Trusts only

Question 1

Claflin Doctrine

Answer 1

A trustee can block a premature trust termination if the trust has an unfulfilled material purpose

This is true even if all beneficiaries consent.

Most courts allow the trustee to block the termination if it can be shown that termination would violate the settlor’s intent.

[this rule applies to discretionary trusts, support trusts, and age-dependent trusts]

Question 2

A class remains open and may admit new members until:

Answer 2

1. at least one class member is entitled to obtain possession of the gift, or
2. The preceding interest terminates (i.e. when the holder of the present life interest dies)

Question 3

Resulting Trust

Answer 3

Used when a trust fails

The trustee must return the property to the settlor or the settlor’s estate.

It is passive in nature

Question 4

Remedial Trusts

Answer 4

An equitable remedy, not driven by intent.

Key characteristic: passive in nature

The trustee’s only duty is to convey the property back to the settlor.

Once this duty is accomplished, the trust terminates

Can be either resulting or constructive.

Question 5

Alienability of Trust Property

Answer 5

A beneficiary’s equitable interest in trust property is freely alienable.

Exception: the trust instrument or a statute limits this right

Creditors may reach the beneficiary’s equitable interest

Question 6

Creditor’s Ability to Reach Trust Property