Wa Barbri - Trusts

Front 1

LIST

cast of characters in trust

Back 1

Settlor

Trustee

Beneficiaries

Front 2

Requirements for trust

Back 2

Intent

Property

Beneficiaries (ascertainable)

Legal purpose

Documentation of trust; can be oral if terms proven

Front 3

DEFINE

spendthrift trust

Back 3

Spendthrift trusts: assets in spendthrift cannot be reached by creditors of beneficiary; all trusts are spendthrift in WA by statute; exceptions for child support and claims from necessity creditors

Front 4

Modification of trust if settlor unavailable

Back 4

If settlor unavailable, need to distinguish between modification and termination and if modification between administrative deviation or distributive deviation

Administrative deviation is change that does not affect distribution or beneficial interests

Distributive deviation is traditional rule that court may order deviation only if unforeseen circumstances that would defeat/substantially impair accomplishment of trust purpose AND change is justified for trust purpose

Front 5

Termination of trust if settlor unavailable

Back 5

Termination: when settlor unavailable, even if consent court can order termination ONLY if termination would not be contrary to material purpose of the settlor; courts deem spendthrift to be material purpose

Front 6

Removal of trustee

Back 6

Removal of trustee: only allowed for cause (breach of trust, dishonesty, lack of capacity, friction between trustee and beneficiaries generally not enough and hardest to remove when trustee appointed by settlor)

Front 7

Trustee duties

Back 7

Trustee has duty of loyalty and duty of care

Treat beneficiaries impartial

Segregate/earmark trust property

Delegate responsibily

Preserve trust property

Account and keep informed

Front 8

DEFINE

duty of loyalty/care

Back 8

Loyalty: must act solely in best in interests of beneficiary; self-dealing not allowed

Care: duty to invest prudently; must establish custom-tailored investment strategy for each trust, accounting for general conditions of economy, effect of inflation, role investments play with trust portfolio, return, etc.