2) Administration

Question 1

trustee’s powers: kinds

Answer 1

1) express

2) implied

Question 2

trustee’s powers: express

Answer 2

spelled out in trust agreement. positive and negative (what can’t do)

Question 3

trustee’s powers: implied

Answer 3

trustee has power to do what is nec or appropriate to carry out terms of the trust

Question 4

if trustee uncertain of his power

Answer 4

ask the court

Question 5

multiple trustees: how do they decide to act

Answer 5

if 3+ generally need unanimous

if can’t reach unanimous, majority rule

Question 6

when can trustee resign

Answer 6

need 1 of these:

1) trust instrument allows
2) gets permission from court
3) gets consent from all beneficiaries

Question 7

trustee resign: when will court give permission:

Answer 7

NOT if removal not in best interest of beneficiaries

Question 8

trustee delegation: ok?

Answer 8

no – trustee may not delegate performance of his duties to others

Question 9

trustee delegation: exception

Answer 9

ok delegate if:

1) trust agreement explicitly grants permission to delegate
2) duties that are purely administrative, do not constitute the entire administration of the trust –> ok delegate

Question 10

liability of trustee to beneficiaries: consider

Answer 10

1) duties
2) breach
3) defenses

Question 11

trustee’s duty to beneficiaries

Answer 11

1) general duty
2) follow all instructions from settlor
3) diversify assets
4) closely supervise any agent delegated duties
5) earmark assets
6) no self-dealing
7) accounting

Question 12

trustee’s duties to beneficiaries: general duty: def

Answer 12

to act with due care, as explained by the prudent investor rule

Question 13

prudent investor rule: def

Answer 13

trustee should act like a reasonable and prudent investor in how she manages assets of the trust

Question 14

trustee duty to beneficiaries: follow all instructions from settlor: result

Answer 14

following all instructions = shield from liability

Question 15

trustee duty to beneficiaries: follow all instructions from settlor: exception

Answer 15

unless it is obvious to a RP that the instructions should not be followed

Question 16

trustee duty to beneficiaries: earmark assets; def

Answer 16

• -must be kept separate fro trustee’s own property

- -must take title to it in a way that makes its identity as trust property readily apparent

Question 17

trustee duty to beneficiaries: avoid self-dealing: def

Answer 17

can have no personal benefit to trustee or trsutee’s spouse

Question 18

trustee duty to beneficiaries: avoid self dealing: exception

Answer 18

is ok compensate trustee for duties, by statute

if trustee has special skills and is doing more than trustee typically does, need to compensate for that too

Question 19

trustee duty to beneficiaries: accounting: def

Answer 19

trustee must provide court w accounting of all transactions entered into on behalf of the trust, at these times:

• -when req’d by statute
• -when requested in court action

Question 20

trustee’s defenses to liability: list

Answer 20

1) offset profits
2) exculpatory clause
3) consent
4) laches/SOL
5) dissent

Question 21

trustee defenses: offset profits: Def

Answer 21

not a defense!!
where trustee tries to offset a loss on 1 investment with a gain in a different investment, in attempt to negate liability

Question 22

trustee defenses: exculpatory clause: def

Answer 22

the clause can relieve trustee from negligent liability but NOT intentional/reckless

Question 23

trustee defenses: consent: reqs

Answer 23

must be by:
legally competent beneficiary
with all the relevant info

Question 24

trustee defenses: consent: result

Answer 24

will shield trustee from liability to THAT beneficiary (but not any who did not consent)

Question 25

trustee defenses: dissent: def

Answer 25

dissenting trustee won't be held liable, as long as she expresses dissent in writing to cotrustees

Question 26

trustee liability: remedies

Answer 26

1) surcharging the trust 2) rescission 3) injunction 4) removal of trustee

Question 27

trustee remedies: surcharging the trustee: def

Answer 27

trustee can be sued for damages in amount of actual loss OR potential lost profit (constructive trust)

Question 28

trustee remedies: rescission: def

Answer 28

can rescind if an improper transaction by trustee

Question 29

improper transaciton: def

Answer 29

one that breaches duty of trustee

Question 30

trustee remedies: injunction: def

Answer 30

- -stop improper action by trustee or | - -compel trustee to perform his duties

Question 31

trustee remedies: remove trustee: ways

Answer 31

1) by terms of trust | 2) seek court order to have trustee removed

Question 32

liability of trustee to 3rd parties: rule

Answer 32

depends on tort vs k

Question 33

liability of trustee to 3rd parties: k

Answer 33

trustee pays if breach if k damages, can get indemnification/ reimbursement if: 1) k properly entered into 2) breach of k was not result of trustee's breach of duty

Question 34

liability of trustee to 3rd parties: tort

Answer 34

trustee pays can get indemnification/ reimbursement if: was not personally at fault

Question 35

trust is suing -- how?

Answer 35

default: trustee sues on behalf of trust

Question 36

when can beneficiaries sue on behalf of trust?

Answer 36

1) trustee fails or refuses to sue 2) trustee knowingly participates w 3rd party in causing loss to trust 3) trustee has abandoned the trust + no successor appointed