Trusts Flashcards

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1
Q

Express Trust

A

created intentionally

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2
Q

Private Express Trust

A

created to benefit private, non-charitable beneficiaries

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3
Q

Charitable Trusts

A

has some charitable purpose, rather than conferring benefit on individuals

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4
Q

Implied trusts

A

Arise by operation of law

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5
Q

Constructive Trusts

A

imposed to deprive wrongdoer from retaining improperly obtained property

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6
Q

Resulting Trusts

A

imposed irrespective of wrongdoing when the circumstances require it

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7
Q

Parties to a trust

A

Settlor, trustee, beneficiary

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8
Q

Income beneficiary

A

present interest in the trust fund

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9
Q

Remainder beneficiary

A

remainder interest in trust fund, generally principal

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10
Q

Duties of Trustee

A

Loyalty and good faith

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11
Q

Elements of a Trust

A

1) a settlor with capacity and mandatory language
2) delivery of specific trust property
3) an ascertainable beneficiary
4) active duties imposed on the trustee
5) a proper trust purpose
6) a trustee

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12
Q

Property that cannot be put into trust

A

Mere expectations, unearned profits, debts owed to trustee

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13
Q

Purpose that offends public policy

A

Delete that language, determine what settlor would have wanted instead

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14
Q

Totten Trust

A

arrangement with a bank that allows the depositor to open a bank account in depositor’s name as trustee for other parties

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15
Q

Wait and see doctrine

A

court’s determination of whether RAP has been violated depends upon what actually happens rather than what might happen

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16
Q

Duty of loyalty

A

-prohibited from self dealing in any manner
-cannot obtain any personal benefit beyond fees
- cannot interact with beneficiaries and have business with them
-cannot have even apparent conflicts of interest

17
Q

Principal

A

amount originally received, plus capital gains less debts, expenses and capital losses

18
Q

Income

A

interest, receipts, dividends, and other income earned by principal

19
Q

Disposition of principal

A

sales proceeds, stock dividends are allocated to principal of trust and protected for ultimate distribution
-extraordinary repairs

20
Q

Disposition of income

A

rents and cash dividends are allocated to trust income and distributed to income beneficiaries
-ordinary expenses

21
Q

Prudent Busi8ness Person Rule

A

Trustees must use degree of skill, care, and prudence that would be reasonably used by a business person in their own personal affairs

22
Q

Liability for duty to beneficiaries

A

Always liable for results of breach

23
Q

Liability for breach of duty of care in investing

A

must personally recompense trust for losses

24
Q

Liability for successor-trustee liability

A

IF T knew of previous T’s breach and failed to take appropriate action, liability attaches

25
Q

Support Interest

A

trustee provides only so much as is necessary for B’s support and no other purpose

26
Q

Discretionary Interest

A

trustee pays as much income as trustee believes desirable

27
Q

Spendthrift

A

provision in a trust that says the beneficiary cannot voluntarily transfer their property nor can creditor attack it

28
Q

Termination

A

irrevocable unless terms expressly provide for revocation

29
Q

Termination by Merger

A

if sole trustee becomes only beneficiary, trust ceases to exist and trustee becomes owner of trust assets

30
Q

Termination by Operation of Law

A

-trust property has been consumed or destroyed
- purpose has been fully accomplished
-material purpose has become illegal, impossible, or impractical

31
Q

Clafflin Doctrine

A

trust cannot be terminated before time specified by settlor, even if all B’s agree

32
Q

Cy Pres

A

if settlor’s exact charitable purpose cannot be met, court can direct the application of the trust property to another charitable trust