Trusts

Question 1

Valid Trust

Answer 1

1. Settlor
2. Present Intent
3. Beneficiary
4. Trustee
5. Trust Property
6. Valid trust purpose

Question 2

Trust is invalid

Answer 2

1. Fraud/Misrepresentation
   - Material misrepresentation
   - person was aware the information was false
   - settlor relied on the misrepresentation
   - damages
2. Undue Influence
   - a party used influence over the settlor
   - the settlor was overcome by the influence
   - but for the influence, the trust would have been different
3. Duress

Question 3

Express Trust

Answer 3

Property is transferred from one owner to another and the trustee holds legal title for the benefit of the beneficiary. It must comply with valid trust requirements

Question 4

Testamentary Trust

Answer 4

Trust created by a will, Trust is valid when the testator dies

Question 5

Pour over Trust

Answer 5

A pour over trust allows a settlor to set up a trust and act as trustee, or manager, during his or her life. Assets can be added to the trust during the their lifetime. Those assets stay in the trust until the trustee’s death.

Question 6

Spendthrift Trust

Answer 6

Designed to protect the beneficiary from their spendthrift ways by prohibiting creditors from reaching the trust property. A beneficiary can’t voluntarily transfer his trust property. The trusts property is protected from most creditors except for necessaries for life, alimony, child support, or government creditors.

Question 7

Support Trust

Answer 7

Trust that is meant to support the beneficiary and not accessible to creditors if it would interfere with the support

Question 8

Discretionary Trust

Answer 8

Trustee has discretion to distribute or withhold payments

Question 9

Charitable Trust

Answer 9

A trust for charitable purposes and benefits society. Must have indefinite beneficiaries.

Question 10

Honorary Trust

Answer 10

Trusts to care for animals

Question 11

Trustees Duties

Answer 11

AND I DID SLIDE
Account, not delegate, impartial, due care, investigate, diversify, segregate, loyalty, invest, defend, enforce

(1) account and inform the beneficiaries on a regular basis about the trust
(2) Not delegate his trustee duties to others
(3) use due care and act as a reasonable prudent person (4) not commingle the trust funds with the trustees own funds
(5) duty of loyalty, the trustee can not participate in self dealing and must avoid conflicts of interest and must treat all beneficiaries the same
(6) invest the trust property in good investments
(7) defend actions that may result in a loss to the trust

Question 12

Trustees Liability

Answer 12

A trustee is personally liable for

1. violating his trustee duties
2. contracts made within the scope of his trust supervision

Trustee can be removed for violating their duties

Question 13

Modification/Termination of Trust

Answer 13

A court can modify a trust for unforeseen circumstances and necessity to meet the settlor’s intent

In california, trusts are revocable unless otherwise stated. A trust will be terminated where all the the beneficiaries petition the court. However,the trusts purpose must have been fulfilled. A trustee has no power to terminate unless it is stated in the trust. A settlor can terminate the trust if he reserved the power.

Question 14

Laches

Answer 14

A trustee can argue laches if the beneficiary waited an unreasonably long period to bring a claim that caused prejudice to the trustee or other beneficiaries.

Question 15

Creditors

Answer 15

Depending on the type of trust, a creditor can attach future payments to themselves of trust payment by getting a judgment from the court.