Valid Creation/Funding of Trust Flashcards

1
Q

To create a valid private trust you must:

A

(1) settlor who;
(2) intended to create a trust;
(3) for valid trust purpose;
(4) delivers trust property to the trustee;
(5) trustee holds for the benefit of one or more beneficiaries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Is a settlor’s promise to create a trust in the future valid?

A

No, UNLESS: (1) supported by consideration; OR (2) manifests anew an intention to create the trust when the assets come into existence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Merger of title occurs when:

A

the sole trustee and sole beneficiary are same individual and hold the same interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Effect of merger of title

A

the trust terminates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Pour Over Gift

A

From a will to a trust:
settlor makes gifts by will to a trust established during his lifetime
- may remain unfunded during the lifetime
must be clearly identified in the will

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Traditional View: creating pour over

A

(1) trust must be in existence OR

(2) must be executed at the time of the will’s execution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Prevailing view: creating pour over

A

trust may be established after the will is executed but before the testator’s death

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Spend thrift trust

A

prevents beneficiary from voluntarily or involuntarily transferring his interest in the trust

prevents creditors from reaching interest in the trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Exceptions to Spend Thrift

A

Cannot be used to shield beneficiary from:

(1) his own creditors where the beneficiary is the settlor;
(2) judgments or court orders for support or maintenance of the beneficiary’s child, spouse, or former spouse; or
(3) claims by the government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

revocable trusts and the rules against perpetuities

A

period beings to run on the date of the settlers death

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Rule against perpetuities

A

interest is void if any possibility it will vest more than 21 years after some life in being at the creation of the interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Gift to class of children

A

includes children from all marriage and adopted children

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Rule of convenience

A

gift to a class conditioned upon the members attaining a certain age the class closes when

  1. the preceding estate terminates AND
  2. the first class member reaches the specified age
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Stock dividend and cash dividends

A

GR: cash dividends are allocated to income and stock dividends declared and paid by the corporation are allocated to the principal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Writing

A

trusts generally must be in writing, most states do not require a writing for trust of personal property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

power of appointment

A

authority created in a donee enabling the donee to designate within the limits prescribed, the persons who shall take certain property and manner in which they shall take it

17
Q

General power of appointment

A

exercisable in favor of the donee, estate, creditors, or creditors of her estate

18
Q

special power of appointment

A

exercisable in favor of a specified class of persons

19
Q

effect of donee failing to exercise power of appointment

A

property passes to the takers in the default appoint (persons designated by donor to take)

20
Q

validity of pour over gifts-

A

valid even if the trust is unfunded during the testtor’s lifetime and even if the trust is amended prior to the testator’s death

21
Q

discretionary trust and creditors

A

before the trustee exercises his discretion to make payments to the beneficiary, the beneficiary’s interest is not assignable and cannot be reached by creditors