Trusts MEE Rules

Question 1

Valid trust requirements

Answer 1

(1) trustee, (2) beneficiary, (3) intent, (4) valid trust purpose, and (5) trust property

Question 2

Trustee

Answer 2

Manages the trust property and holds it for the benefit of the beneficiaries (ct may appoint one)

Question 3

Beneficiary

Answer 3

Must be definite and ascertainable.

The same person cannot be the sole trustee and sole beneficiary, invalid trust.

Question 4

Trust property

Answer 4

Must be identifiable

Question 5

Presumption of revocability

Answer 5

Under the UTC, an intervivos trust is revocable unless the instrument expressly states otherwise.

Question 6

Termination of irrevocable trust

Answer 6

If all beneficiaries and settlors consent, if all Bs consent and all material purpose is done.

Question 7

Pourover will

Answer 7

A will that makes a gift to a trust is valid as long as the trust is identified in the will, the terms are incorporated in a writing executed before or concurrently with the will.

Question 8

Discretionary trust

Answer 8

Trustee given sole and absolute discretion to determine how much to pay beneficial. Must be expressly stated in terms of trust.

Question 9

Spendthrift trust

Answer 9

Prevents B from voluntarily transferring future payments, and creditors from attaching.

Question 10

Support trust

Answer 10

Trustee is required to use only as much income or principal as necessary for B’s health, support, maintenance, or education.

Question 11

Honorary trust

Answer 11

Trust has no ascertainable B or charitable purpose. Often used to take care of a thing for a non charitable purpose (ex: cemetery plot).

Question 12

Charitable trust

Answer 12

Trust created for a charitable purpose. If impossible or impracticable and ct finds that settlor had general charitable intent, will modify or terminate trust to be distributed in a manner consistent with settlor’s general charitable intent.

Question 13

Duty of loyalty

Answer 13

Trustee has a duty of loyalty to act in the best interest of the beneficiaries.

Question 14

Duty of care

Answer 14

Trustee must administer the trust as a prudent person would, using reasonable care, skill, and caution.

Includes duty to diversify

Question 15

Remedies for breach of trust

Answer 15

Suspending or removing trustee, decreasing compensation, compelling a trustee to perform duties, compelling payment of damages.

Question 16

When a portion of the trust fails for lack of beneficiary

Answer 16

A resulting trust in favor of the settlor or settlor’s successors in interest is presumed - residuary beneficiary.