Trusts & Future I's Flashcards
A trust is valid if it has a
trustee, beneficiary and trust property
Trustee
manages the trust property and holds it for benefit of Bs, a trust will not fail if specific trustee not mentioned (court will appoint one)
Beneficiary
in private express trust, Bs must be DEFINITE and ASCERTAINABLE
same person cannot be sole trustee and sole beneficiary
Trust Property
trust property MUST be identifiable
Under the Uniform Trust Code (UTC) the default rule is that the trust is
revocable unless instrument states otherwise
Irrevocable trust can still be _____ or _____ in some circumstances
terminated or modified
Termination by Settlor
can terminate if all Bs are in existence and all agree to termination
Termination by Bs after Settlor dies
even an irrevocable trust can be terminated if the income Bs and the remaindermen UNANIMOUSLY CONSENT and there is NO MATERIAL PURPOSE OF THE TRUST YET TO BE PERFORMED
Pour over Will
a will that makes a gift to a trust is valid so long as the trust is identfiied in the will and the terms are INCORPORATED IN A WRITING executed before or concurrently with the execution of the will
modern = later amendments are valid
common law = amendmnets are not valid
Discretionary Trust
trustee has direction to decide when to make distribution to B
B cannot demand any part of the income or principle
nor can creditor unless can show trustee acted dishonestly or in state of mind not contemplated by the settlor
Support Trust
trustee may pay what is necessary for the Bs support
Spendthrift Trust
retains both voluntary and involuntary transfer of a Bs interest
Right of Creditor (may not reach) part of Bs distribution until B reaches it
ULESS; child support, judgment creditor, claim of the state or US (taxes)
Charitable Trust
created for charitable purpose (relief of poverty, education , religion, health, governmental or municipal purpose)
must have a LARGE NUMBER OF NOT READILY IDENTIFIABLE INDIVUDALS (rather than a few)
not subject to RAP
Modifying a Charitable Trust
may terminate if charitable purpose becomes unlawful, impactable, or impossible to achieve; no alternative charity is name din the trust
and court finds that settlor had a general rather than specific charitable intent, CAN APPLY CY PRES to modify or terminate trust by directing trust property be distributed n manner consisted with Settlor’s intent
Honorary Trust
DOES NOT HAVE CHARITABLE PURPOSE OR DEFINITE BENEFICIARY
trust to take care of a thing (cemetery plot) for a noncharitable purpose
valid but may not be enforced for more than 21 years
not valid if violated RAP, but court must characterize the trust as a power to allow trustee to exercise power according to trust terms for 21 years
Duty of Loyalty
act in best interst of Bs
Duty of Care - Prudent Administration
UIPA (UNIFORM PRUDENT INVESTOR ACT) trustee must administer trust as a prudent person would using reasonable care, skill and caution
Duty to Diversify
not liable for declines in value due to a downturn resulting from general economic conditions - but is liable for failure to diversify absent directions to the contrary
Remedies for Breach of Trust
suspending or removing trustee, decreasing compensation, compelling a trustee to perform trust duties, compelling payment of damages, etc.
Self-Dealing Case
Trust Bs may rescind transaction and ask for self-dealing purchase to be set aside (amount paid is refunded by the trust) or recover any profits Trustee made by reason of the breach
General and Special Powers of Appointment
a person writing a will or trust can give Bs a POA which enables B to designate who will receive specific property
General POA
the class of people B can exercise power of appointment in favor is unlimited
Majority (general residuary clause) does not exercise power of appointment unless it is explicitly mentioned
Minority (general language in B’s will) such as residuary clause “everything to my husband”
Special or Limited POAs
class of people B can exercise power in favor is limited
substantial compliance can be shutdown
Rule of Conveience
“my children” the class closes when at lease one member is entity to distribution
UPC Class Gift
each living B takes their share and pass to surviving decedents if not decedents gift fails even if not related ot S
CL Class Gift
gift or remainder has already been vested and goes to whomever deceased person has specified via intestacy
If testator gives gift to group of individuals unrelated and one predeceased him
the deceased would not take, neither would his descendants UNLESS antilapse applies
