Types Of Trusts

Front 1

What are the the FOUR types of will substitutes?

Back 1

1. Revocable lifetime (inter-vivos) trusts
2. Totten Trusts
3. Joint Bank Accounts
4. Uniform Transfers to Minors Act Gifts

Front 2

What are the two types of express trusts?

Back 2

1. Private trusts
2. charitable trusts

Front 3

When will a trust be irrevocable?

Back 3

- Presumed to be unles the trust explicitely authorizes revocation.

Front 4

What is required for a revocable lifetime trust to be valid?

Back 4

1. There has to be at least 1 beneficiary that is not the settlor IF they are also named the trustee

Front 5

What are the THREE main reasons to use a lifetime trust?

Back 5

1. makes managing assets easier
2. avoids the necessity of a guardianship in the event the settlor becomes incapacitated
3. avoids probate

Front 6

Why would you not want a revocable lifetime trust?

Back 6

- Does not avoid taxes
- If settlor keeps an income interest, or a power to revoke the FULL trust assets will be included in the settlor's gross estate for estate tax purposes

Front 7

What is required for the settlor's estate to be a beneficiary of the principal of a lifetime trust?

Back 7

- There has to be at least 1 other beneficiary

Front 8

What is the result of a revocable lifetime trust?

Back 8

- The interest in the trust passes to the beneficiary during the settlor's lifetime and becomes possesory on the settlor's death.

Front 9

What is a Pour Over gift?

Back 9

A testamentary gift made to an existing revocable trust.

Front 10

What is the requirement for a pour over gift? (2)

Back 10

The trust must be
1. in existence (doesn't have to be the settlor's trust); OR
2. executed concurrently with the will

Front 11

What are the TWO ways an insured can make life insurance proceeds payable to a trust?

Back 11

1. Insured creates an unfunded revocable trust and names the trustee of the trust as the policy beneficiary; OR
2. Have a testamentary trust with the life insurance policy contract naming the "the trustee named in my will" as the policy beneficiary

Front 12

What is a Totten Trust?

Back 12

- aka poor mans trust.
- Essentially a bank account that the depositor uses during their lifetime, that goes to the beneficiary when they die.
- Account name is something like "A as trustee for B)

Front 13

Who has an interest in a Totten Trust druing the depositor's lifetime?

Back 13

- Only the depositor
- The beneficiary has no interest during the depositor's lifetime.

Front 14

What will create a totten trust?

Back 14

- Words like:
"A as trustee for B"
"A ITF (in trust for) B"
- There is no particular words that are required

Front 15

What are the FOUR ways to revoke a Totten Trust?

Back 15

1. Withdraw all the $ in the account
2. Express revocation during lifetime of depositor
3. Revocation in a will
4. death of the beneficiary

Front 16

What FOUR things are required for an express revocation of a Totten Trust during the life time of the depositor?

Back 16

Revocation is
1. in writing
2. naming the beneficiary and the financial institution
3. notarized; AND
4. delivered to the bank

Front 17

What FOUR things are required for an express revocation of a Totten Trust in a will?

Back 17

- Same as express revocation during depositor's life.
- Revocation must be:
1. in writing
2. naming the beneficiary and the financial institution
3. notarized; AND
4. delivered to the bank

Front 18

What are the TWO effects of the death of a beneficiary in a Totten Trust?

Back 18

1. Trust is revoked; AND
2. money in the account goes free and clear to the depositor

Front 19

How can a depositor change the beneficiary in a Totten Trust?

Back 19

- Same as express revocation during depositor's life.
- Revocation must be:
1. in writing
2. naming the beneficiary and the financial institution
3. notarized; AND
4. delivered to the bank

Front 20

When can creditors of the depositor reach the Totten Trust?

Back 20

- Any time.

Front 21

What is a Joint Account?

Back 21

- e.g. "John and Jane with Right of Survivorship"
- Each account holder owns 1/2 of the money no matter who deposits it. Each deposit is half gift to other account holder

Front 22

When in a joint account will the funds not go to the surviving account holder at the other's death? (2)

Back 22

- Clear and convincing evidence shows that:
1. survivorship was not intended when the account was established; AND
2. The account was opened only as a matter of convenience to the depositor.

Front 23

What happens in a joint account when one account holder withdraws more than their share?

Back 23

The JT is destroyed and he owes the amount they removed in excess of their share.

Front 24

What is a Uniform Tranfers to Minors Act (UTMA) gift?

Back 24

- similar to a trust
- transfers the title of property to a minor but it is subject to the custodian's statutory powers until they are 21

Front 25

What are the THREE benefits of a UTMA gift?

Back 25

1. avoids a guardianship proceeding
2. avoids a trust and court supervision of a trust
3. qualifies for the $14,000 per donee annual exclusion from gift tax

Front 26

What is required to make a gift under UTMA?

Back 26

- Must use the statutory language: "[name of custodian] as custodian for [name of minor] under New York Uniform Transfers to Minors Act."

Front 27

What are the FOUR duties of an UTMA custodian?

Back 27

1. Hold, manage and invest the property under a prudent person standard
2. Pay over to the minor or for the minors needs the part of the property the custodian deems advisable; AND
3. Pay what is left over of the property when the minor turns 21 (18 if the gift was made before 1997)

Front 28

What are the THREE requirements for a charitable trust?

Back 28

1. beneficiaries must be INDEFINITE;
2. beneficiaries must be a reasonably large group; AND
3. must be for a charitable purpose (e.g. health, education, religion)

Front 29

What is the maximum length for a charitable trust?

Back 29

- None, can be perpetual
- Not subject to RAP

Front 30

When will Cy Pres be used to change the trust?

Back 30

If the stated intent of the charitable trust
can no longer be accomplished, or the designated
charity goes out of existence, the court may use this to
make the trust be as near as possible to what the settlor wanted

Front 31

What is the AG's role under a charitable trust?

Back 31

1. They are an indispensable party to any suit on construction or enforcement of the trust
2. They have standing (along with the donor) to sue to enforce the trust's terms