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Trusts Estate Plan


What is a trust? pg 68 A trust is a fiduciary relationship in which property is transferred from the trustor, the creator of the trust, to one or more persons , known as trustee.
What is a trustee? pg 68 The trustees hold the legal title to the property,subject to fiduciary duties imposed by the trustor, to hold and use the property for the benefit of another individual, called the beneficiary who holds the equitable title.
what is equitable title? pg 68 ?
Is a trust itself is considered a legal entity? pg 68 The trust itself is considered a legal entity in its own right, with the trustee and the beneficiary each holding a portion of the complete title to the property.
Is the relationship between the trustee and the beneficiary like the relationship of joint tentants or tenants in common in which each tenent owns a portion of the properrty? p 68 The relationship between the trustee and the beneficiary is not like the relationship fo joint tenants or tenants in common inwhich each tenant owns portions of the property itself
How is proerty owned in a trust? pg 68 in a trust, the property is owned by the tust , but each participant holds a poriton of the title not a portionf of the property as in tenatns in common or a joint tenancy.p 68
what is the purpose of the trust? pg 68 The purpose of a trust is to see the property is appropriately managed and its income disbursed to persons who the trustor wishes to benefit from the property.p68
Is the trust limited to the life of one person? pg 68 No, a trust is not limited to the life of any one person and may continue to provide benefits for several generations beyond that of the trustor himself.p68
What is the method? pg 68 It is a whereby a person may maintain control over his or her property even from the grave p68
Whe is a trust created? A trusts can be created during the trustor's life by having the trustor transfer the property while alive, known as an inter vivos or living trust.
What other way may a trust be created? pg 68 Trusts may also be created as part of a testamentary disposition in a person's will.
What is a testamentary trust? p68 Trusts may also be created as part of a testamentary disposition in a person's will.pg 68
What can be done if the beneficiary is not able to manage the property either because of age or infirmity? pg68 The trust can be created becasue the trustee can manage the assets, the trustor woud be assured that the property will produce an income for the beneficiary. pg68
Can a trust be multigenerational? pg 68 yes, the trustor can make sure that the assets will still exist for several generations an dnot be spent by the first generatioins beneficiary, leaving nothing for later generations.
How can a person protect properyt from intestate heirs and taxes? pg 68 By placing property in trust during a peson's lifetime, that property is not considered owned by the person at death and therefore is not taxable or subject to the claims of intestate heirs.
What can a person do to ensure that his dependent will continue to receive support? p68 By placing property in trust sufficient to produce the incme the trustor typically give s to the dependent, he will haveshifted the income tax burder to the trustl and the beneficiaries which may have more advantages, tax-wise, thaa paying taxes on the $
Loretta wants to make sure that evan will have money to support himself should she die, why is it a problem not creating a trust? If evan received the money from loretta's life insurance, as a minor he woud be incapable of mangign the funds.pg 69
Why would a trust be beneficial? If Loretta establishes a trust for evan witht he proceeds of the life insurance, she can select a trustee who is knowledgeable in money management to make sure evan has income.pg 69
What is the advantage for Oscar to leave all of his assets in his will in trust for Hyacinth? pg68 The will provide incomne to support her for life and onher death, the income is to go to Byron for life. Ayrons death, the roperty will be divided among Byron's children. In this manner, no once can squander the assets. Oscar can be assured.p69
Can Kingsont and Donna transfer the bjuldk of ther property in trust while they are alife and make themselves the beneficiaries of the trust? Yes, In this way they can still enjoyr the incomne fromn their assets.
Can they dictate that upon their death the property goes to their grandchildren? p69 Yes, When they die, this property would probaably not be federally taxable becuase they do not own it on their deaths.pg69
If they do not own it, who does? p69 The trust. pg 69
At their death would regina be successful if she challages their will? pg 69 No, because it is owned by the trust and not Kingston and Donna, hence, regina's attempt to challegen their will or claim an intestate share of their assest woudl fail.
If a beneficiary of a trust receives income fron that trust, will the tax rate be lower as opposed to not havig income form a source other than a trust? And will the trustor pay less taxes? yes, pg 69
may a trust be created for an unlawful purpose? pg 69 No. it msut be lawful.
Can a trust be created orally? pg 69 No, it must be in writing, a written instrument.
What are the five requisite elements for the creation of a valid trust? 1. a trustor 2. trust property 3. a valid trust purpose 4. a trustee 5.a beneficiary
Who is the trustor? pg 70 is the person who initially owns the property and who is the creator of the trust relationship. pg 70
who may create the trust? p70 in order to be able to create a trust the trutor must own a transferagble inerest in property. this may mean in fee or it could be a tenancy or nay other title that permits the title holde to convey the properyt to a third person.
What is a grantor? If the property transferred is real estate, the trustor is known as the grantorp 70
What is a settlor? pg 70 If the property transferred is persnoal propeoty, the trustor is called the settlor,
Does the trustor have to be a natural person? the trustor does ot have to be a naturl person, any legal entity capable of owning andtransferring property may be the creator of a trust.p 71
What if the legal entity does not have a transferable interest and legal capacity, may it still be a trustor?p70 No, must mantain those atributes.
Can a person put shares of his co-op apartment in trust under the cooperataive agreement? No, becasue these co-op shares are not legally transferable.j co-op shares are transferable to specifically designated individual. pg 70
A person wins $50,000.00 in a lottery, can he create a trust in order to provide and income for a love one? Yes, becasue he has a transferable interest inthe cash. pg 70
If a person purchases an apparmtment for investmnent purposes, how can he create a trust in order to generate income for a beneficiary? pg 70 By placing the deed to the building in trust in order to provide an income for the beneficiary.
Because the property is real estate, what is the person who places the deed to real estate into a trust called? pg 71 Grantor
If grace lear acquires several a government bond, in order to create income for her nephews, she places the securites in trust, using the income for her nephew's benefit. What is grace?` Grace is a settlor becaue the trust property is personality. p71
May a minor who has money in the bank use that money to create a trust? p71 no because the minor is legally incapable of transferring the property. She lacks what is known as contractual capacity and may not be a creator of a trust.
Can most transferable properyt be made the subjecdt of a trust? yes pg 71
What kind of property is trnsferable and be made the subject of a trust? pg 71 Transferable properyt includes all real estate, and tangible and intangible property,including choses in action.
What subject cannot be made the subjecdt of a trust? Government pesnions, tort claims, and any other interest or item to which attaches a retridction on trasreability.
If the property cannnot generate income, is that subject to a trust? pg 71 No, as a general principlem, only property that is capagble of producing an income may be the subject of a trust.
If a person places in the trust personal property that is not income producing and does not indicate that the properyt may be sold to purdahse income producing property, is this a trust? No, in reality simply becomes a custodial araangment.
Tom, as a government employee willl eventually be entitled to both a government pesion and social secuirty. under the terms of his pension agreemnent, his int, cannnot be transferred. can tome make this property interest of the trust? No, but the actual income can be transferred once it is in Tom's hands
Is it a turst to place a very valuable pearl neclace into a trust where the beneficiary will inherit the neclace when she is 18 years old? no, this is not a trust because the trustee is merely maintaining non-income-producing property for the beneficiary. pg 72 this is a bailment with certain restrictions placed on the bailor. pg 72
How is trust property classified? 72 It is classified acccording to the nature of the proerty. if real property is placed in trust, is is referred to as the corpus, or body, of the trust.
how is personal property classified,not inlcuding cash, ? 72 it is call the res or thing.
how is cash classified? 72 if cash is ussed as the trust property it is generakkly referred to as tghe principal.
What name is used generically for all trust property? 72 corpus
What do you call a corporate bond placed in a trust to produce an income for the grand children. p72 the bond is referred to as "the trust res" because it is persoanl property.
What if the deed to a small aprtment building is placed in trust to produce an income for a beneficiary, how do you classify that property? 72 The appartment building as realty forms the corpus of the trust.
How do you classify the property to a trust when when you create a trust using office builidng tou won, some corporate stock and 20,000 dollars in cash as the basis for the trust? 71 with a mixed trust assets the property is generally referred to as the corpus of the trust
Can the description of the trust property be vaguely described until the trustor is certain of the terms of the trust? p72 No, in order for the trust to be validly created, the trust property must be legally and sufficently described
Is a trust valid if the property is not in existence and not owned by the trustor? pg72 No. The trust property must be in existence and owned by the trustor at the date of the creation of the trust.
can a trust be created from anticipated property or property over which the trustor does not have a current transferable interest p72 no the proerty must be in existence and owned by the trustor.
Can Items be added to the trust later? 72 items may be added to the corpus of a trust that already exists. p72
Loretta wint the state lottery for $500,000.00 with payments to be made in 20 yearly installments. Can Loreta start the trust as she anticipates her first check? 73 nom, loretta can ony create a truast once she has the first instlllment in hand. and the would be limitted to to just the amount of the payment, she cannot create a trust with her anticipted 500,000.00
Loretta creates a small trust for evan. In her life ins policy she indicated that the beneficiary of the proceeds of the policy is to be the trust that she has previously established. Is this valid?p73 This is valid because property is being added to the trust as the property becomes transferable.pg73
can a trust be createf for an illegal purpose?p73 no it must be for a lawful purpose only. it will not be valid if it violates any part of the law.
can a trust be created for any legal purpose? p73 Yes, examples are to povide income for self and others, for needy children, for QTIP income for wife for life and upon her death to another family memger.
Created by: profluis