Trusts - JDA One Sheet Flashcards
A trust is valid if the following elements are present:
(1) it has a trustee,
(2) it has a beneficiary,
(3) it has trust property,
(4) the settlor has the present intent and capacity to create a trust, and
(5) the trust is created for a valid purpose.
Trustee
A trustee manages the trust property and holds it for the benefit of the beneficiaries. A trust will not fail if a specific trustee is not appointed or if the trustee refuses to serve. (The court will simply appoint one)
A trustee ____________ and holds it for the benefit of the beneficiaries. A trust will not fail if a specific trustee is not appointed or if the trustee refuses to serve. (The court will simply appoint one)
manages the trust property
A trustee manages the trust property and _____________. A trust will not fail if a specific trustee is not appointed or if the trustee refuses to serve. (The court will simply appoint one)
holds it for the benefit of the beneficiaries.
A trustee manages the trust property and holds it for the benefit of the beneficiaries. A trust ____________ if a specific trustee is not appointed or if the trustee refuses to serve.
will not fail
(The court will simply appoint one)
In a private express trust, a beneficiary must be ________ and _____________.
definite & ascertainable
(This is not needed in a charitable trust.)
The settlor must have the ________ to create a trust and must intend to create a trust. No specific words are needed.
capacity
The settlor must have the capacity to create a trust and must ________ to create a trust. No specific words are needed.
intend
The settlor must have the capacity to create a trust and must intend to create a trust. ________ words are needed.
no specific
Trust property can include any ____________ interest in property that is able to be transferred.
presently existing
Trust property can include any presently existing ____________ that is able to be transferred.
interest in property
Trust property can include any presently existing interest in property that is ________________.
able to be transferred
Delivery of a trust property to the trustee ________ required for a testamentarty trust or if the settlor creates a self-declaration of trust (orally or in writing declares himself trustee over particular property).
is not
Delivery of a trust property to the trustee is not required for a ____________________ or if the settlor creates a self-declaration of trust (orally or in writing declares himself trustee over particular property).
testamentary trust
Delivery of a trust property to the trustee is not required for a testamentarty trust or if the settlor creates a ____________________ (orally or in writing declares himself trustee over particular property).
self-declaration of trust
The trust purpose must not be ___________________________.
illegal or against public policy
A testamentary trust is created by a valid will.
The essential elements must be ascertained from:
(1) the terms of the will,
(2) an existing writing incorporated by reference, or
(3) ________________________________.
the exercise of a power of appointment created in the will
A testamentary trust is created by a valid will.
The essential elements must be ascertained from:
(1) the terms of the will,
(2) _____________________, or
(3) the exercise of a power of appointment created in the will.
an existing writing incorporated by reference
A testamentary trust is created by a valid will.
The essential elements must be ascertained from:
(1) _________________,
(2) an existing writing incorporated by reference, or
(3) the exercise of a power of appointment created in the will.
the terms of the will
A testamentary trust is created by a valid will.
The essential elements must be ascertained from:
(1) the terms of the will,
(2) an existing writing incorporated by reference, or
(3) the exercise of a power of appointment created in the will.
A pourover will gives a gift to a trust.
A pourover will is valid if:
(1) the trust is incorporated by reference,
(2) there are facts of independent significance, or
(3) the trust is valid and in existence before the will was executed or at the time it was executed
A pourover will gives a gift to a trust.
A pourover will is valid if:
(1) ___________________________
(2) there are facts of independent significance, or
(3) the trust is valid and in existence before the will was executed or at the time it was executed.
the trust is incorporated by reference
i.e., the trust is identified in the testator’s will and the terms are incorporated in a writing executed before or concurrently with the execution of the will
A pourover will gives a gift to a trust.
A pourover will is valid if:
(1) the trust is incorporated by reference,
(2) ________________________, or
(3) the trust is valid and in existence before the will was executed or at the time it was executed.
there are facts of independent significance
i.e., even without the will, the inter vivos trust would exist so the trust instrument is independent from the will
A pourover will gives a gift to a trust.
A pourover will is valid if:
(1) the trust is incorporated by reference
(2) there are facts of independent significance, or
(3) ________________________.
the trust is valid and in existence before the will was executed or at the time it was executed
A ________________ may be created for the relief of poverty, or the promotion of education, religion, health, scientific, literary, benevolent, governmental purposes, etc.
It must have a large number of not readily identifiable individuals (rather than a few identifiable individuals).
charitable trust
Note that charitable trusts are not subject to RAP
A charitable trust may fail if “a particular charitable purpose becomes ________________________.”
However, the cy pres doctrine, which is a common law doctrine recognized by CA, allows the court to save the trust and carry out the particular charitable purpose as nearly as possible.
unlawful, impracticable, or impossible to achieve
A charitable trust may fail if “a particular charitable purpose becomes unlawful, impracticable, or impossible to achieve.
However, the cy pres doctrine, which is a common law doctrine recognized by CA, allows the court to ___________________________.
save the trust and carry out the particular charitable purpose as nearly as possible
The doctrine of __________ provides that if:
(1) a particular charitable purpose has become unlawful, impracticable, or impossible to achieve,
(2) no alternative charity is named in the trust, and
(3) the court finds that the settlor had general, rather than specific, charitable intent
then the trust will not fail, the trust property does not revert to the settlor or the settlor’s successors in interest, and the court may apply cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s general charitable intent.
cy pres
The doctrine of cy pres provides that if:
(1) a particular charitable purpose has become _____________ to achieve,
(2) no alternative charity is named in the trust, and
(3) the court finds that the settlor had general, rather than specific, charitable intent
then the trust will not fail, the trust property does not revert to the settlor or the settlor’s successors in interest, and the court may apply cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s general charitable intent.
unlawful, impracticable, or impossible
The doctrine of cy pres provides that if:
(1) a particular charitable purpose has become unlawful, impracticable, or impossible to achieve,
(2) __________________ is named in the trust, and
(3) the court finds that the settlor had general, rather than specific, charitable intent
then the trust will not fail, the trust property does not revert to the settlor or the settlor’s successors in interest, and the court may apply cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s general charitable intent.
no alternative charity
The doctrine of cy pres provides that if:
(1) a particular charitable purpose has become unlawful, impracticable, or impossible to achieve,
(2) no alternative charity is named in the trust, and
(3) the court finds that the settlor had _______________________
then the trust will not fail, the trust property does not revert to the settlor or the settlor’s successors in interest, and the court may apply cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s general charitable intent.
general, rather than specific, charitable intent
The doctrine of cy pres provides that if:
(1) _________
(2) ________, and
(3) __________
then the trust will not fail, the trust property does not revert to the settlor or the settlor’s successors in interest, and the court may apply cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s general charitable intent.
(1) a particular charitable purpose has become unlawful, impracticable, or impossible to achieve,
(2) no alternative charity is named in the trust, and
(3) the court finds that the settlor had general, rather than specific, charitable intent
Trustee’s Duty to Administer the Trust
The trustee shall administer the trust in** good faith**, as a prudent trustee would, and in accordance with the terms of the trust.
If the trust is irrevocable, the trustee must administer the trust solely in the interest of the beneficiaries.
If the trust is revocable, the trustee has a duty of loyalty to the settlor.
The trustee shall administer the trust in _________, as a prudent trustee would, and in accordance with the terms of the trust.
If the trust is irrevocable, the trustee must administer the trust solely in the interest of the beneficiaries.
If the trust is revocable, the trustee has a duty of loyalty to the settlor.
good faith
The trustee shall administer the trust in** good faith**, as a ____________ would, and in accordance with the terms of the trust.
If the trust is irrevocable, the trustee must administer the trust solely in the interest of the beneficiaries.
If the trust is revocable, the trustee has a duty of loyalty to the settlor.
prudent trustee
The trustee shall administer the trust in** good faith**, as a prudent trustee would, and in ____________ of the trust.
If the trust is irrevocable, the trustee must administer the trust solely in the interest of the beneficiaries.
If the trust is revocable, the trustee has a duty of loyalty to the settlor.
accordance with the terms
The trustee shall administer the trust in** good faith**, as a prudent trustee would, and in accordance with the terms of the trust.
If the trust is irrevocable, the trustee must __________________.
If the trust is revocable, the trustee has a duty of loyalty to the settlor.
administer the trust solely in the interest of the beneficiaries
The trustee shall administer the trust in** good faith**, as a prudent trustee would, and in accordance with the terms of the trust.
If the trust is irrevocable, the trustee must administer the trust solely in the interest of the beneficiaries.
If the trust is revocable, the trustee _________________.
has a duty of loyalty to the settlor
Trustee’s Duty to Account
The trustee must keep and render accounts and furnish information to the beneficiaries at their request.
Trustee’s Duty of Loyalty and to Act Impartially
A trustee has a duty of loyalty.
If a trust has 2 or more beneficiaries, the trustee should give due regard to the beneficiaries’ respective interests when it invests, manages, and distributes trust property.
A trustee may not use trust property for his own profit or for any purpose unconnected with the trust. For example, the trustee may not buy or sell trust assets or personally profit by purchasing stock in his own corporation.
A trustee has a duty of loyalty.
If a trust has 2 or more beneficiaries, the trustee should give ____________ to the beneficiaries’ respective interests when it invests, manages, and distributes trust property.
A trustee may not use trust property for his own profit or for any purpose unconnected with the trust. For example, the trustee may not buy or sell trust assets or personally profit by purchasing stock in his own corporation.
due regard
A trustee has a duty of loyalty.
If a trust has 2 or more beneficiaries, the trustee should give due regard to the beneficiaries’ respective interests when it ________________ trust property.
A trustee may not use trust property for his own profit or for any purpose unconnected with the trust. For example, the trustee may not buy or sell trust assets or personally profit by purchasing stock in his own corporation.
invests, manages, and distributes
Under the Uniform Trust Code and in CA, a trust is presumed to be revocable unless _________.
otherwise stated
Under the Uniform Trust Code and in CA, a trust is presumed to be ________ unless otherwise stated.
revocable
If all beneficiaries of an irrevocable trust consent to terminate a trust after the settlor’s death, they may ____________ for modification or termination of the trust.
However, if the continuance of the trust is necessary to carry out a material purpose of the trust, the trust cannot be modified or terminated unless the court determined that the reason for doing so under the circumstances outweighs the interest in accomplishing a material purpose of the trust.
petition the court
If all beneficiaries of an irrevocable trust consent to terminate a trust after the settlor’s death, they may petition the court for modification or termination of the trust.
However, if the continuance of the trust is ____________, the trust cannot be modified or terminated unless the court determined that the reason for doing so under the circumstances outweighs the interest in accomplishing a material purpose of the trust.
necessary to carry out a material purpose of the trust
If all beneficiaries of an irrevocable trust consent to terminate a trust after the settlor’s death, they may petition the court for modification or termination of the trust.
However, if the continuance of the trust is necessary to carry out a material purpose of the trust, the trust cannot be modified or terminated unless the court determined that ____________________.
the reason for doing so under the circumstances outweighs the interest in accomplishing a material purpose of the trust
Remedies for a breach of trust include:
(1) _________ a trustee,
(2) decreasing compensation,
(3) compelling a trustee to perform trust duties, and
(4) compelling the trustee to pay damages to make the beneficiaries whole.
If the trustee was self-dealing, the trustee must also pay back any profits from self-dealing.
suspending or removing
Remedies for a breach of trust include:
(1) suspending or removing a trustee,
(2) decreasing compensation,
(3) compelling a trustee to perform trust duties, and
(4) compelling the trustee to pay damages to _____________________.
If the trustee was self-dealing, the trustee must also pay back any profits from self-dealing.
make the beneficiaries whole
Remedies for a breach of trust include:
(1) suspending or removing a trustee,
(2) decreasing compensation,
(3) compelling a trustee to perform trust duties, and
(4) compelling the trustee to pay damages to make the beneficiaries whole.
If the trustee was self-dealing, the trustee must also _________________.
pay back any profits from self-dealing
Trustee’s Duty of Care - prudent administration
The trustee shall exercise care, skill, and caution in administering the trust.
The trustee shall exercise ____________ in administering the trust.
care, skill, and caution
A trustee’s investment and management decisions with respect to individual assets should be evaluated in the context of the estate portfolio as a whole and as part of an overall investment strategy rather than in isolation. Thus, even if one particular investment looks imprudent, if it is looked at in relation to other investments, it might be considered prudent.
One of the hallmarks of prudent investing is diversification. The trustee is not liable for declines in value due to a downturn resulting from general economic conditions.
