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trusts Flashcards

1
Q

trust

A

fidcuiary (trustee) holds legal title to property and administers for beneficiaries on behalf of settlor

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2
Q

trustee fiduciary resp

A

reasonable care
loyalty
personal liability for actions in relation to trust

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3
Q

settlor

A

original owner of property in trust, former of trust

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4
Q

creation of a trust

A

settlor transfers legal title to trustee, trustee manages accodrding to wishes of settlor

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5
Q

types of express trusts

A

private

charitable

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6
Q

validity of trust (first question when given trust problem)

A 
intent
identifiable corpus:
ascertainable beneficiares
proepr purpose
mechaninc and formalites
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7
Q

intent to create trust

A

(1) a settlor
with capacity to convey, (2) a present intent to create a
trust relationship, (3) a competent trustee with duties, (4) a
definite beneficiary, and (5) the same person is not the sole
trustee and sole beneficiary.

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8
Q

must a trust have property

A

yes

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9
Q

what prevent capacity, and by extension, intent to create a trust

A

The settlor’s lack of legal capacity to convey, inter vivos
or at death, prevents a trust from arising, and undue influ
ence,
fraud, or duress renders the trust unenforceable

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10
Q

are formal words rq for formation of intent

A

no, no writing is req unless statute of frauds of wills

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11
Q

msut a settlor intend trust to form immediately, or can she postpone

A

must be immediate

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12
Q

can wishes of desire, hope, wish form a trust

A

presumptively no, but can overcome with
Definite and precise directions
•
Directions addressed to a fiduciary (for example, executor under a will)
•
A resulting “unnatural” disposition of property (for example, close relative will otherwise take nothing) if no trust imposed; or
•
Extrinsic evidence showing that the settlor previously supported the intended beneficiary

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13
Q

can split title of trustee with other

A

yes, so long as sole turstee and beneficiaries dont overlap

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14
Q

identifiable corpus

A

proeprty in trust must be ascertainable

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15
Q

res

A

trust property

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16
Q

can future interst be held in trust

A

yes, but must be in legal existence (future legal interest)

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17
Q

qualified beneficiary

A

current beneficiary

first line remainderman

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18
Q

notice needed for beneficiary

A

nope, but can be evidence of no trust existing

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19
Q

does beneficiary need to accpet trust

A

yes, can occur after formation

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20
Q

disclaiming benefit

A

written instrument with trustee most states

within 9 months (unless under 21)

estopped if excersied dominion over conferred benfit

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21
Q

divorce removes beneficiary/trustee status?

A

yes

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22
Q

when msut beneficiaries be ascertainable

A

when interest come into enjoyment

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23
Q

example of unascertainable class

A

future children
friends
people not known outside of settlor

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24
Q

what happens when a trustee dies, or rejects, or resigns

A

trust goes on, if settlor not around court will select a trustee

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25
what must a trustee have to be a trustee
duties
26
how can a trustee be removed
serious breach of trust serious lack of cooperation unfitness, failure substantial change in circum action raised by benefi, setlor, court itself, or cotrustee
27
can a settlor be a trustee
yes; presnt declaration trust
28
must res be segregated from other property
yes
29
conveyance in trust
formation of trust with trustee other than settlor conveynace of proeprty msut be out of settlor control; real property by deed, personal by delivery
30
statute of fraud
applies for conveyance of real property/land
31
can pour over property form a trust
yes pour over property means property not devised in will (residual) so long as trust is id in will trust is executed before testator death
32
can a beneficiary transfer interest in a trust
yes, unless trust says no
33
discretionary trust
trustee given discretion to deal with payments in trust
34
creditors dealing with discretionary trust
can attach to beneficiary interest BUT cant compel trustee to send payments
35
spendthrift trust
preculdes beneficiary from transfering interest AND creditors from reaching interest to satisfy claims UNTIL paid to beneficiary
36
when is spendthrift trust ineffective
when creditor is beneficiary against govt against judgment for child support
37
support trust
only for bene support not assignable impliedly spendthrift limited to support, can supplement income but not replace
38
when does trust expire
no more property purpose of trust accomplished term expires
39
termination/modification of trust by beneficiaries
possible, but req all beneficiaries (including unborn/unascertainable) cant frustrate material purpose of trust ``` material purposes: support of bene spendthrift payment at certain age payment at certain date discretionary status ```
40
can a court terminate/modify trust
yes, if unanticipated circumstances threaten the trust continuation is wasteful or impractical value in trust is insufficient to justify cost of admin
41
can a trustee modify/term trust
yes, if less than 50k and not justify to admin must wind up trust business
42
trustee authority
express by law implied in admin of trust
43
imperative power of trustee
must exercise or may be compelled by court to do so (pay people, express duty)
44
duty of trustee
``` duty to admin trust duty of loyalty duty of reasonable care duty to report duty to keep records ```
45
duty of admin
admin trust in good faith and reasonable care
46
duty of loyalty
no double dealing get good vlaue for assets To Act for the benefit of the trust express and implied wishes
47
is a unquthorized transaction (by duty violaiton) voidable
yes, but beneficiaries must sue timely
48
standard of care for trustees investing trust funds
reasonable care skill caution of an investor viewed in total of fund, not single decisions
49
some factors for prudent investment determination
``` econ condition effect of inflation taxes role of investment expected return need for liquidity ```
50
is lack of skill an excuse for bad investing of trustee
no
51
remedies for a trustee breach
injunction specific performance pay money to trust remove/suspension
52
remedy for self dealing
if trust makes money, keep the deal if not, set aside transaction, and trace profits trustee gained
53
when is a trustee not laible for breach
reasonble reliance on terms of trust bene consented, relasesd from liablity, or ratified transaction
54
difference between trust income and principal
trust income: net rental income, 10% wasting asset, allocation of loss repayment from insurance principal: sale of a trust asset, sale of business, stock dividend 90% wasting asset, insurance policy
55
expenses charged from principal
the remaining one-half of the compensation of the trustee and any person providing investment advisory or custo dial services to the trustee; the remaining one-half of all expenses for accountings, judicial proceedings, and other matters affecting both income and remainder interests; payments on the principal of a trust debt; expenses of a proceeding that concerns primarily an interest in principal; estate taxes; and disbursements related to environmental matters
56
expenses coming out of income
one-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee; one-half of all expenses for account ings, judicial proceedings, and other matters affecting both income and remainder interests; the entire cost of ordinary expenses; and insurance premiums covering the loss of a principal asset.
57
charitable trust
must have indefinite beneficiary can be perpetual (forever) must ahve a purpose that benefits the public
58
what if the charitable trust cant be followed as written?
cy pres doctrine: follow the trust as closely as possible to find purpose
59
do charitable trusts have to follow rules against perp
no
60
constructive trust
must be requested | equitable action for unjust enrichment

Constitution Law Bar Prep (16 decks)

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