Types Of Trusts Flashcards
Can a trust instrument be revocable?
Yes; may be revocable or irrevocable by the settlor—whatever stated in trust. If no designation, state law governs by default
Majority: trusts are irrevocable by default unless expressly stated otherwise
Minority/UTC: trust is revocable by default UNLESS stated otherwise
What is a pour-over provision in a will?
Gifts property to a previously established trust, which is then distributed according to the terms of the trust
How is a pour over provision distinguishable from a testamentary trust?
A pour over provision doesn’t create a trust; it transfers property to a trust already in existence; thus, must be connected to an inter vivos trust (made during testator’s lifetime)
Is a testamentary disposition to an inter-vivos trust valid?
Yes, even if trust instrument is amendable or revocable
When are the terms of a testamentary disposition to an inter-vivos trust determined?
The terms are determined as the trust appears on the date of the testator’s death
What is the effect of a revocation or termination of a trust before the testator’s death on a testamentary disposition?
Unless otherwise provided in will, the gift lapses
What is a charitable trust?
One created by settlor to confer a substantial benefit to society
Must the beneficiary of a charitable trust be definite?
No, may be indefinite or contain a class of persons described by trust
Does the RAP apply to charitable trusts?
No
Will a charitable trust fail for want of a specific purpose or beneficiary?
No; court may select a purpose or beneficiary consistent with settlor’s intent
Who may enforce a charitable trust?
Settlor, qualified beneficiary, or attorney general
When will a trust naming a specific purpose or beneficiary terminate?
Upon that specified charity’s termination
What is the doctrine of cy pres?
Equitable doctrine that applies to charitable bequests and charitable trusts
When will courts apply cy pres to modify a charitable trust?
If settlor’s general intended purpose is frustrated—impracticable, unlawful, or wasteful—the court will substitute a new charitable purpose “as near as possible” with settlor’s or testator’s intent.
NOTE: only applies where testator had a GENERAL charitable intent
When does a discretionary trust occur?
When a trustee has absolute discretion and power to determine when and how much of the trust property is distributed to the beneficiaries of the trust
What is the only requirement for a trustee’s exercise of discretion?
Must be in good faith
When will a court interfere with a trustee’s exercise of discretion?
When there is an abuse of power/discretion, dependent upon:
1. The terms of the trust instrument; AND
2 the other duties of the trustee (e.g., the duty to administer the trust according to its terms, duty to act impartially, and duty of care)
What is a support trust?
Contains a provision directing the trustee to pay the beneficiary as much income and principal as is necessary for the beneficiary’s support—may be pure or discretionary
When may a beneficiary compel a trustee to make payments according to a discretionary support trust provision?
When the provision contains an ascertainable standard
What is a common example of an ascertainable standard in a discretionary support what?
One that provides for an individual’s health, education, support, or maintenance
How is the definition of support defined in a discretionary Support trust?
Fact-dependent; measured by lifestyle the beneficiary has been accustomed to; includes more than just necessities and bare essentials;
ALWAYS includes: necessities (food, shelter, clothing, and medical care) and reasonable amounts for child support
What is an indication of a general charitable intent?
The absence of a reverter clause (that property will go to another beneficiary in event that property cannot be used for charitable purpose)
What is a spendthrift trust?
Provision in a trust preventing the transfer of a beneficiary’s interest
