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Flashcards in Express Private Trusts Deck (19)
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1
Q

elements required for a trust

A
  1. Property
  2. Beneficiary
  3. Trustee
  4. Intent
  5. Valid legal purpose
2
Q

spendthrift trust

A

precludes the beneficiary from voluntarily or involuntarily transferring his interest in the trust, and his creditors are precluded from reaching it to satisfy their claims

3
Q

discretionary trust

A

trustee is given discretion whether to apply or withhold payments of income or principal (or both) to a beneficiary

4
Q

support trust

A
  • directs the trustee to pay only so much of the income or principal (or both) as is necessary for the beneficiary’s support
  • discretionary trust with a support standard
5
Q

termination of a trust by the beneficiaries

A
  • A trust may be terminated or modified upon the consent of the settlor (or his agent, converator, or guardian) and all beneficiaries, even of the modification or termination conflicts with material purpose of the trust.
  • A trust can be terminated or modified on the consent of only all beneficiaries, but only if no material purpose of the trust would be frustrated.
6
Q

termination of a trust by the court

A
  • If termination or modification is not available because not all beneficiaries consented, a court may terminate or modify the trust if: (i) the trust could have been modified had all the beneficiaries consented; and (ii) the interests of any nonconsenting beneficiaries will be adequately protected.
  • Additionally, a court may terminate or modify a trust if: (i) unanticipated circumstances threaten the purposes of the trust; (ii) continuation of the trust on its existing terms is impracticable or wasteful; or (iii) the value of the trust is insufficient to justify the cost of administration or to achieve settlor’s tax objectives.
7
Q

termination of a trust by the trustee

A

A trustee can terminate the trust if the trust property is less than $50,000 and the amount is insufficient to justify the cost of administration, as long as the trustee provides the qualified beneficiaries with notice.

8
Q

A trustee of a revocable trust owes her duties exclusively to the _________; whereas a trustee of an irrevocable trust owes her duties to ____________.

A

settlor; all of the trust beneficiaries

9
Q

duties of trustee

A
  1. duty to administer trust
  2. duty of loyalty
  3. duty to report
  4. duty not to commingle
  5. duty to enforce claims and defend trust from attack
  6. duty to preserve trust property and make it productive
10
Q

Uniform Prudent Investor Act standard of care

A

A trustee must exercise reasonable care, skill, and caution while investing and managing trust assets

11
Q

Investment decisions must be evaluated in the context of the

A

entire trust portfolio and as part of an overall investment strategy

12
Q

diversification of investments

A

A trustee must diversify the investments of the trust unless she reasonable determines that the purposes of the trust are better served without diversification.

13
Q

duty of fairness to all beneficiaries

A

The trustee is under a duty to administer the trust impartially, except to the extent that the trust or the will manifests an intent that one or more of the beneficiaries is to be favored over the others.

14
Q

resulting trust

A
  • trust implied by law or imposed by courts

- involve reversionary interests and are based on the presumed intent of the settlor

15
Q

constructive trusts

A
  • implied by law or imposed by courts

- used to prevent unjust enrichment

16
Q

Resulting trusts are of three types:

A

(i) purchase money resulting trusts;
(ii) resulting trusts arising on failure of an express trust; and
(iii) resulting trusts arising from an incomplete disposition of trust assets (i.e., excess corpus)

17
Q

purchase money resulting trusts

A

Presumed whenever the beneficiary furnishes the consideration for the acquisition of real or personal property but, with the beneficiary’s consent, title is taken in the name of the trustee.

18
Q

resulting trust on failure of express trust

A
  • A settlor has conveyed property to a trustee under an express trust and (i) the trust is void or unenforceable, or (ii) the beneficiary is dead or cannot be located.
  • May also apply on failure of a charitable trust where cy pres is inapplicable
  • Express trust terminates and settlor becomes beneficiary of the resulting trust
19
Q

resulting trust implied from excess corpus

A

A resulting trust in favor of the settlor also arises when the trust purpose is fully satisfied and some trust property remains.