Trusts - Essay Model Answers

Question 1

A valid inter vivos trust requires: (1) settlor with capacity (at least age 18 and of sound mind) (2) present intent by settlor to create a trust, (3) trust property, (4) beneficiary to enforce trust, (5) trust purpose not contrary to public policy, and (6) named or court appointed trustee.

Question 2

The trustee must exercise that degree of ___________ exercised by a reasonably
prudent person in managing and investing the person’s own property.

If the trustee has special skills, the person will be held to a higher standard.

With respect to trust investments, the duty of care requires: (1) diversifying assets, (2) making property productive, and (3) making informed decisions regarding investment schemes.

Answer 2

Care, skill & caution

Question 3

The trustee must exercise that degree of care, skill, and caution exercised by a ___________ in managing and investing the person’s own property.

If the trustee has special skills, the person will be held to a higher standard.

With respect to trust investments, the duty of care requires: (1) diversifying assets, (2) making property productive, and (3) making informed decisions regarding investment schemes.

Answer 3

Reasonably prudent person

Question 4

The trustee must exercise that degree of care, skill, and caution exercised by a reasonably
prudent person in managing and investing the person’s own property.

If the trustee has __________, the person will be held to a higher standard.

With respect to trust investments, the duty of care requires: (1) diversifying assets, (2) making property productive, and (3) making informed decisions regarding investment schemes.

Answer 4

Special skills

Question 5

With respect to trust investments, the duty of care requires: (1) ________, (2) making property productive, and (3) making informed decisions regarding investment schemes.

Answer 5

Diversifying assets

Question 6

With respect to trust investments, the duty of care requires: (1) diversifying assets, (2) ___________, and (3) making informed decisions regarding investment schemes.

Answer 6

Making property productive

Question 7

With respect to trust investments, the duty of care requires: (1) diversifying assets, (2) making property productive, and (3) ______________.

Answer 7

making informed decisions regarding investment schemes

Question 8

Duty to Act Impartially Between Beneficiaries

Answer 8

If a trust has two or more beneficiaries, the trustee shall act impartially in investing and managing trust property, taking into account any differing interests of the beneficiaries.

Question 9

If a trust has two or more beneficiaries, the trustee shall act ____________ in investing and managing trust property, taking into account any differing interests of the beneficiaries.

Answer 9

Impartially

Question 10

Duty to Inform and Account

Answer 10

A trustee must disclose to beneficiaries complete and accurate information about the nature and
extent of trust property, and periodically account for actions taken on behalf of the trust so the trustee’s performance can be assessed against trust provisions.

Question 11

A trustee must disclose to beneficiaries __________________ about the nature and
extent of trust property, and periodically account for actions taken on behalf of the trust so the trustee’s performance can be assessed against trust provisions.

Answer 11

Complete and accurate information

Question 12

A trustee must disclose to beneficiaries complete and accurate information about the nature and
extent of trust property, and periodically ______________ so the trustee’s performance can be assessed against trust provisions.

Answer 12

account for actions taken on behalf of the trust