Types of Express Trusts

Question 1

Revocable Trust

Answer 1

Unless the settlor has reserved the power to revoke or modify the trust in the trust instrument, the trust is irrevocable.

• Any modification or termination, if allowed, must be in writing
• A settlor must retain (within the instrument) a power to revoke!

Question 2

Pour Over Gift

Answer 2

• A disposition in a will to an inter vivos trust that already exists at the testator’s death.
• The assets pour over into the inter vivos trust and become part of that trust - Does not establish testamentary trust

Question 3

Totten Trust

Answer 3

Not a real trust. It’s an exception to the rule that all trusts are automatically irrevocable absent settlor’s contrary intent.

• There are no trustee duties
• It’s an account where there are restrictions
• Creditors CAN get to this during T’s lifetime and must pay taxes on

ex. Debra deposits 100k in bank account that reads “Debra Depositor, as trustee for Billy Beneficiary”

Question 4

Discretionary Trusts

Answer 4

• One in which the trustee is given discretion whether to apply or withhold payments of income or principal (or both) to a beneficiary.
• Before the trustee exercises his discretion to make payment to the beneficiary the interest is
  
  • Not assignable
  • Cannot be reached by creditors or transferees
  • Exception- When the settlor is the beneficiary his creditors can reach the proportion of the trust property attributable to his contribution.
• Bottom Line Creditors can reach the income AFTER distribution, but not before (except in circumstances above)

Question 5

Spendthrift Trust

Answer 5

• Beneficiary cannot sell or give away his right to future income or capital
• Creditors are unable to collect or attach
• Exception: Georgia law allows a creditor to reach 25% of a beneficiary’s interest in the trust for the following:
  1. Tort Claims
  2. Taxes
  3. Alimony or child support (50% here)
  4. Judgments or orders for restitution as a result of criminal conviction
  5. Judgments for necessaries

Question 6

Charitable Trust

Answer 6

Charitable trusts may be established for PUBLIC BENEFIT purposes, including (in GA) - relief of poverty, education, religion/ethics, health/welfare, government, etc.

• Beneficiaries MUST benefit public at large
• Charitable trusts aren’t subject to RAP!
• May be modified with Cy Pres Doctrine
• • The AG is tasked with enforcing these!

Question 7

Cy Pres

Answer 7

“As nearly as possible”

Funds may be moved to another beneficiary (when the original wasn’t ascertainable) to comply as best as possible with the settlor’s intention.