Trusts and Wills

Question 1

Intervivos Trust

Answer 1

• Made during grantor’s life
• doesn’t need to comply with statute of wills (which requires two witnesses)
• can be oral (unless involves real property)

Question 2

A trust is created BIT by bit

Answer 2

B - BENEFICIARY clearly and unambiguously named
I - INTENT to create a trust
T - property must be TRANSFERRED into trust (unless pour over trust)

Question 3

Supplemental Needs Trusts

Answer 3

• supplements govt assistance
• must clearly indicate in wording that the proceeds shall not reimburse the govt - probate court can amend language to say this

**self settled supplemental needs trust pays back govt upon death of that person

Question 4

Trustee can’t buy or sell from trust assets unless:

Answer 4

1. expressly authorized in trust doc
2. court permission

**absent one or two, the transaction can be rescinded by the unhappy trust beneficiary

Question 5

Trustee’s investments of trust assets

Answer 5

must be prudent

if delegate to investment advisor still must be prudent

factors to consider - trust terms, inflation, diversification, when beneficiaries are to be paid out, amount of money in trust

Question 6

Asset allocation - income v. principal

Answer 6

principal - sale of appreciated stock/property, stock split

income - interest, rental income, dividends

**“uni-trust” doesn’t distinguish - just allocates certain percentage as income

Question 7

Spendthrift provisions

Answer 7

Shield these assets from creditors. also a beneficiary can’t assign these assets away

Question 8

Spendthrift provision - exceptions (where this money can be touched by creditors)

Answer 8

• self-settled trusts
• expressly made non-spendthrift
• for “necessaries” for beneficiary
• alimony
• federal income taxes
• excess income not reasonably necessary for maintenance and education of beneficiary

Question 9

Power of Appointment

Answer 9

Appointee given power to choose to who and how much should be distributed in the future

Can’t be assigned/delegated

8 types

“special power” - only to certain types. “exclusive” allows them to exclude some of these class members

“general” - to anyone even trustee herself. this subject to claims of creditors.

postponed - cant be exercised until later
testamentary power - exercise only after grantor death

imperative - names a beneficiary in case appointee defaults by not exercising their power

Question 10

Revocable Lifetime Trust

Answer 10

self settled
no spendthrift protection
if includes things w title then they need to be in name of trust

Question 11

Charitable Trusts

Answer 11

Charitable purpose that benefits the community, the poor, or to benefit education or religion

if impossible to pursue trust’s general charitable purpose then court will employ cy pres doctrine - to benefit a similar charity (as near as)

Question 12

RAP - general definition

Answer 12

Under RAP, a future interest is invalid unless it vests, if at all, no later than 21 years after measuring lives that were used when the RAP period began to run

prevents unreasonable restraints on alienation