Week 8 Class Notes - Test 2 Flashcards

1
Q

A living trust is a (1), (2) trust.

A
  1. revokable (can be cancelled, rescinded, invalidated at ANY TIME)
  2. intervivos (“between the living” - MADE and TAKES EFFECT while grantor is alive)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

3 interchangeable terms for the one who establishes the living trust

A
  1. trustor
  2. grantor
  3. settlor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A trustee is a (1) or (2) who assumes (3) to the (4).

A
  1. person
  2. entity
  3. legal title
  4. trust property (everything held in trust)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

5 terms for entirety of trust property

A
  1. corpus (most common)
  2. trust corpus
  3. trust res
  4. trust principal
  5. trust estate
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

A beneficiary is a (1) who holds (2) to the trust property.

A
  1. person

2. equitable title

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

When the testatory to a will dies, the will goes into effect (1), although (2)

A
  1. immediately

2. it may take awhile to transfer in probate

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

The grantor to a trust can determine (1) the property gets transferred, which helps with (2), in the sense that (3) and (4). However, trusts are much more (5) than wills.

A
  1. when
  2. asset protection
  3. creditors cannot reach the trust assets
  4. heirs must wait until a certain age
  5. expensive
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Drafting a trust is very specialized, and it’s helpful to have a backgorund in (1). A trust pays taxes the way a (2) does. Estate taxes are exempt up to (3), and it’s important to know limits such as these. It also helps to have knowledge about (4).

A
  1. income tax
  2. corporation
  3. 5 million
  4. property tax
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A trust is a (1) in which the (2) transfers specific property to the (3) who holds (4) to that property for the benefit of the (5) who hold (6).

A
  1. fiduciary relationship
  2. trustor
  3. trustee
  4. legaltitle
  5. beneficiary (ies)
  6. equitable title
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A trust is a form of ownership of property which separates (1) and (2) of the property from (3). A trust requires this separation; without it, (for example, if the (4) and (5) are the same), then the titles (6) and there is no trust.

A
  1. control
  2. ownership
  3. benefit of ownership
  4. trustee
  5. beneficiary
  6. merge
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Legal title is held by the (1). Another example of legal title is found in (2)

A
  1. trustee

2. seller loans (sellers holds title until paid off, otherwise can take back AND keep all payments as rent)

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

Equitable title is held by the (1) until the (2) is handed over by the trustee according to trust specifications, at which time the trust (3). Another example of equitable title is (4).

A
  1. beneficiary
  2. corpus
  3. terminates
  4. the buyer who is making payments and does not have legal title yet
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

The trustee holds “(1)” legal title, which means no creditors of the (2) can get at it.

A
  1. bare

2. trustee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

To create a living trust, the trustor must (1)–in other words, there is no trust until there is a (2). The trustor does not get to (3) once the trust is in place.

A
  1. transfer property to the trustee
  2. corpus
  3. possess the property
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

5 requirements for a trust

A
  1. trustor
  2. trustee (if none exists, the courts will appoint)
  3. beneficiaries
  4. trust property
  5. trust purpose
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Administration of a trust costs money, which will come from (1)

A
  1. the trust
17
Q

Historically tehre was a rule against (1), meaning (2) had to end–(3) were different. Historically that limitation was (4) after the (5) of the (6). Now, it is sort of done away with–the limitation is (7).

A
  1. perpetuities
  2. private trusts
  3. charitable trusts
  4. 21 years
  5. death
  6. last beneficiary
  7. 500 years
18
Q

Trusts are (1) in that you can include almost any (2). This is different than wills which deal simply with (3). Trusts are subject to (4) and (5).

A
  1. contracts
  2. terms and conditions
  3. transfer of property
  4. legality
  5. public policy (no undue influence, fraud, etc.)
19
Q

A trustor must have the capacity to (1), meaning he must have (2) and (3). Additionally, he must have the (4) and (5) to transfer property. A trustor does not have to be an (6).

A
  1. contract
  2. legal age
  3. sound mind
  4. power
  5. authority (e.g., no JTWROS)
  6. individual (an be a corporation or partnership)
20
Q

A trustor can name himself as the (1) but this will incur (2) so an (3) would be most appropriate. A trustor who does this cannot also be (4). A (5) can be a trustee as long as he is (6), as with contracting, but it is not a good idea. You can also have (7) trustees.

A
  1. trustor
  2. tax consequences
  3. irrevocable trust
  4. sole beneficiary (if sole trustee)(cannot be trustor, SOLE bene, SOLE trustee)
  5. minor
  6. emancipated
  7. multiple
21
Q

Only the (1) can enforce the duties of the trustee–not even the (2) can!

A
  1. beneficiaries

2. trustor

22
Q

Under the Probate Code, the trustee must administer the estate as (1). The question asked is, (2)? Any (3) must be applied. The trustor may relax standards on the trustee, but only insofar as (4). The trustee has a (5) to the beneficiaries, as well as an (6) and a duty to (7).

A
  1. a prudent person
  2. hat would you do with your own money?
  3. special skills (e.g., if trustee is a bank)
  4. the Probate Code is followed
  5. duty of loyalty
  6. impartiality duty (no preference for certain benes)
    7 keep beneficiaries informed
23
Q

The trustee may not (1), (2), (3) or (4) trust property–otherwise beneficiaries may (5)–and the trustee must (6).

A
  1. sell
  2. buy
  3. borrow
  4. lease
  5. collect the value of the property lost
  6. make the property productive (invest cash, rent property)
24
Q

The trustee can (1) duties but may not (2), or else (3)

A
  1. delegate
  2. delegate all of them
  3. the trustee becomes responsible for errors
25
Q

The trustee can exercise powers given only by (1) or by the (2). This includes (3) and (4).

A
  1. law
  2. trust instrument
  3. imperative powers (no choice)(e.g., how much to distributed to benes–if not enough money, must liquidate or get protection from court)
  4. discretionary powers (e.g., what to invest in)(more common than imperative)
26
Q

In the case of (1)–3+ trustees–discretionary powers are dependent on the (2)

A
  1. joint trustees

2. majority

27
Q

In making investment decisions, the trustee owes a duty to both (1) and (2)

A
  1. income beneficiaries

2. remainderman beneficiaries (entitled to estate after purpose of trust is complete)

28
Q

A trustee must have (1), or else the trust fails as a (2).

A
  1. duties

2. passive trust

29
Q

If there are two or more trustees, they are (1) as required by (2) in Arizona. The rule is the same for (3)

A
  1. joint tenants with right of survivorship
  2. statute
  3. spouse co-trustees
30
Q

You must be (1) as a trustee. To get out of being a trustee, you need a (2). A trustee is a (3) and owes a duty to act in (4) and in the (5)

A
  1. compensated
  2. court order
  3. fiduciary
  4. good faith
  5. best interests of the benes
31
Q

Beneficiaries are (1)–they enjoy the (2) and are the (3) of the trust. The beneficiary must be (4) by an (5). Joint beneficiaries own the benefit as (6).

A
  1. cestui que
  2. benefits
  3. purpose
  4. ascertainable
  5. objective standard
  6. tenants in common
32
Q

A trust purpose can exist for (1) but it fails if it is a (2), (3), to (4) or if it is against (5).

A
  1. almost any reason
  2. crime
  3. tort
  4. defraud creditors
  5. public policy (e.g., conditional upon divorce, prohibitive of a marriage)
33
Q

(1) cannot be reached by creditors while the money is in trust

A
  1. Spendthrift trusts
34
Q

A n express trust arises with an (1) to create the (2). A trust can be oral insofar as it complies with the (3). A (4) is oral.

A
  1. express intention
  2. trust relationship
  3. Statute of Frauds
  4. Totten Trust
35
Q

6 requirements of an oral trust

A
  1. present intent (not for a future time, except testamentary trusts)
  2. does not requrie the word trust but there can be no doubt that it is one
  3. must include intent to impose enforceable duties on the trustee (no precatory language, which doesn’t impose a duty)
  4. trustor has no power to supervise the trustee
  5. cannot hold something in trust for oneself–title merges
  6. need specific, undefinable property (e.g., “most of” a certain fund)(???!)
36
Q

Implied trusts happen (1). Two examples are the (2) and the (3).

A
  1. by operation of law
  2. resulting trust
  3. constructive trust
37
Q

A resulting trust pulls from the (1). The trustee continues serving until (2). He holds legal title but (3).

A
  1. presumed intent of the property owner
  2. the court decides what to do
  3. nobody holds equitable title
38
Q

Constructives trusts have to do with (1) and prevent, for example, (2) and (3).

A
  1. wrongdoing (trustee, bene)
  2. fraud
  3. unjust enrichment (e.g., in undue influence)