Classification of Trusts: Types of Trusts and Their Characteristics, Schemes and Mind Maps of Law

Download Classification of Trusts: Types of Trusts and Their Characteristics and more Schemes and Mind Maps Law in PDF only on Docsity! CHAPTER 13: CLASSIFICATION OF TRUSTS, THE LIVING TRUST, AND OTHER SPECIAL TRUSTS MATCHING a. active trust b. inter vivos trust c. purchase-money resulting trust d. failed trust e. excessive endowment trust f. spendthrift trust g. sprinkling trust h. Totten trust i. declaration of trust j. irrevocable living trust 1. A trust that provides a fund for the maintenance of a beneficiary while safeguarding the fund against the beneficiary’s extravagance or inexperience in spending money 2. A trust made when a settlor retains title to property and simply declares himself/herself trustee of the property for the benefit of another person 3. An express trust that can be either private or charitable 4. A trust that is declared void for reasons other than that it has an illegal objective 5. A trust that is established when the value of property exceeds the amount needed for the purpose of a private express trust 6. A savings account in which money is deposited in the depositor’s name as trustee for another person named as beneficiary and is payable upon the death of the depositor 7. A trust made between living persons 8. A trust that may not be amended, revoked, or canceled after its creation 9. A trust for which the trustee has the authority and discretion to accumulate or distribute trust income or principal, or both, among the trust beneficiaries in varying amounts 10. A resulting trust in which property is purchased and paid for by one person, at whose direction the seller transfers possession and title to another person 1. ANS: F 2. ANS: I 3. ANS: A 4. ANS: D 5. ANS: E 6. ANS: H 7. ANS: B 8. ANS: J 9. ANS: G 10. ANS: C TRUE/FALSE 1. All trusts must be either express or implied. ANS: T True Correct. Express trusts are declared in explicit terms. False Incorrect. Implied trusts are based on the assumed intent of the person holding legal title to property. 2. Charitable trusts, as public trusts, must benefit the general public. ANS: F False Correct. Trusts that limit funds to named individuals must be private. True Incorrect. A charitable trust can benefit a reasonably large indefinite class of persons within the public. 3. The law will permit a public trust to end if the beneficiary no longer exists. ANS: F False Correct. An equity court will name a charity whose purpose is as near as possible to the designated charity as the new beneficiary. True Incorrect. The courts will apply the doctrine of cy-pres. 4. If a settlor wishes to see how well a trust operates while he/she is alive, a testamentary trust should be established. ANS: F False Correct. A testamentary trust is a gift made after the death of the settlor under the terms of a will. True Incorrect. An inter vivos trust is a gift made while the settlor is living. 5. The Rule Against Perpetuities places a time limit on how long a private noncharitable trust may exist. ANS: T True Correct. The Rule Against Perpetuities holds that a valid trust must take effect at some time in the future. False Incorrect. “Perpetuity” means ongoing indefinitely or, essentially, forever. 6. Courts frequently use resulting trusts to settle legal disputes. ANS: T True Correct. An excessive endowment trust returns the amount not needed to the settlor or to his/her successors. False Incorrect. A purchase-money resulting trust can give a payor equitable title to property. 7. The money in a Totten trust is a probate asset. ANS: F False Correct. The money in a Totten trust is a nonprobate asset. True Incorrect. The money in a Totten trust is not part of the depositor’s estate. 8. A trust that provides income payments to a person whose spouse has died only until the person remarries opposes public policy. ANS: F False Correct. Courts generally uphold trusts that require the beneficiary to lose an interest in a trust if he/she remarries. True Incorrect. Such a trust restrains remarriage, not marriage. 9. On the death of the settlor, a revocable living trust becomes irrevocable. ANS: T True Correct. Many people now use a revocable living trust in place of a will. False Incorrect. A revocable living trust is revocable only by the settlor.