Trusts - JDA One Sheet

Question 1

A trust is valid if the following elements are present:

Answer 1

(1) it has a trustee,
(2) it has a beneficiary,
(3) it has trust property,
(4) the settlor has the present intent and capacity to create a trust, and
(5) the trust is created for a valid purpose.

Question 2

Trustee

Answer 2

A trustee manages the trust property and holds it for the benefit of the beneficiaries. A trust will not fail if a specific trustee is not appointed or if the trustee refuses to serve. (The court will simply appoint one)

Question 3

A trustee ____________ and holds it for the benefit of the beneficiaries. A trust will not fail if a specific trustee is not appointed or if the trustee refuses to serve. (The court will simply appoint one)

Answer 3

manages the trust property

Question 4

A trustee manages the trust property and _____________. A trust will not fail if a specific trustee is not appointed or if the trustee refuses to serve. (The court will simply appoint one)

Answer 4

holds it for the benefit of the beneficiaries.

Question 5

A trustee manages the trust property and holds it for the benefit of the beneficiaries. A trust ____________ if a specific trustee is not appointed or if the trustee refuses to serve.

Answer 5

will not fail

(The court will simply appoint one)

Question 6

In a private express trust, a beneficiary must be ________ and _____________.

Answer 6

definite & ascertainable

(This is not needed in a charitable trust.)

Question 7

The settlor must have the ________ to create a trust and must intend to create a trust. No specific words are needed.

Answer 7

capacity

Question 8

The settlor must have the capacity to create a trust and must ________ to create a trust. No specific words are needed.

Answer 8

intend

Question 9

The settlor must have the capacity to create a trust and must intend to create a trust. ________ words are needed.

Answer 9

no specific

Question 10

Trust property can include any ____________ interest in property that is able to be transferred.

Answer 10

presently existing

Question 11

Trust property can include any presently existing ____________ that is able to be transferred.

Answer 11

interest in property

Question 12

Trust property can include any presently existing interest in property that is ________________.

Answer 12

able to be transferred

Question 13

Delivery of a trust property to the trustee ________ required for a testamentarty trust or if the settlor creates a self-declaration of trust (orally or in writing declares himself trustee over particular property).

Answer 13

is not

Question 14

Delivery of a trust property to the trustee is not required for a ____________________ or if the settlor creates a self-declaration of trust (orally or in writing declares himself trustee over particular property).

Answer 14

testamentary trust

Question 15

Delivery of a trust property to the trustee is not required for a testamentarty trust or if the settlor creates a ____________________ (orally or in writing declares himself trustee over particular property).

Answer 15

self-declaration of trust

Question 16

The trust purpose must not be ___________________________.

Answer 16

illegal or against public policy

Question 17

A testamentary trust is created by a valid will.

The essential elements must be ascertained from:
(1) the terms of the will,
(2) an existing writing incorporated by reference, or
(3) ________________________________.

Answer 17

the exercise of a power of appointment created in the will

Question 18

A testamentary trust is created by a valid will.

The essential elements must be ascertained from:
(1) the terms of the will,
(2) _____________________, or
(3) the exercise of a power of appointment created in the will.

Answer 18

an existing writing incorporated by reference

Question 19

A testamentary trust is created by a valid will.

The essential elements must be ascertained from:
(1) _________________,
(2) an existing writing incorporated by reference, or
(3) the exercise of a power of appointment created in the will.

Answer 19

the terms of the will

Question 20

A testamentary trust is created by a valid will.

The essential elements must be ascertained from:

Answer 20

(1) the terms of the will,
(2) an existing writing incorporated by reference, or
(3) the exercise of a power of appointment created in the will.

Question 21

A pourover will gives a gift to a trust.

A pourover will is valid if:

Answer 21

(1) the trust is incorporated by reference,

(2) there are facts of independent significance, or

(3) the trust is valid and in existence before the will was executed or at the time it was executed

Question 22

A pourover will gives a gift to a trust.

A pourover will is valid if:

(1) ___________________________
(2) there are facts of independent significance, or
(3) the trust is valid and in existence before the will was executed or at the time it was executed.

Answer 22

the trust is incorporated by reference

i.e., the trust is identified in the testator’s will and the terms are incorporated in a writing executed before or concurrently with the execution of the will

Question 23

A pourover will gives a gift to a trust.

A pourover will is valid if:

(1) the trust is incorporated by reference,
(2) ________________________, or
(3) the trust is valid and in existence before the will was executed or at the time it was executed.

Answer 23

there are facts of independent significance

i.e., even without the will, the inter vivos trust would exist so the trust instrument is independent from the will

Question 24

A pourover will gives a gift to a trust.

A pourover will is valid if:

(1) the trust is incorporated by reference
(2) there are facts of independent significance, or
(3) ________________________.

Answer 24

the trust is valid and in existence before the will was executed or at the time it was executed

Question 25

A ________________ may be created for the relief of poverty, or the promotion of education, religion, health, scientific, literary, benevolent, governmental purposes, etc. It must have a large number of not readily identifiable individuals (rather than a few identifiable individuals).

Answer 25

charitable trust | Note that charitable trusts are not subject to RAP

Question 26

A **charitable trust** may fail if "a particular charitable purpose becomes ________________________." However, the cy pres doctrine, which is a common law doctrine recognized by CA, allows the court to save the trust and carry out the particular charitable purpose as nearly as possible.

Answer 26

unlawful, impracticable, or impossible to achieve

Question 27

A charitable trust may fail if "a particular charitable purpose becomes unlawful, impracticable, or impossible to achieve. However, the **cy pres** doctrine, which is a common law doctrine recognized by CA, allows the court to ___________________________.

Answer 27

save the trust and carry out the particular charitable purpose as nearly as possible

Question 28

The doctrine of __________ provides that if: (1) a particular charitable purpose has become **unlawful, impracticable, or impossible** to achieve, (2) **no alternative charity** is named in the trust, and (3) the court finds that the settlor had **general, rather than specific, charitable intent** then the trust will **not fail**, the trust property does not revert to the settlor or the settlor's successors in interest, and the court may apply cy pres to **modify or terminate the trust** by directing that the trust property be applied or distributed, in whole or in part, in a **manner consistent with the settlor's general charitable intent**.

Answer 28

cy pres

Question 29

The doctrine of **cy pres** provides that if: (1) a particular charitable purpose has become **_____________** to achieve, (2) **no alternative charity** is named in the trust, and (3) the court finds that the settlor had **general, rather than specific, charitable intent** then the trust will **not fail**, the trust property does not revert to the settlor or the settlor's successors in interest, and the court may apply cy pres to **modify or terminate the trust** by directing that the trust property be applied or distributed, in whole or in part, in a **manner consistent with the settlor's general charitable intent**.

Answer 29

unlawful, impracticable, or impossible

Question 30

The doctrine of **cy pres** provides that if: (1) a particular charitable purpose has become **unlawful, impracticable, or impossible** to achieve, (2) **__________________** is named in the trust, and (3) the court finds that the settlor had **general, rather than specific, charitable intent** then the trust will **not fail**, the trust property does not revert to the settlor or the settlor's successors in interest, and the court may apply cy pres to **modify or terminate the trust** by directing that the trust property be applied or distributed, in whole or in part, in a **manner consistent with the settlor's general charitable intent**.

Answer 30

no alternative charity

Question 31

The doctrine of **cy pres** provides that if: (1) a particular charitable purpose has become **unlawful, impracticable, or impossible** to achieve, (2) **no alternative charity** is named in the trust, and (3) the court finds that the settlor had **_______________________** then the trust will **not fail**, the trust property does not revert to the settlor or the settlor's successors in interest, and the court may apply cy pres to **modify or terminate the trust** by directing that the trust property be applied or distributed, in whole or in part, in a **manner consistent with the settlor's general charitable intent**.

Answer 31

**general**, rather than specific, **charitable intent**

Question 32

The doctrine of **cy pres** provides that if: (1) _________ (2) ________, and (3) __________ then the trust will **not fail**, the trust property does not revert to the settlor or the settlor's successors in interest, and the court may apply cy pres to **modify or terminate the trust** by directing that the trust property be applied or distributed, in whole or in part, in a **manner consistent with the settlor's general charitable intent**.

Answer 32

(1) a particular charitable purpose has become **unlawful, impracticable, or impossible** to achieve, (2) **no alternative charity** is named in the trust, and (3) the court finds that the settlor had **general, rather than specific, charitable intent**

Question 33

Trustee's Duty to Administer the Trust

Answer 33

The trustee shall administer the trust in** good faith**, as a **prudent trustee** would, and in **accordance with the terms** of the trust. If the trust is ***irrevocable***, the trustee must administer the trust solely in the interest of the beneficiaries. If the trust is ***revocable***, the trustee has a duty of loyalty to the settlor.

Question 34

The trustee shall administer the trust in _________, as a **prudent trustee** would, and in **accordance with the terms** of the trust. If the trust is ***irrevocable***, the trustee must administer the trust solely in the interest of the beneficiaries. If the trust is ***revocable***, the trustee has a duty of loyalty to the settlor.

Answer 34

good faith

Question 35

The trustee shall administer the trust in** good faith**, as a ____________ would, and in **accordance with the terms** of the trust. If the trust is ***irrevocable***, the trustee must administer the trust solely in the interest of the beneficiaries. If the trust is ***revocable***, the trustee has a duty of loyalty to the settlor.

Answer 35

prudent trustee

Question 36

The trustee shall administer the trust in** good faith**, as a **prudent trustee** would, and in ____________ of the trust. If the trust is ***irrevocable***, the trustee must administer the trust solely in the interest of the beneficiaries. If the trust is ***revocable***, the trustee has a duty of loyalty to the settlor.

Answer 36

accordance with the terms

Question 37

The trustee shall administer the trust in** good faith**, as a **prudent trustee** would, and in **accordance with the terms** of the trust. If the trust is ***irrevocable***, the trustee must __________________. If the trust is ***revocable***, the trustee has a duty of loyalty to the settlor.

Answer 37

administer the trust solely in the interest of the beneficiaries

Question 38

The trustee shall administer the trust in** good faith**, as a **prudent trustee** would, and in **accordance with the terms** of the trust. If the trust is ***irrevocable***, the trustee must administer the trust solely in the interest of the beneficiaries. If the trust is ***revocable***, the trustee _________________.

Answer 38

has a duty of loyalty to the settlor

Question 39

Trustee's Duty to Account

Answer 39

The trustee must keep and render accounts and furnish information to the beneficiaries at their request.

Question 40

Trustee's Duty of Loyalty and to Act Impartially

Answer 40

A trustee has a **duty of loyalty**. If a trust has 2 or more beneficiaries, the trustee should give **due regard** to the beneficiaries' respective interests when it **invests**, **manages**, and **distributes** trust property. A trustee may not use trust property for his own profit or for any purpose unconnected with the trust. For example, the trustee may not buy or sell trust assets or personally profit by purchasing stock in his own corporation.

Question 41

A trustee has a **duty of loyalty**. If a trust has 2 or more beneficiaries, the trustee should give ____________ to the beneficiaries' respective interests when it **invests**, **manages**, and **distributes** trust property. ## Footnote A trustee may not use trust property for his own profit or for any purpose unconnected with the trust. For example, the trustee may not buy or sell trust assets or personally profit by purchasing stock in his own corporation.

Answer 41

due regard

Question 42

A trustee has a **duty of loyalty**. If a trust has 2 or more beneficiaries, the trustee should give **due regard** to the beneficiaries' respective interests when it ________________ trust property. ## Footnote A trustee may not use trust property for his own profit or for any purpose unconnected with the trust. For example, the trustee may not buy or sell trust assets or personally profit by purchasing stock in his own corporation.

Answer 42

**invests**, **manages**, and **distributes**

Question 43

Under the Uniform Trust Code and in CA, a trust is presumed to be revocable unless _________.

Answer 43

otherwise stated

Question 44

Under the Uniform Trust Code and in CA, a trust is presumed to be ________ unless otherwise stated.

Answer 44

revocable

Question 45

If **all** beneficiaries of an irrevocable trust consent to terminate a trust after the settlor's death, they may ____________ for modification or termination of the trust. However, if the continuance of the trust is **necessary** to carry out a **material purpose** of the trust, the trust cannot be modified or terminated *unless* the court determined that the **reason for doing so** under the circumstances **outweighs the interest in accomplishing a material purpose** of the trust.

Answer 45

**petition the court**

Question 46

If **all** beneficiaries of an irrevocable trust consent to terminate a trust after the settlor's death, they may **petition the court** for modification or termination of the trust. However, if the continuance of the trust is ____________, the trust cannot be modified or terminated *unless* the court determined that the **reason for doing so** under the circumstances **outweighs the interest in accomplishing a material purpose** of the trust.

Answer 46

**necessary** to carry out a **material purpose** of the trust

Question 47

If **all** beneficiaries of an irrevocable trust consent to terminate a trust after the settlor's death, they may **petition the court** for modification or termination of the trust. However, if the continuance of the trust is **necessary** to carry out a **material purpose** of the trust, the trust cannot be modified or terminated *unless* the court determined that ____________________.

Answer 47

the **reason for doing so** under the circumstances **outweighs the interest in accomplishing a material purpose** of the trust

Question 48

Remedies for a breach of trust include: (1) _________ a trustee, (2) decreasing compensation, (3) compelling a trustee to perform trust duties, and (4) compelling the trustee to pay damages to make the beneficiaries whole. If the trustee was self-dealing, the trustee must also pay back any profits from self-dealing.

Answer 48

suspending or removing

Question 49

Remedies for a breach of trust include: (1) suspending or removing a trustee, (2) decreasing compensation, (3) compelling a trustee to perform trust duties, and (4) compelling the trustee to pay damages to _____________________. If the trustee was self-dealing, the trustee must also pay back any profits from self-dealing.

Answer 49

make the beneficiaries whole

Question 50

Remedies for a breach of trust include: (1) suspending or removing a trustee, (2) decreasing compensation, (3) compelling a trustee to perform trust duties, and (4) compelling the trustee to pay damages to make the beneficiaries whole. If the trustee was self-dealing, the trustee must also _________________.

Answer 50

pay back any profits from self-dealing

Question 51

Trustee's Duty of Care - prudent administration

Answer 51

The trustee shall exercise care, skill, and caution in administering the trust.

Question 52

The trustee shall exercise ____________ in administering the trust.

Answer 52

care, skill, and caution

Question 53

A trustee’s investment and management decisions with respect to individual assets should be evaluated in the context of the estate portfolio as a whole and as part of an overall investment strategy rather than in isolation. Thus, even if one particular investment looks imprudent, if it is looked at in relation to other investments, it might be considered prudent.

Question 54

One of the hallmarks of prudent investing is diversification. The trustee is not liable for declines in value due to a downturn resulting from general economic conditions.