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16 Cards in this Set

  • Front
  • Back
There are three kinds of trusts, name them
Express, Implied (Remaining), and Constructive
How does one make an express trust?
Settlor, with capacity, must put his TRIB in writing, if necessary.
T=Trust purpose, R=Res, I=Intent, B=Beneficiary
What happens to a trust if the purpose is bad (ie. violates public policy)?
Void the trust
Is "my friends" a valid beneficiary on an express trust?
NO dumbass, it needs to be identifiable - would pass to residuary or descendants in implied trust
How is an implied trust made?
Failure of express trust, Failure of charitable/honorable trust, or purchase money for title in another's name
If you gift an item to someone you aren't related to, what is the presumption?
That they are the trustee for the property for the benefit of you and your heirs
Refers to the transfer of an interest/corpus: Beneficiary can’t convey and Creditor can’t attach - Except: Court ordered alimony or child support
If settlor gives trustee the discretion to pay life beneficiary not only interest, but corpus - what happens?
Before exercised: it can’t be reached by beneficiary (or by his creditors). After exercised: beneficiary can enforce and creditors can attach
Under what circumstances can a beneficiary force distribution of the corpus?
If he shows the trustee acted in bad faith or in violation of duty.
Are trusts presumed to be revocable or irrevocable?
Irrevocable Stupid
How can an irrevocable trust be revoked?
If settlor is alive: all parties agree, then it can be revoked. If settlor is dead: all remaining parties agree and it WON'T thwart purpose of trust, do it. EXCEPT: In IL, if settlor is dead, the automatic spendthrift provision doesn't allow revocation.
What happens if a charity is extinct at the time of funding?
Issue: Cy Pres
If settlor had a "general charitable intent", then it goes to next closes charity. If no "GCI", then it goes to descendants/heirs.
What is the investment standard for a trust (absent a standard in the trust itself)?
"Prudent Investment Rule" - IITLAW [Income and Safety, Inflation, Taxes, Liquidity & Diversification, Appreciation, Will beneficiary have other resources?]
What are the duties of a trustee?
Basic: Protect trust and follow instructions.
As well: SAIL [Segregation of assets, Accounting, Impartiality, Loyalty]
What is the liability of a trustee?
Unlike an agent, a trustee is PERSONALLY LIABLE!
What is deemed principal and income?
Principal: What goes to life beneficiaries - stock splits/dividends.

Income: What goes to trust beneficiary - RIC [Rent, Income (interest), Cash dividends (also merchandise dividends).