Trusts & Future I's

Question 1

A trust is valid if it has a

Answer 1

trustee, beneficiary and trust property

Question 2

Trustee

Answer 2

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)

Question 3

Beneficiary

Answer 3

in private express trust, Bs must be DEFINITE and ASCERTAINABLE

same person cannot be sole trustee and sole beneficiary

Question 4

Trust Property

Answer 4

trust property MUST be identifiable

Question 5

Under the Uniform Trust Code (UTC) the default rule is that the trust is

Answer 5

revocable unless instrument states otherwise

Question 6

Irrevocable trust can still be _____ or _____ in some circumstances

Answer 6

terminated or modified

Question 7

Termination by Settlor

Answer 7

can terminate if all Bs are in existence and all agree to termination

Question 8

Termination by Bs after Settlor dies

Answer 8

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

Question 9

Pour over Will

Answer 9

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

Question 10

Discretionary Trust

Answer 10

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

Question 11

Support Trust

Answer 11

trustee may pay what is necessary for the Bs support

Question 12

Spendthrift Trust

Answer 12

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)

Question 13

Charitable Trust

Answer 13

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

Question 14

Modifying a Charitable Trust

Answer 14

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

Question 15

Honorary Trust

Answer 15

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

Question 16

Duty of Loyalty

Answer 16

act in best interst of Bs

Question 17

Duty of Care - Prudent Administration

Answer 17

UIPA (UNIFORM PRUDENT INVESTOR ACT) trustee must administer trust as a prudent person would using reasonable care, skill and caution

Question 18

Duty to Diversify

Answer 18

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

Question 19

Remedies for Breach of Trust

Answer 19

suspending or removing trustee, decreasing compensation, compelling a trustee to perform trust duties, compelling payment of damages, etc.

Question 20

Self-Dealing Case

Answer 20

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

Question 21

General and Special Powers of Appointment

Answer 21

a person writing a will or trust can give Bs a POA which enables B to designate who will receive specific property

Question 22

General POA

Answer 22

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”

Question 23

Special or Limited POAs

Answer 23

class of people B can exercise power in favor is limited

substantial compliance can be shutdown

Question 24

Rule of Conveience

Answer 24

“my children” the class closes when at lease one member is entity to distribution

Question 25

UPC Class Gift

Answer 25

each living B takes their share and pass to surviving decedents if not decedents gift fails even if not related ot S

Question 26

CL Class Gift

Answer 26

gift or remainder has already been vested and goes to whomever deceased person has specified via intestacy

Question 27

If testator gives gift to group of individuals unrelated and one predeceased him

Answer 27

the deceased would not take, neither would his descendants UNLESS antilapse applies