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Question 1

A valid express trust requires:

Answer 1

(1) a definitive beneficiary
(the beneficiary can be reasonably ascertained now or in the
future);  (2) a settlor with capacity;  (3) an intent to create
a trust;  (4) a trustee;  (5) a valid trust purpose;  (6) trust
property (the res);  AND (7) compliance with any State
formalities (i.e.  signed in front of notary).

The same execution formalities for a will (i.e.  two
witnesses) are NOT required to create or amend a
trust.  Under the Uniform Trust Code, no execution
formalities are required.

(high)

Question 2

Beneficiaries can be

Answer 2

natural persons, corporations, or other
organizations.

(high)

Question 3

Intent to create a trust may be established by a promise that
creates enforceable rights in a person who (immediately or
later) holds these rights as trustee.  An oral promise

Answer 3

supported
by consideration is sufficient to create enforceable rights,
unless the State requires certain trust formalities or the statute
of frauds applies.

(high)

Question 4

The Trustee must have duties to perform, and the same person
CANNOT be the sole trustee and sole beneficiary.  Although a
trust must have a named trustee, the trust will NOT fail solely
because that person

Answer 4

refuses to act as trustee, dies, is removed,
or resigns.  In such instance, the court will appoint a new
trustee.

(high)

Question 5

A trust is not created until it receives valid property.  The
property interest does not need to be substantial, and does not
have to be transferred contemporaneously with the signing
of the trust instrument.  A trust instrument signed during the
settlor’s lifetime is valid even if

Answer 5

the property was transferred
to the trustee at a much later date, including after the settlor’s
death (i.e.  through a pour-over provision in a will).

(high)

Question 6

Trust for the Benefit of “Friends”:  A trust for benefit of
“friends” has indefinite beneficiaries.  If a trustee is instructed
to distribute trust assets to an indefinite class, NO member of
that class may enforce the trust.

Restatement (Third) of Trusts Exception:  A trust for
“friends” MAY BE VALID if:

Answer 6

(a) some ascertainable
group of friends was intended;  OR (b) an implied
term of the trust authorizes the trustee to determine
who the friends are.

(high)

Question 7

Precatory language are words in a will or trust (such as
“hope” or “request”) that merely express a settlor’s desire
regarding the disposition of his property.  Such words DO
NOT create a legal obligation to act in accordance with that
desire, and will not create a valid trust.  Instead, there MUST
be specific settlor intent.  When there is a familial or fiduciary
relationship between the parties, the court may

Answer 7

presume the
settlor intended to create a legal obligation.

(medium)

Question 8

Similarly, a promise to create a trust in the future is
unenforceable UNLESS the promise is deemed to be a

Answer 8

valid
contract (mutual assent, consideration, and no defenses to
formation).

(medium)

Question 9

The UTC creates an exception to definite-beneficiary
rule.  Under the UTC, two types of trusts MAY be enforced
without ascertainable beneficiaries:

Answer 9

(1) trusts for general
but noncharitable purposes, and (2) trusts for a specific
noncharitable purpose other than the care of an animal.  Such
trusts CANNOT be enforced for more than 21 years.

(low)

Question 10

Trusts for general noncharitable purposes include a bequest of
money to be distributed to such objects of benevolence as the
trustee might select.  An example of a specific noncharitable
purpose is for

Answer 10

the care or maintenance of a cemetery plot.

(low)

Question 11

Property of the trust may be applied only to its intended use,
except to the extent the court determines that the value of the
trust property exceeds the amount required for the intended
use.  Except as otherwise provided in the terms of the trust,
property not required for the intended use must be

Answer 11

distributed
to the settlor (if then living) or otherwise to the settlor’s
successors in interest.

(low)

Question 12

The trust instrument may state whether the trust is irrevocable
or revocable by the settlor.  If no designation is set forth,
then state law will govern whether the trust is revocable or
irrevocable by default.

The majority view is that trusts are

Answer 12

irrevocable by default
UNLESS expressly stated otherwise.  Generally, an
irrevocable trust CANNOT be modified or revoked by the
settlor after its creation

(high)

Question 13

The minority view and the Uniform Trust Code (UTC)
provides that a trust is revocable by default UNLESS stated
otherwise.

A revocable trust becomes irrevocable upon the

Answer 13

death or
incapacity of the settlor.

(high)

Question 14

A Testamentary Trust may be created through the provisions
of a settlor’s will, and the trust does not take effect until the
settlor’s death.

In order to create a Testamentary Trust: 

Answer 14

(1) the will must
state the essential trust terms (beneficiaries, purpose, and
trust property);  AND (2) intent to create a trust must be
found from either (a) the express terms of the will, or (b)
incorporation by reference of a document/writing in existence
at the time the will was executed.

(low)

Question 15

A pour-over provision in a will gifts property to a previously
established trust.  The property is distributed according
to the terms of the trust.  A pour-over will provision is
distinguished from a testamentary trust because it does not
create a trust.  Instead, the pour-over will transfers property
to a trust already in existence.  As such, a pour-over will

Answer 15

must
be connected to an inter vivos trust (a trust made during the
testator’s life).

(high)

Question 16

A testamentary disposition to an inter-vivos trust is valid, even
if the trust instrument is amendable or revocable.  But, that
disposition shall be given effect in accordance with the terms
of the trust instrument (including an amendment thereto) as it

Answer 16

appears on the date of the testator’s death.  Unless otherwise
provided in a will, a revocation or termination of the trust
before the testator’s death causes the gift to lapse.

(high)

Question 17

A Charitable Trust is one created by a settlor to confer
a substantial benefit to society.  The beneficiary may be

Answer 17

indefinite or contain a class of persons described by the
trust.  The rule against perpetuities DOES NOT apply to
charitable trusts.

(medium)

Question 18

A general charitable trust that fails to state a specific purpose
or beneficiary will NOT fail.  Instead, the court will select a

Answer 18

purpose or beneficiary consistent with the settlor’s intent.

Question 19

When the trust names a specific charitable beneficiary,
the trust will terminate upon that specified charity’s
termination.  However, if the settlor had a general charitable
intent, the cy pres doctrine may be used to

Answer 19

continue the trust
consistent with that intent.

Question 20

Charitable Purpose:  Charitable purposes include: 

Answer 20

(1) the
relief of poverty,  (2) the advancement of education or
religion,  (3) the promotion of health,  (4) governmental or
municipal purposes,  and (5) other purposes that benefit the
community.  A trust to beautify a city or provide aesthetic
enjoyment to the community is deemed charitable.

(medium)

Question 21

A trust made to help a profit-making business is NOT
charitable.  However, the settlor’s motivation does not
determine the nature of the benefit provided by the
trust; only the trust instrument determines

Answer 21

whether the
benefit is charitable vs. non-charitable.

(medium)

Question 22

When the settlor retains significant control over the trust
property indicating a lack of intent to create a trust (i.e.  when
a settlor retains a right of withdrawal or names himself as sole
trustee), the trust will be deemed

Answer 22

illusory and invalid.

(low)

Question 23

If a trust fails for lack of a beneficiary, a Resulting Trust is
implied by law, and all trust property

Answer 23

returns to the settlor or
the settlor’s estate.

(low)

Question 24

A Discretionary Trust occurs when a trustee has absolute
discretion and power to determine when and how much of
the trust property is distributed to the beneficiaries of the
trust.  The trustee’s exercise of discretion MUST be in good
faith.  A court will generally not interfere with a trustee’s
exercise of discretion, unless the trustee is abusing such
power.

Whether the trustee has

Answer 24

abused their discretion depends
on:  (1) the terms of the trust instrument; and (2) the other
duties of the trustee (such as the duty to administer the trust
according to its terms, duty to act impartially, and duty of
care).

(high)

Question 25

A support trust is a trust that contains a provision directing the trustee to pay the beneficiary as much income and principal

Answer 25

as is necessary for the beneficiary’s support.  Support trusts may be pure (when the trustee has no discretion) or discretionary. (medium)

Question 26

If a discretionary support trust provision contains an ascertainable standard, a beneficiary may compel a trustee to make payments in accordance with that standard. A common ascertainable standard is one that

Answer 26

provides for an individual’s health, education, support, or maintenance.  The beneficiary may bring a judicial proceeding against the trustee for abuse of discretion when the trustee fails to make proper payments/distributions. (medium)

Question 27

Unless otherwise defined, the definition of support is fact dependent.  It is measured by

Answer 27

the lifestyle the beneficiary has been accustomed to, and includes more than just necessities and bare essentials.  It ALWAYS includes:  necessities (i.e. necessary food, shelter, clothing, and medical care);  and reasonable amounts for child support (medium)

Question 28

Trust assets pass according to the terms of the trust.  When a testamentary trust or distribution fails, the trust property passes:

Answer 28

(a) under the residuary clause in a will; OR (b) to the settlor’s heirs by intestacy (if no applicable residuary clause). (low)

Question 29

Cy pres is an equitable doctrine that applies to charitable bequests and charitable trusts.  Courts will apply cy pres to modify a charitable trust to be

Answer 29

consistent with and “as near as possible” with the settlor’s or testator’s intent, if the purpose of the trust or bequest is frustrated (the trust becomes unlawful, impracticable, impossible, or wasteful).  The cy pres doctrine only applies if the testator had a general charitable intent. (high)

Question 30

A settlor has general charitable intent when the settlor provides a particular charitable purpose, rather than naming a specific charity.  The majority of courts and the Uniform Trust Code (UTC) will

Answer 30

presume a general charitable intent.  The absence of a reverter clause (that property will go to another beneficiary in the event that property cannot be used for the charitable purpose) is an indication of a general charitable intent. (high)

Question 31

A spendthrift provision in a trust (one preventing the transfer of a beneficiary’s interest) is valid only if

Answer 31

f it restrains both voluntary AND involuntary transfers. (high)

Question 32

A spendthrift interest means that the interest CANNOT be sold or assigned by the income beneficiary, nor may any creditors reach it (but the creditor may attempt to collect directly from the beneficiary after a payment is made from the trust). However, there are five exceptions to this rule when a creditor CAN reach the beneficiary’s interest.  They are: 

Answer 32

(1) a judgment creditor who has provided services for the protection of a beneficiary’s interest in the trust;  (2) a creditor who furnishes necessities (i.e. necessary food, shelter, clothing, and medical care) – only some jurisdictions recognize this exception;  (3) an order for child support or alimony;  (4) any claim by the state or federal government (i.e.  federal tax liens);  or (5) a self-settled trust where the settlor retains an interest (i.e.  a revocable trust). (high)

Question 33

Spendthrift trusts DO NOT provide protection for mandatory distributions of trust property. A spendthrift provision DOES NOT prevent

Answer 33

a beneficiary from reaching trust assets if the trustee abused his discretion in failing to make payments. (high)

Question 34

If a beneficiary’s interest is not subject to a spendthrift provision, then the court may authorize a creditor to reach the beneficiary’s interest by attachment of present or future distributions to the beneficiary.  If a beneficiary’s interest is subject to a spendthrift provision, a creditor is generally prohibited from attaching that interest, and may only attempt to collect directly from the beneficiary after a payment is made.  If the debtor is a remainder beneficiary, the creditor will need to

Answer 34

wait until the trust terminates to receive the trust property. (high)

Question 35

Discretionary Trusts:  Whether or not a trust contains a spendthrift provision, a creditor cannot compel a distribution to a beneficiary that is subject to the trustee’s discretion, even if: 

Answer 35

(a) the discretion is expressed in the form of a standard of distribution;  OR (b) the trustee has abused their discretion. (high)

Question 36

Discretionary Trusts & Spousal and Child Support:  If a judgment or order exists against the beneficiary for unpaid spousal or child support, the court may

Answer 36

order a distribution to satisfy the judgment and direct the trustee to pay the child, spouse, or former spouse an equitable amount of the judgment/order. (high)

Question 37

Invasion of Trust Principal:  If a beneficiary will eventually receive trust principal, a court may permit invasion UNLESS the invasion would:

Answer 37

(a) be contrary to the settlor’s intent;  OR (b) adversely affect other beneficiaries. (low)

Question 38

Express and Implied Powers of Invasion:  A trustee CANNOT use trust property to pay income beneficiaries when trust income is insufficient, UNLESS there is an express or implied (through settlor’s words or conduct) power of invasion. A court may also permit invasion if

Answer 38

it’s in the best interests of the beneficiaries or for the maintenance and support of the beneficiaries. (low)

Question 39

Under the majority view, a trust may only be modified by a settlor:  (a) who expressly reserved the power to modify the trust;  OR (b) who has the power to revoke the trust (a power of revocation includes the power to amend).  Under the minority view, a settlor is

Answer 39

free to amend or revoke a trust without the express authority to do so (unless the trust states otherwise).  Amendments must be made in writing and signed by the settlor. (medium)

Question 40

Under the Uniform Trust Code (UTC), a trust may be modified in the following instances: 

Answer 40

(1) by the settlor while alive, by a later will/codicil, or any other method manifesting clear and convincing evidence of the settlor’s intent (unless the trust instrument provides otherwise);  (2) with the settlor and the beneficiaries consent (even if the modification is inconsistent with the trust purpose);  (3) with the beneficiaries consent and the court determines that the modification is not inconsistent with the trust purpose;  (4) modification will further the purposes of the trust because of circumstances not anticipated by the settlor;  (5) the cy pres doctrine applies;  (6) the court determines that the value of the trust property is insufficient to justify the cost of administration, and provides notice to all beneficiaries;  and (7) it is necessary to conform to the settlor’s intent or tax objectives. (medium)

Question 41

When determining the settlor’s intent, the court must consider: 

Answer 41

(1) terms and words of the trust;  (2) the property involved;  (3) the ability of ascertaining possible trust purposes, terms, and possible beneficiaries and their interests;  (4) the interests or motives that could have reasonably influenced the settlor;  and (5) the financial situation, dependencies, and expectations of the parties (medium)

Question 42

If continuing a trust on its existing terms would be impracticable or wasteful, courts may apply the Equitable Deviation Doctrine to modify the terms of the trust.  The doctrine permits the court to

Answer 42

modify the administrative provisions or procedures of a trust if modification would further the trust purpose because of circumstances not anticipated by the settlor. (low)

Question 43

Under the common law, the equitable deviation doctrine only applied to modification of administrative provisions of a trust.  However, under the Uniform Trust Code (UTC), dispositive provisions in a trust

Answer 43

may be modified if modification will further the purposes of the trust when circumstances arise that were not anticipated by the settlor. (low)

Question 44

When the settlor anticipates changing trust assets, an additions clause should be added to the trust instrument.  A trustee retains the specific power to

Answer 44

accept or reject additions to the trust property from a settlor or any other person. (low)

Question 45

Under the Uniform Trust Code (UTC), a trust may be terminated in the following instances: 

Answer 45

(1) it is revoked or expires pursuant to its terms (including the settlor revoking a revocable trust);  (2) the material purpose of the trust has been achieved (a material purpose is a particular concern or objective of the settlor);  (3) the trust has become unlawful, contrary to public policy, or impossible to achieve;  (4) the settlor and all beneficiaries consent (even if termination is inconsistent with purpose of the trust);  (5) all beneficiaries consent and the court decides that continuance is not necessary to achieve any purpose of the trust;  (6) termination will further the purpose of the trust because of circumstances not anticipated by the settlor;  (7) the court applies the cy pres doctrine to terminate the trust;  or (8) the court or trustee determines that the value of the trust property is insufficient to justify the cost of administration. (high)

Question 46

Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed expeditiously to distribute the trust property to those entitled to it.  The trustee may

Answer 46

retain a reasonable reserve for the payment of debts, expenses, and taxes. (low)

Question 47

The beneficiaries may decide how the trust property is to be distributed if the trust is terminated either by:

Answer 47

(a) consent from the settlor and all beneficiaries;  OR (b) by all beneficiaries, and a determination from the court. (low)

Question 48

A condition on a gift in a will/trust that prohibits a first marriage or requires divorce are void as against public policy, and will be treated as though the restriction had not been imposed.  However, a restraint on marriage may be upheld if:

Answer 48

(a) it is a restraint on remarriage (i.e.  a condition tied to the surviving spouse’s interest);  OR (b) the language of the bequest or gift indicates that its intended purpose is to take care of a person’s daily needs until they are able to obtain such support through marriage. (medium)

Question 49

The trustee must continue to administer the trust until the trust terminates, and must hold the trust assets until the remaindermen are determined. Under the common law, the trustee owed beneficiaries the

Answer 49

duty to act with care, skill, and prudence. (high)

Question 50

Under the Uniform Trust Code, a trustee MUST administer the trust:

Answer 50

(1) in good faith;  (2) in accordance with the trust purpose and terms;  AND (3) in the interests of the trust beneficiaries (high)

Question 51

The trustee MUST exercise his powers in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries, even if

Answer 51

the trust grants the trustee broad range of discretion (including the use of terms such as “absolute” or “uncontrolled”). (high)

Question 52

Duty of Prudent Administration: A trustee must administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust.  In order to satisfy this duty, a trustee must

Answer 52

exercise reasonable care, skill, and caution. (low)

Question 53

Duty to Take Control & Protect Trust Property:  A trustee must also take reasonable steps to take control of AND protect the trust property.  The failure to purchase fire/ casualty insurance for trust property is

Answer 53

is a breach of this duty, when insurance is customarily obtained by a prudent person. (low)

Question 54

A trustee must administer the trust solely in the interest of the beneficiaries and CANNOT engage in self-dealing.  A transaction involving trust property that is entered into by the trustee for the trustee’s own benefit or that is affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction.  Alternatively, a beneficiary can seek a damages award for the trustee’s self-dealing. Five exceptions to this rule exist: 

Answer 54

(1) if the transaction was authorized by the terms of the trust;  (2) if the transaction was approved by the court;  (3) the beneficiary did not commence a judicial proceeding within the required time;  (4) the beneficiary consented to the conduct, ratified the transaction, or released the trustee of liability;  OR (5) the transaction occurred before the person became trustee. (HIGH)

Question 55

A transaction will be presumed to be affected by a conflict of interest if it is entered into by the trustee with

Answer 55

(a) the trustee’s spouse;  (b) the trustee’s descendants, siblings, parents, or their spouses;  (c) an agent or attorney of the trustee;  OR (d) a corporation or other person or enterprise in which the trustee has an interest that might affect the trustee’s best judgment (MEDIUM)

Question 56

Under the No Further Inquiry Rule, a transaction involving trust property entered into by the trustee for the trustee’s own benefit is

Answer 56

automatically presumed to be a conflict of interest, and is voidable without further inquiry into the fairness of transaction or possible intent/motivation for selfdealing.  It is immaterial whether the trustee acts in good faith or pays a fair consideration. (MEDIUM)

Question 57

For transactions involving trust property entered into with persons who have close business or personal ties with the trustee, this presumption may be

Answer 57

rebutted if the trustee shows that the transaction was not affected by any conflict. (MEDIUM)

Question 58

If a trust has two or more beneficiaries, the trustee MUST act impartially in investing, managing, and distributing the trust property – giving due regard to the beneficiaries’ respective interests. Impartiality means that the trustee

Answer 58

CANNOT be influenced by his personal favoritism or animosity toward individual beneficiaries when administering the trust. (MEDIUM)

Question 59

Failing to test the market for potential buyers before selling trust property (i.e.  shares of a company) could result in

Answer 59

in a breach of the trustee’s duty of care. (LOW)

Question 60

The Prudent Investor Rule requires that a trustee exercise the degree of care, skill, and prudence of a reasonable investor investing his own property. This includes

Answer 60

diversifying trust assets, avoiding risky investments, and the duty to monitor investments and sell and reinvest investments as necessary to keep the trust assets productive. (HIGH)

Question 61

In assessing whether a trustee has breached this duty, a court must consider a number of factors, including: 

Answer 61

(1) the distribution requirements of the trust;  (2) general economic conditions;  (3) the role the investment plays in relationship to the trust’s overall investment portfolio;  and (4) the trust’s need for liquidity, regularity of income, and preservation or appreciation of capital. (HIGH)

Question 62

A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances.  If the trustee delegates a duty, the trustee MUST exercise reasonable care, skill, and caution in: 

Answer 62

(1) selecting an agent;  (2) establishing the scope and terms of the delegation;  AND (3) periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation.  The trustee is NOT liable for actions of an agent if the trustee meets the above requirements. (LOW)

Question 63

If a trust is revocable, a trustee owes duties only to the settlor (during the settlor’s lifetime).  Therefore, a trustee is NOT liable for breach of the trust if the trustee acted in accordance with the settlor’s wishes (even if to the exclusion of the other beneficiaries). If a trust is irrevocable, the trustee owes

Answer 63

duties to settlor and the beneficiaries, and cannot be relieved from liability for acting in accordance with the settlor’s wishes. (MEDIUM)

Question 64

Trust receipts and disbursements are allocated according to State law either to income or principal. The following items MUST be allocated to income:

Answer 64

(1) receipt of rental payments from real or personal property;  (2) money received from an entity (i.e.  cash dividends, interest on investments);  and (3) ordinary expenses and repairs. (HIGH)

Question 65

The following items MUST be allocated to principal: 

Answer 65

(1) proceeds from the sale of a principal asset;  (2) all other property received (other than money received from an entity); and (3) extraordinary expenses and repairs – expenses/ repairs due to an unusual or unforeseen occurrence that is beyond the usual, customary, or regular kind. (HIGH)

Question 66

A trustee who wrongfully invades trust assets is liable to the beneficiaries affected for the greater of: 

Answer 66

(a) the amount required to restore the value of the trust property and distributions (to what it would have been if the breach did not occur);  OR (b) any profit made by the trustee from the breach. (LOW)

Question 67

Remainder beneficiaries (also known as remaindermen) are NOT entitled to receive trust property UNTIL the

Answer 67

termination of the trust. (HIGH)

Question 68

A minor, incapacitated, or unborn individual MAY be represented by and bound by a person with a substantially identical interest concerning a particular issue, UNLESS:

Answer 68

(a) the person is already represented;  OR (b) a conflict of interest exists between the representative and the person. (LOW)

Question 69

A substitute gift is created in the deceased beneficiary’s surviving descendants if: 

Answer 69

(1) the beneficiary of a future interest does not survive the distribution date;  AND (2) a state’s anti-lapse law applies to trusts.  However, most states’ anti-lapse statutes DO NOT apply to trusts (MEDIUM)

Question 70

Under the Uniform Probate Code (UPC), if a beneficiary of a future interest DOES NOT survive the distribution date, the following applies:

Answer 70

(a) if the gift is not a class gift, a substitute gift is created in the deceased beneficiary’s surviving descendants who take the property the beneficiary would have received;  OR (b) if the gift is a single generation class gift (i.e. “children”), a substitute gift is created in the surviving descendants of any deceased beneficiary.  Each surviving beneficiary takes the property he would have been entitled to had all the beneficiaries survived the distribution date.  Each deceased beneficiary’s surviving descendant takes the property the deceased beneficiary would have been entitled to.

Question 71

A vested remainder is an interest where there are no contingencies or conditions on survivorship.  Vested remainders are devisable and will pass to that person’s heirs if they die before the interest becomes possessory. Under the common law,

Answer 71

vested remainders will pass to a deceased remainder person’s heirs, UNLESS there is a survival condition in the trust.  If the remainder person has no heirs, the interest passes to the remainder person’s estate. (MED)

Question 72

Under the common law, a condition of survivorship on future interests in a trust is NOT implied.  However, under the Uniform Probate Code (UPC),

Answer 72

such condition is implied. (MEDIUM)

Question 73

A person’s future remainder interest may be accelerated (allowing the person to take possession immediately) if the present holder:

Answer 73

(a) loses his legal right to the property;  OR (b) disclaims his present interest in the property.  If an income beneficiary disclaims his interest, the remainder beneficiaries are immediately entitled to the trust principal UNLESS:  (a) distribution would harm one of the beneficiaries or potential beneficiaries (i.e.  causing a class to close earlier);  OR (b) the trust terms limit acceleration of a remainder interest.

Question 74

When a testator/settlor (the donor) gives another person the power to decide where and to whom the testator’s property will go, that person (the donee) has a power of appointment. A general power of appointment is granted when the testator DOES NOT leave any conditions or restrictions as to the appointment of the property.  Thus, the donee is permitted to appoint the power to anyone, including himself.  A testamentary power of appointment can only be exercised by

Answer 74

the donee’s will and according to the donor’s conditions. (HIGH)

Question 75

The donee’s power is effectively exercised in an instrument only if: 

Answer 75

(1) the instrument is valid under state law;  (2) the terms indicate the holder’s intent to exercise the power and are consistent with the conditions (if any) imposed by the testator;  AND (3) the appointment is permissible.

Question 76

An appointment is permissible if it’s to a person or group authorized by the donor.  In most states, a donee’s power is NOT exercised in a general residuary clause in a will UNLESS

Answer 76

the donee’s intent to exercise the power is referenced.  Intent to exercise the power is presumed in a blanket exercise clause (i.e. “All the residue and remainder of my estate, including any property over which I have a power of appointment, I devise to…”). (HIGH)

Question 77

Under the Uniform Probate Code (UPC), absent a requirement that a power be expressly or specifically referenced, a general residuary clause expresses an intention to exercise a power of appointment held by the testator only if:

Answer 77

(a) the testator’s will manifests an intention to include the property subject to the power;  OR (b) the power is a general power and the creating instrument does not contain a gift if the power is not exercised. (HIGH)

Question 78

In some states and under the UPC, if the donor required the power be exercised by an express or specific reference, a blanket exercise clause is

Answer 78

not sufficient to show intent to exercise the power, and additional evidence will be needed to prove the donee’s intent (HIGH)

Question 79

A special power of appointment is one in which the donee (the holder of the power) may only appoint property to a limited class of persons

Answer 79

authorized by the donor.  The donor MUST indicate certain individuals or definite groups. MEDIUM

Question 80

Unless the instrument giving the power states otherwise, the donee MAY make an appointment in any form (including one in trust), and can create

Answer 80

more limited interests (e.g. life estate). MEDIUM

Question 81

Appointments made to those NOT authorized by the donor are ineffective.  The holder of a special power of appointment CANNOT appoint such property to

Answer 81

himself, his estate, his creditors, or his estate’s creditors. MEDIUM

Question 82

Appointments made to those NOT authorized by the donor are ineffective.  If more than one appointment is made at a time, an appointment that is ineffective will not affect an appointment that is valid.  If the donee of a general power of appointment makes an ineffective appointment, the property passes to the taker-in-default designated by the donor of the power.  If the donor did not provide for a taker-in-default, the property passes to

Answer 82

the donee or the donee’s estate. HIGH

Question 83

For an interest to be valid under the common law Rule Against Perpetuities (RAP), it must vest within a life in being at the time of the grant plus 21 years.  This rule invalidates any interest that will not vest during the time period AND those that hypothetically may not vest within the time period.  A class gift becomes vested under the RAP when

Answer 83

(1) the class closes; AND (2) all conditions for every member of the class are satisfied. HIGH

Question 84

Some states have modified the common law rule, and provide that a non-vested property interest is invalid ONLY IF it actually does not vest within 21 years after the death of a life in being at the time the interest was created.  Rather than invalidate interests on the possibility that they will not vest, this approach

Answer 84

waits to see if the interest will actually not vest. In addition, certain states have statutorily modified the common law rule such that the courts will reduce any age contingencies that violate the rule to 21 years HIGH

Question 85

A class gift is a gift to a group of persons described collectively (usually in terms of their familial relationship). Under the common law, the words of a testator/settlor were given their legal meaning.  However, modern courts are more likely to consider the testator/settlor’s intent.  The terms “children” and “issue” are interpreted in accordance with intestate succession rules.  An adopted child inherits the same as a natural child when the adopted child is not the relative of the adopting parent.  This applies to inheritance rights not only of the adopting parent, but the adopting parent’s family.  Therefore, if a class gift is made to the issue or children of an adopting parent, the adoptive child will share in that gift as would a natural child of that parent. Class gifts generally close at the death of the testator/ settlor.  Under the Rule of Convenience the class is closed when any member of the class is

Answer 85

entitled to possession of the gift. HIGH

Question 86

When a gift to a class is involved, whether the gift to a predeceased member of the class will go into the residuary estate or be divided amongst the other class members depends on whether a group of persons is named (i.e. “my children”) or whether individual members of the class are specifically named (i.e. “Tom, Mary, and Joe”).  When the class is specifically named, the gift will lapse and fall into the residuary estate unless an anti-lapse statute applies.  When the class members are named as a group,

Answer 86

the predeceased member’s share will be divided amongst the other members, unless there is a provision in the will to the contrary or an anti-lapse statute applies HIGH

Question 87

A class gift may be based on a contingency.  If so, remaindermen are entitled only to

Answer 87

the gift if the specified conditions are satisfied HIGH