trusts

Question 1

Validity of a trust?

Answer 1

A trust of personal property is valid if it has a trustee, a beneficiary, and trust property

Question 2

Elements of a trust?

Answer 2

1. Trustee
   1. A trustee manages the trust property and holds the benefit of the beneficiaries
2. beneficiary
   1. In a private express trust beneficiaries must be definite and ascertainable
   2. The same person cannot be the sole trustee and sole beneficiary or the trust collapses
3. Trust property
   1. Trust property must be identifiable

Question 3

revoking a trust?

Answer 3

1. Presumption of revocability
   1. Under the UTC, default rule is that an inter vivo trust is revocable unless the instrument states otherwise.
2. Termination by settlor
   
   1. A settlor may terminate the trust if all beneficiaries are in existence and all agree
3. Termination by beneficiaries after death of seller
   1. irrevocable trust can be terminated if both the income beneficiaries and the remaindermen ALL agree and there is no material purpose of the trust yet to be performed

Question 4

Pour over will

Answer 4

A will that makes a gift to a trust is valid if the trust is identified in the will and the terms are incorporated into a writing before or while the will is made.

Later amendments are cool in the modern approach, not cool in common law

Question 5

Discretionary trust

Answer 5

Trustee can decide when to make distributions

Creditor can not get payments unless the trustee acted dishonestly

Question 6

Support trust

Answer 6

trustee must pay what is necessary for the beneficiaries support

Question 7

Spendthrift trust

Answer 7

Restrains the transfer of a beneficiary sinterest

creditors cant touch it before the beneficiary does, unless:

1. Child support
2. Judgement creditor
3. Government

Question 8

Charitable trust

Answer 8

1. may be created for a charitable purpose
2. Must have a large number of not readily identifiable individuals

Question 9

Modifying a charitable trust?

Answer 9

May terminate if the charitable purpose becomes unlawful or impossible.

HOWEVER can be saved by Cy Press

1. If purpose becomes unlawful or impossible, no alternate is named in the trust, and court finds intent was general, then can direct money in a manner consistent with wishes

Question 10

Honorary trust

Answer 10

1. No charitable purpose or definite beneficiary
2. Usually just takes care of something like a tomb stone for a non charitable purpose
3. Under UTC, only good for 21 years. under CL vilaetes RAP

Question 11

Duty of loyalty (trust)

Answer 11

trustee has there duty of loyalty to act in the best interest of the beneficiary

Question 12

duty of care - prudent administration

Answer 12

UPIA states that a trustee must administer the trust as a prudent person would using reasonable care, skill, and caution

duty to diversity

investments and management decisions should be viewed in the context of the portfolio as a whole and as part of strategy

Question 13

Remedies fro breech?

Answer 13

1. Suspending or removing trustee
   2. decreasing compensation
   3. compelling them to perform
   4. damages
   5. ETC.

Question 14

self dealing? (trust)

Answer 14

1. trust beneficiary may rescind the transaction and ask the self dealing purchase to be set aside
2. or recover any profits the trustee made

Question 15

Powers of appointment?

Answer 15

A person writing a will or trust can give her beneficiaries a power of appointment which enables the beneficiary to designate who will receive specific property

Question 16

General power of appointment

Answer 16

Beneficiary can exercise power over an unlimited amount of people

Question 17

majority view of general power of appointment

Answer 17

A general residuary clause in a will (i give all my estate..) does not exercise a power of appointment

However if the general residuary clause is coupled with a blanket exercise clause (including all property over which i have a power of appointment), any power of appointment held by donee is exercised, unless the donor of the power specifically references it

Question 18

Minority view of general power of appointment

Answer 18

A general testamentary power of appointment can be excessed by general language in the beneficiaries will even if it makes no reference to the power of the instrument

Question 19

Special power of appointment

Answer 19

1. The class of people that the beneficiary can excercise the power in favor of is limited
2. Needs to be specifically excersiced
3. Substantial compliance rule
   1. If it could be shown that the power holder intended to exercise a power, a blanket exercise clause be sufficient

Question 20

Rule of convenience?

Answer 20

when a gift is made to a group, such as “my children’, the class closes when at least one member is entitled to a distribution

Question 21

UPC approach to giving gifts to a class

Answer 21

When a class gift is made, each living beneficiary will take their share and the deceased beneficiary share will pass to their surviving descendants

Question 22

Common law approach to the giving gifts to a class

Answer 22

If there gift to remainder to a deceased beneficiary has already vested, and there is no applicable statute, it will go to whomever the instrument says it should go to