Trusts Formation

Question 1

_Formation

What are the six elements of an express trust?

Answer 1

1. Settlor with capacity
2. Present intent to create a trust
3. Competent trustee
4. Definite beneficiary _{(sole trustee and sole beneficiary must not be the same person)}
5. Trust property
6. Valid trust purpose

Question 2

_Formation

Is communication to beneficiary required?

Answer 2

No

Question 3

_Formation

While a present trust requires present intent, what does a future trust require?

Answer 3

Consideration

Question 4

_Formation

What happens when the sole trustee is the sole beneficiary?

Answer 4

The trust terminates and that persons gets full legal and equitible title

Question 5

_Formation

What two types of property cannot be placed in trust?

Answer 5

1. Property you do not have the power to transfer
2. Property you do not yet own

Question 6

_Formation

Is competency required of a beneficiary?

Answer 6

No

Question 7

_Formation

What is required of a common law class gift?

Answer 7

The class must be reasonably identifiable

Question 8

_Formation

Regarding class gifts, what extra power does a trustee have under the Uniform Trust Code?

Answer 8

He can select beneficiaries from an indefinite class

Question 9

_Formation

Where a class is reasonably identifiable, what can the trustee do?

Answer 9

Exercising discretion in selecting members to be benefitted, or requiring members meet certain requirements before they can benefit

Question 10

_Formation

Where a trustee does not exercise his powers regarding a class gift, what happens?

Answer 10

A resulting trust in favour of settlor or successors

Question 11

_Formation

For what four purposes will a trust be invalid?

Answer 11

1. Illegal
2. Contrary to public policy
3. Impossible to achieve
4. Intended to defraud settlor’s creditors

Question 12

_Formation

Is a trust revocable by the settlor?

Answer 12

Yes, unless the express terms provide otherwise

Question 13

_{Discretionary Trust}

What is a discretionary trust?

Answer 13

A trust where trustee is given discretion whether to apply or withhold payments to a beneficiary

Question 14

_{Discretionary Trust}

What is a creditor’s right before trustee has exercised discretion? How come?

Answer 14

They can attach to the beneficiary but cannot compel the trustee to make a payment, because B’s interest is not yet assignable

Question 15

_{Discretionary Trust}

Where a trustee has knowledge of B’s creditors and decides to make a payment, to whom must the payment be made?

What is the one exception?

Answer 15

Directly to B’s creditors

Unless the beneficiary’s interest is protected by a spendthrift provision

Question 16

_{Discretionary Trust}

In what one instance can the court compel a trustee to make a payment?

Answer 16

To satisfy a judgment or order against B regarding support or maintenance of B’s child, spouse, or former spouse