
Trust Property
Proper Purpose
Ascertainable Benny
Trustee

Question 3

Intent Creation of Trust

Answer 3

Evid intent to create trust 
Looking for precatory language
Spicer test
Exact wording used such 
As words of obligation
Specificity of language & writing 
Contained in document, and 
Whether description of use of 
Property objective or subjective

Question 4

Trust Property Creation of Trust

Answer 4

Cannot be expectancy

Question 5

Proper Purpose Creation of Trust

Answer 5

Cannot be illegal or against public policy

Must comply w/ RAP

Question 6

Ascertainable Benny Creation of Trust

Answer 6

Must sufficiently describe bennys

Question 7

Trustee Creation of Trust

Answer 7

Not necessary to be valid

Court will appoint if one not named

Question 8

Invalidation of Trust

Answer 8

Ineffective if procured by duress,

Menace, fraud, or undue influence

Question 9

Types of Trusts

Answer 9

Intervivos
Testamentary
Pour Over Will
Secret/Semi-Secret
Charitable
Spendthrift
Support
Discretionary
Purchase Money Resulting Trust
Resulting
Constructive

Question 10

Intervivos Trust

Answer 10

Created during lifetime of settlor
Must comply w/ SoF for real prop
May be oral for personal prop

Question 11

Testamentary Trust

Answer 11

Created at death of settlor and irrevocable

Must comply w/ Statute of Wills

Question 12

Pour Over Will

Answer 12

Regular will leaves residuary to trust
Must be in existence at time will made
Must be identified in will
May be modified in the future

Question 13

Secret/Semi-Secret Trust

Answer 13

Appears to be trust but
Details known only to settlor and tee
Makes outright gift to tee

Question 14

Secret Trust

Answer 14

Leaves money and extrinsic evid
Showing money was for particular purpose
But vague in its term

Question 15

Semi-Secret Trust

Answer 15

Leaves money and says 
“They know what to do with it” and 
Extrinsic evid showing money was for 
Particular purpose but vague
Majority: invalid and resulting trust
Minority: Extrinsic evid to prove trust

Question 16

Charitable Trust

Answer 16

Set up for charitable purposes and

Benefits society

Question 17

Cy Pres

Answer 17

Objective becomes impossible or 
Impracticable to fulfill, courts 
Substitute similar charitable 
Object near as possible to original
Fails, creates a resulting trust

Question 18

Spendthrift Trust

Answer 18

Benny cannot voluntarily or involuntarily
Alienate his interest
Protected from own irresponsibility and
Cannot transfer interest and most creditors
Cannot reach to satisfy claims

Question 19

Exceptions of Spendthrift Trust

Answer 19

Creditors for necessities
Alimony and child support or
Government liens

Question 20

Support Trust

Answer 20

Directs tee to make limited distributions
To pay for benny’s support, health, etc. and
Not accessible by creditors if interferes

Question 21

Discretionary Trust

Answer 21

Tee discretion to distribute payments to benny

Question 22

Purchase Money Resulting Trust

Answer 22

Benny pays consideration for property but

Allows title to prop to be taken in name of another

Question 23

Resulting Trust

Answer 23

Implied-in-fact trust based upon 
Presumed intent of parties and will 
Transfer trust property back to settlor if:
Purpose of trust satisfied
Express trust fails
Cy pres doctrine fails
Trust is illegal, or 
Semi-secret will

Question 24

Constructive Trust

Answer 24

Remedy to prevent unjust enrichment if 
Self-dealing or breach of fiduciary duties
Fraud in inducement or undue influence
Secret trusts involved or 
Oral real estate trusts created

Question 25

Remedial Trust

Answer 25

``` Equitable remedy by operation of law Not subject to creation requirements or Statue of Wills or Frauds Passive in sole duty of tee to convey Trust prop to benny, then terminates ```

Question 26

Settlor Modification

Answer 26

May modify if trust revocable

Question 27

Irrevocable Trust Modification by Bennys

Answer 27

If bennys agree, can petition for Modification unless continuance Necessary to carry out material purpose

Question 28

Settlor and Bennys Modification

Answer 28

Written consent of settlor and all bennys W/out court approval If one benny does not agree, Court may modify if settlor consents and Interests of benny not substantially impaired

Question 29

Trustee Termination

Answer 29

No power to terminate

Question 30

Settlor Termination

Answer 30

If reserved power

Question 31

Irrevocable Trust Termination by Bennys

Answer 31

If bennys agree, can petition for Termination unless continuance Necessary to carry out material purpose

Question 32

Settlor and Bennys Termination

Answer 32

Written consent of settlor and all bennys W/out court approval If one benny does not agree, Court may partially term if settlor consents and Interests of benny not substantially impaired

Question 33

Court Termination Trust

Answer 33

If purpose becomes frustrated, impossible | Illegal, or if changed circumstances

Question 34

Duties of Tee

Answer 34

``` Care Loyalty Administer Perform Personally Invest Prudently Diversify Act Impartially Segregate ```

Question 35

Duty of Care Tee

Answer 35

``` Reasonable care, skill, and caution Under circumstances that Reasonably prudent person would do Acting in like capacity to accomplish Purpose of trust ```

Question 36

Duty of Loyalty Tee

Answer 36

Administer trust solely for Interest of bennys Self-Dealing or Over Two Trusts

Question 37

Self Dealing Duty of Loyalty Tee

Answer 37

Tee personally engages in Transaction involving trust prop Conflict of interest arises between Tee’s duties and bennys

Question 38

No Further Inquiry Rule

Answer 38

Once self-dealing established | Per se breach

Question 39

Over Two Trusts Duty of Loyalty Tee

Answer 39

Sells, exchanges, or participates in Sell or exchange between two Not violation so long as fair & reasonable to bennys of both tee gives bennys notice of all material facts

Question 40

Duty to Administer Tee

Answer 40

In good faith, in accordance w/ Terms and purposes, and in Interests of bennys

Question 41

Duty to Perform Personally Tee

Answer 41

``` Cannot delegate performance that Can be reasonably done by tee and Cannot transfer office of tee Performance delegated must be Properly supervised by tee ```

Question 42

Duty to Invest Prudently

Answer 42

CL: limited to acceptable investments ML: fiduciary held to prudent investor

Question 43

Duty to Diversify

Answer 43

Diversify investments unless | Under circumstances prudent not to

Question 44

Duty to Act Impartially

Answer 44

Includes balancing interests of | Present and future bennys

Question 45

Duty to Segregate

Answer 45

Keep trust prop separate from | Other prop and no commingling

Question 46

Allocate Income/Expenses Tee

Answer 46

Generally old rule, bennys entitled to Income from interest income, cash dividends Net business income, but must Pay interest on loan debt, taxes, or Minor repair and remaindermen Entitled to principal from net proceeds on Sale of asset, stock dividends, and Profits from sale of stock, but must Pay principal of loan debt and major repairs

Question 47

Liability of Tee Breach

Answer 47

Ratify transaction and waive breach Surcharge tee by suing for resulting loss Trace and recover prop Seek to discharge tee and replace him

Question 48

Equitable Deviation

Answer 48

A court may modify a trust under the doctrine of equitable deviation if events that were unanticipated by the trustee have occurred, and the changes would further the purposes of the trust. To the extent possible, the modification must be made in accordance with the settlor’s probable intention, and the court need not seek beneficiary consent to make the modification.