Trusts

Question 1

support trust

Answer 1

trustee of support trust required to pay as much as necessary to support beneficiary
no discretion to refuse to pay bills

Question 2

discretionary trust

Answer 2

trustee of discretionary trust has discretion whether to apply or withhold payment; beneficiary limited to amount trustee decides to give.
beneficiary cannot interfere with trustee’s discretion unless abuse. Abuse = bad faith or dishonesty.

T discretion.

Question 3

termination of trust

Answer 3

trust may be terminated by all beneficiaries only if all beneficiaries consent and it does not interfere with material purpose

spendthrift provision precludes termination because shows material purpose would be at odds with termination.

Question 4

Trust Requirements

Answer 4

settlor, intent, valid trust purpose, trust property, trustee, beneficiaries. if no assets when trust executed, trust arises when funded and intent remanifested.

settlor can be trustee.

beneficiaries must be susceptible to ID by the time interests come into enjoyment. May be class but must be reasonably definite. (if fails goes back into estate)

Question 5

Pour over trust

Answer 5

trust must be in existence or executed with will

UPC pour overs valid if trust exists (instrument executed) even if unfunded during testator’s life. valid as long as trust established in testator’s lifetime.

Question 6

spendthrift trust

Answer 6

creditors cannot reach spendthrift trust

exception for settlor as beneficiary.

Question 7

revocable and irrevocable trust

Answer 7

presumption trust is revocable and includes the power to amend, so easy to add assets.

CL irrevocable unless stated otherwise. Now revocable unless stated otherwise.

Question 8

Power of appointment

Answer 8

donee can decide who takes property and how. General power - can appoint self, own estate, or own creditors. 
special - can appoint to specific class and not self, estate, or creditors. 
testamentary power exercised by will only.

Question 9

Lapse does and doesn’t apply

Answer 9

if remainder conditioned on survival and beneficiary predeceases interest fails.

UPC - apply anti-lapse statute to future interests in trust.

Question 10

charitable trust

Answer 10

cy pres court must find general charitable intent. general charitable intent presumed under UTC. Trust property applied to another charitable purpose as close as possible.

Question 11

Class closes

Answer 11

class closes when some member of class can call for distribution. When gift to class follows life estate, class closes on death of life tenant. Survival of class member until closing not required.

disclaimed treated as interest predeceased life tenant.

Question 12

Trustee duties

Answer 12

duty to preserve property and make it productive. UPIA regulates investment duties: prudent investor standard; reasonable care, skill, and caution; prudent measured by overall strategy; must diversify unless specials circumstances

duty of loyalty prohibits personal dealings with trust’ T may not purchase trust property even if paid full value. Beneficiaries can set aside, recover profit, or ratify transaction.