TRUSTS PROFESSOR ZACHARY A. KRAMER ARIZONA STATE UNIVERSITY SANDRA DAY O CONNOR COLLEGE OF LAW

TRUSTS PROFESSOR ZACHARY A. KRAMER ARIZONA STATE UNIVERSITY SANDRA DAY O CONNOR COLLEGE OF LAW CHAPTER 1: INTRODUCTION A. What s What? A trust is a device Key feature: A transfer Trustee wns title and manages the prperty fr the benefit f the Example 1: T-Bne Taylr transfers his stck prtfli t Hank Mardukas in trust fr the benefit f T-Bne s children, Bnnie and Clyde. This is a bifurcated transfer. Hank, as trustee, wns the interest. Bnnie and Clyde, as beneficiaries, wn the interest. : Original trust prperty and any increase in value : Mney invested by the trust Revcable trust can be revked at any time during life Persn wh the trust is the settlr Irrevcable trust cannt be revked Under the majrity rule, a trust is presumed t be, unless the trust dcuments say therwise. The Unifrm Trust Cde (UTC) reverses this presumptin; a trust is unless the trust dcuments say therwise. Exam Tip 1: On the MEE, mentin bth rules if yu get this srt f questin. Mandatry Trust: Trustee make distributins frm the trust Trust: Trustee may make distributins in her discretin Remedial Trust: Is a created by peratin f law Often called a passive trust Trustee nly has ne pwer t transfer the prperty Rule Against Perpetuities: Applies t trusts Wait and see apprach: Wait until an interest vests t determine its validity

B. Wh s Wh? Persn wh creates trust is the Persn wh manages the trust is the Hlds title t the prperty Has pwer t manage the prperty (i.e., sell, transfer, invest) Can be an individual, a bank, r a trust cmpany A trust fail fr lack f trustee The persn wh receives the benefit f the trust is the Hlds title t the prperty Has pwer t the trust instrument Can have multiple classes f beneficiaries Example 2: Husband devises prperty in trust t Wife fr life, then t Husband s children. Wife is bth trustee and incme beneficiary. This is valid, because Wife is nt the sle beneficiary. Husband s children have a remainder interest. They have standing t bring an actin against Wife t enfrce her duties as trustee. Example 3: T-Bne Taylr wants t ensure that after his death, his belved Cckap, Rbert Dwney, Jr., Jr., is able t cntinue his luxurius lifestyle. He creates a trust naming Hank Mardukas as trustee fr the benefit f Rbert Dwney, Jr., Jr. What type f trust is this? Is it valid? In a majrity f jurisdictins, Example 4: T-Bne Taylr transfers a substantial sum t his friend, Hank Mardukas, in trust fr the benefit f Hank s children. The terms f the trust say that Hank is t give each child $10,000 each year t pay fr schl until he graduates frm cllege. What kind f trust is this? Wh is settlr? Wh is trustee? Wh are beneficiaries? CHAPTER 2: EXPRESS TRUSTS A. Express Trusts Owner indicates the intent t create a trust. 2 2018 Themis Bar Review, LLC Trusts

May be private r B. Private Express Trusts 1. Intent Trust wrds create a presumptin f a trust (e.g., in trust, fr the benefit f ) Oral trusts are Example 5: In frnt f his entire family, T-Bne Taylr declares, I am giving my savings t my wife, Charlene, in trust, fr the benefit f my best friend, Hank Mardukas. This is enugh t create a trust. N writing is necessary. Exceptins: When trust must be in writing: Statute f Frauds (i.e., cnveying real prperty) A (i.e., trust created in a will) Prperty is nt transferred by the will, but rather by the trust Trust must be in existence at the time the will was made r created simultaneusly Trust avids prbate Minrity: A valid trust be in writing Watch ut fr: 2. Trust Res language Language that expresses dnr s r that the dnee use prperty in a certain way Des nt create a trust Example 6: T-Bne transfers $10,000 t Hank Mardukas, My wish being that he will use the mney t supprt his children s educatinal pursuits. This likely des nt create a trust. Ambiguus language Distinguishing between a trust and a gift Exam Tip 2: Intent is tested frequently. Ask yurself, Wh has the beneficial interest? That shuld distinguish it frm a gift. A gift is a revcable, utright gift. A trust invlves a bifurcated transfer the settlr gives the prperty t ne persn fr the benefit f anther. There is n trust unless there is sme piece f prperty in it. trust: A trust withut prperty Exceptin: trust Trust terms must be in writing at time will is executed Trusts 2018 Themis Bar Review, LLC 3

Prperty need nt be in trust at time f will 3. Trust Purpse Exam Tip 3: Make sure yu understand the difference between trusts and debts. A debt is an bligatin t pay a sum f mney. The surce yu use t pay the mney usually des nt matter. A trust necessarily invlves a segregated surce f funds. Valid if nt r cntrary t public plicy 4. Beneficiaries There must be an beneficiary Either a specific persn r sme t determine wh the persn is Example 7: T-Bne transfers $10,000 t Hank in trust fr the benefit f the members f the Hilly Flats High Schl marching band. Are there beneficiaries here? Wh are they? Exceptins: children Example 8: S cnveys prperty t T in trust t benefit A fr life, then t A s children. At the time f the trust, A des nt have children. First class f beneficiaries: Secnd class f beneficiaries: This is a valid trust. We d nt knw wh A s children are. Hwever, by the time the life estate ends, we will knw wh, if anyne, is in the class. Class gifts The class must be definite. Charitable trusts C. Charitable Trusts Must have a charitable, such as: Relief f ; Advancement f educatin r religin; Prmtin f gd health; Gvernmental r municipal purpses; Other purpses benefitting the at large r a particular f the cmmunity. 4 2018 Themis Bar Review, LLC Trusts

Example 9: Richie Rich cnveys his estate t the Cure Tay-Sachs Fundatin in trust, t care fr thse suffering frm Tay-Sachs disease. This disease is very rare, and strikes very few peple. Even thugh nly a small number f peple are affected, the trust is still charitable in nature. Mdern trend: T validate a charitable trust Rule Against Perpetuities: apply! Cy pres dctrine: Curt can mdify a trust if the trust s charitable purpse is n lnger Example 10: Richie Rich cnveys t the Hilly Flats Schl f the Arts in trust t supprt the schl s pttery prgram. Because f lw enrllment, the schl replaces the pttery prgram with a graphic design prgram. Using cy pres, the curt can mdify Richie Rich s trust t supprt the new graphic design prgram. T mdify, yu need a charitable purpse Gal is t make the new purpse as clse as pssible t the purpse RST and Unifrm Trust Cde presume a general charitable purpse If there is n general charitable purpse, the prperty ges t a trust Example 11: The settlr created a trust and directed that the remainder g t a charity t end hmelessness. This is a charitable purpse. Thirty years later, the charity has clsed its drs, and the questin is whether the remainder will g t the settlr s estate, r if the prbate curt can use cy pres t substitute a different charity. The settlr did have general charitable purpse, s the curt culd mdify the trust purpse. What facts wuld yu need t suggest that there is n general charitable purpse? We wuld need the settlr t say that the mney is nly fr a specific purpse. Standing: Attrney General s ffice has standing t enfrce the terms f a charitable trust Unifrm Trust Cde: Settlr als has standing D. Creatin f Express Trusts 1. Inter vivs transfer: Created during in ne f the fllwing ways: a. Declaratin f trust Settlr declares herself hlder f the prperty in trust fr beneficiaries; Settlr als serves as Trusts 2018 Themis Bar Review, LLC 5

b. Deed f trust Settlr cnveys prperty t a trustee; Settlr is nt the 2. Testamentary transfer: Created accrding t the terms f a will CHAPTER 3: REMEDIAL TRUSTS; CREDITORS RIGHTS A. In General Nt driven by intent It is an remedy created by peratin f law Key characteristic: It is in nature Trustee s nly duty is t cnvey the prperty back t the settlr Tw Types: trust trust B. Resulting Trusts Used when a trust ; Trustee must return prperty t r estate; Example 12: Oliver s will passes prperty in trust t Tny t benefit Archer fr life, then t Archer s children. Archer dies withut having children. What happens t the trust prperty? The trust, and a trust is created. Tny s sle duty is t transfer the prperty t Oliver s estate. Why t Oliver s estate and nt Oliver? Because Oliver created the trust by will. Gal is t avid 1. Purchase-Mney Resulting Trust: Persn One buys the prperty, but title is taken in Persn Tw s name If Persn Tw is nt the f Persn One s bunty (i.e., nt a clse friend r relative), a curt will create a purchase-mney resulting trust 2. Aviding a Resulting Trust: Create a clause Example 13: Oliver s will prvides that if Archer dies withut children, the remaining trust prperty is t g t Henry r Henry s heirs. This is a gift-ver clause. 6 2018 Themis Bar Review, LLC Trusts

C. Cnstructive Trusts A remedy used t prevent unjust enrichment if a takes advantage f the settlr Key characteristic: cnduct (e.g., fraud, undue influence) Wrngful cnduct must be cnduct the settlr that caused the settlr t create the trust Example 14: Darcy has been ill fr a number f years. She suffers frm depressin and ccasinal dementia. Her lawyer cnvinces her t disinherit her belved children, wh are far away and unable t visit ften, and give her entire estate t him. This is The children successfully challenge the will n this grund, and the will is invalidated. As a remedy, the curt will impse a cnstructive trust, making the lawyer a cnstructive trustee whse jb is t the hld the prperty fr the benefit f Darcy s estate and cnvey it t her estate. Lk fr: Fraud; Duress; Undue influence; Breach f a duty; Detrimental reliance by a third party. Example 15: Slayer cases. A killer is barred frm benefiting frm the victim s estate. The remedy is t create a cnstructive trust. D. Types f Trust Distributins 1. Mandatry Trusts Trustee has discretin as t whether he will make a distributin Trustee t pay all incme Trustee t distribute $1,000 every mnth Trustee t distribute law schl tuitin fr the next three years 2. Discretinary Trusts Trustee has discretin as t whether she will make a distributin Trustee t make payments fr the health and care f beneficiary Trustee t make payments, in her discretin, fr the educatin f the beneficiary Trusts 2018 Themis Bar Review, LLC 7

3. Supprt Trusts Trustee makes distributins t the beneficiary Trustee t make distributins fr the supprt f the beneficiary E. Alienability f Trust Prperty and Creditrs Ability t Reach Tw basic rules: Rule 1: A beneficiary s equitable interest in trust prperty is Exceptin: Trust instrument r a statute limits this right Creditrs can reach the beneficiary s interest Example 16: T-Bne devises his estate t Hank Mardukas, in trust, t make a mandatry payment every mnth t T-Bne s daughter, Bnnie. Bnnie can transfer this interest. When can Bnnie s creditrs reach her interest in the trust? As are made t her. Rule 2: A creditr reach trust principal r incme until such amunts becme t the beneficiary r the beneficiary can it. Example 17: T-Bne executed a deed f trust, cnveying his savings t Hank in trust fr the benefit f T-Bne s daughter, Bnnie. The trust gives Hank full discretin in deciding when t make payments t Bnnie. Thus, Bnnie s creditrs cannt reach the trust payment until, at the earliest, Hank makes a payment. F. Asset Prtectin Trusts Gal is t shield beneficiaries frm claims 1. Supprt Trust Creditrs cannt reach trust prperty, because the beneficiary cannt payment. Creditrs can reach when the trustee makes a 2. Discretinary Trust Creditrs cannt reach trust prperty, because the beneficiary cannt payment. Creditrs can reach when the trustee makes a 3. Spendthrift Trust Trust expressly restricts the beneficiary s pwer t her interest. 8 2018 Themis Bar Review, LLC Trusts

Creditrs cannt reach trust prperty until the trustee makes a payment. Example 18: T-Bne s sn, Clyde, lves t play the pnies. He has incurred a significant amunt f persnal debt. Cncerned that Clyde will never be financially secure, T-Bne inserts a spendthrift clause int the trust he created fr Clyde s benefit. As a result, Clyde cannt alienate his interest in the trust prperty. Additinally, Clyde s creditrs cannt reach the trust prperty, until the trustee makes payments t Clyde. Exceptins: The fllwing creditrs can reach trust prperty: Spusal r child supprt; Thse prviding t the beneficiary; Hlders f federal r state tax liens. CHAPTER 4: TRUST MODIFICATION AND TERMINATION A. Terminatin Expiratin: An express trust can at the end f a stated term. Example 19: T-Bne creates a trust fr the benefit f his sn, Clyde, which terminates when Clyde turns 25. When Clyde turns 25, the trust autmatically terminates. Material purpse: If the trust has been, the trust autmatically terminates. Example 20: T-Bne creates a trust t pay fr his daughter Rachel s medical schl. After Rachel finishes medical schl, the trust terminates. Unfulfilled material purpse dctrine: Claflin Dctrine Say the settlr is n lnger alive. The beneficiary wants t terminate the trust prematurely and the trustee terminatin. Example 21: T-Bne creates a trust fr the benefit f his sn, Clyde, which terminates when Clyde turns 25. On Clyde s 22nd birthday, he ntifies Hank that he wants t terminate the trust. Hank ppses the terminatin. T-Bne is n lnger alive. Rule: A trustee can blck premature terminatin if the trust is still serving sme Discretinary trusts; trusts; Age-dependent trusts (e.g., example immediately abve). Trusts 2018 Themis Bar Review, LLC 9

Example 22: S leaves her estate in trust, t A fr life, then t B. B predeceases A. B leaves A as her sle heir. In this situatin, the material purpse f the trust cannt be fulfilled. The material purpse is t prvide fr B in the future. If A mves t prematurely terminate, a curt is likely t allw it. Settlr s pwer: Can unilaterally terminate, if reserved the right t terminate in the trust dcuments If settlr did nt expressly prvide fr terminatin, the settlr can still terminate if and all cnsent B. Mdificatin If settlr is alive: Can mdify, if expressly reserved the right in trust dcument If did nt reserve this right, beneficiaries must cnsent and prpsed change must nt interfere with primary f the trust If settlr is dead, can generally mdify in ne f tw situatins: beneficiaries agree t a mdificatin cnsistent with material purpse f trust; r An unfreseen event has purpse f trust (i.e., equitable deviatin) Example 23: Saul Bellwstein created a trust fr the benefit f his grandchildren. Due t substantial changes in the tax cde since the trust was created, the grandchildren all agree that the terms f the trust shuld be changed t lwer the grandchildren s tax burden. A curt wuld likely apprve this mdificatin because it is cnsistent with the purpse f the trust. Example 24: Saul Bellwstein created a trust fr the benefit f his daughter. The trust prvided that Saul s huse was nt t be sld until his daughter died. When the trust was created, the neighbrhd was lvely. The purpse f this trust is t prvide her a place t live. After the lcal plant clsed, the neighbrhd crumbled, and it is n lnger a safe place t live. The daughter wants t sell the hme and mve t a new neighbrhd. She will argue that the purpse f the trust (t prvide her with a safe, decent place t live) is frustrated. Exam Tip 4: If yu see a fact pattern invlving unfreseen events n the exam, be very clear abut what the purpse f the trust is. 10 2018 Themis Bar Review, LLC Trusts

C. Remval f a Trustee Nte 1: A trustee terminate r mdify a trust thrugh unilateral actin. Generally a remedy when the trustee has breached a duty r mismanaged the prperty Remval likely t be granted: Trustee became f perfrming duties (e.g., in jail, incapacitated, seriusly ill); Material breach f a duty; Trustee develps a cnflict f ; A serius cnflict between a trustee and a beneficiary; The trust persistently perfrms prly as a result f the trustee s actin r inactin. Trustee can resign with, if settlr is alive, t c-trustees and beneficiaries CHAPTER 5: PRINCIPAL AND INCOME; TRUST ADMINISTRATION A. Principal vs. Incme Hw shuld the trustee balance the interests f multiple beneficiaries when their interests are different? Example 25: Lifetime beneficiaries want a quick return, while remainder hlders want greater grwth ver time. Cnsider an example: Example 26: Saul Bellwstein cnveys a sum f mney in trust t Tanya fr the benefit f Larry during Larry s life, then t Rachel. The trustee s jb is t allcate assets received between principal and incme. 1. Old Rule: Classified incme and principal based n nature f mney The life beneficiary was entitled t Example 27: Wh is entitled t the incme f the trust in the example abve? The hlder f the remainder interest was entitled t the Example 28: In the example abve, wh is entitled t the principal? Trusts 2018 Themis Bar Review, LLC 11

2. Mdern Apprach: Less rigid, mre whlistic Gverned by the Unifrm Principal and Incme Act (UPAIA) Trustee is t fcus n the f the trust prtfli Trustee can re-characterize and reallcate items as necessary t fulfill trust purpses Allcatins must be Factrs that trustee must balance: f settlr and language f trust instrument;,, and purpse f trust; Identities and circumstances f ; Anticipated effect f cnditins; Anticipated cnsequences. B. Trustee s Pwers Always lk t the trust dcument first. If the trust dcuments are silent, then refer t statutry and cmmn-law principles. Mdern trend is t grant the trustee all thse pwers t act as a reasnably persn, including pwers t: Sell r transfer; Lease trust prperty; Pay taxes; Sever r cnslidate trust prperty. Trustee wns legal title and can act as wner. C. Trustee s Duties 1. In General A trustee has tw primary duties: a duty f and a duty f Designed t ensure the trustee acts in the best interests f the beneficiaries beneficiary has standing t enfrce these duties. Duty f Lyalty: Objective standard: Did the trustee act? Duty f Care: Subjective standard: Did the trustee act in gd faith? 2. Duty f Lyalty Self-dealing is a breach f the duty f lyalty 12 2018 Themis Bar Review, LLC Trusts

Example 29: T-Bne Taylr serves as the trustee f a trust. T-Bne sells stck frm the trust t himself fr fair market value. Is he liable fr breach f his duty f lyalty? Gverned by the rule If yu have established self-dealing, the curt des NOT inquire int the reasnableness r gd faith Always a per se breach f duty f lyalty Example 30: T-Bne served as the trustee f a trust created by his best friend, Hank Mardukas. T-Bne brrwed mney frm the trust fr his wife t take a wine appreciatin class. T-Bne paid the mney back plus interest the fllwing week. Under n further inquiry, we d nt inquire whether the trust was harmed. This is a per se breach f T-Bne s duty f lyalty. Even if the trust dcuments self-dealing, the transactin must still be and fair fr the trustee t avid liability. Cnflicts f are nn-self-dealing transactins that may still breach the duty f lyalty. Assessed under and test 3. Duty f Care Example 31: Mr. T is the trustee fr a trust that wns a valuable instrument cllectin. The trust needs t sell sme f its instruments. It cntracts with Music Auctin Stre t sell them. Althugh Mr. T is nt frmally affiliated with Music Auctin Stre, he builds ne-f-a-kind guitars, and the stre agrees t sell his guitars as well. He is nt ding business with himself, but he is in a cnflict with himself, because the trust has dne a deal with the stre, and nw the stre is ging t d a deal with Mr. T. It seems like the stre is ding business with the trust t get Mr. T s business. Editrial Nte 1: This categry f trustee duties may als be referred t as duties f prudence. The care that a persn f rdinary wuld practice in the care f his wn estate A trustee shuld treat the trust prperty as his wn. Special skills: Trustee must use thse special skills Trustee with special skills is held t a standard Trusts 2018 Themis Bar Review, LLC 13

a. Delegatin Cmmn law: Trustee delegate authrity Mdern law: delegatin If it wuld be unreasnable fr settlr t expect trustee t undertake such functins (e.g., investment decisins) Trustee then has a duty t versee. b. Investments Old Rule: Trustees were limited t specific f acceptable investments. A trustee breached by making investments utside the list. Mdern Rule: Prudent Investr Rule A trustee has discretin t invest and manage prperty as wuld a prudent investr. Trustee is expected t assets t spread the risk f Prtfli Apprach: Measure the success f the prtfli c. Duty f impartiality Trustee has a duty t the cmpeting interests f present and future beneficiaries. Old Rule: Life beneficiary entitled t ; Remainder hlder entitled t Mdern Rule: The allcatin between incme and principal must be t treat life tenants and remainder hlders Example 32: T-Bne Taylr is the trustee f a trust benefitting Hank Mardukas fr life, with the remainder t Bnnie and Clyde. Because f the nature f the trust prperty, the principal is increasing steadily, but the prperty is nt prducing substantial incme. The duty f impartiality requires T-Bne t balance Hank s interests with the interests f Bnnie and Clyde. Lk at the ttal return. Trustee can reallcate as lng as it is fulfilling the trust purpse. 14 2018 Themis Bar Review, LLC Trusts

D. Administrative Duties Must be reasnable 1. Duty t Infrm Beneficiaries Abut the nature f the trust prperty 2. Duty t Accunt Fr taken n behalf f the trust Reprt n the health f the trust prtfli CHAPTER 6: FUTURE INTERESTS A. In General Key questin: Wh has the right t pssess prperty? Pssessry estate hlder has right t pssessin. Future interest hlder has a present right t pssessin. A. Fee Simple Interests 1. Fee Simple Abslute Largest estate because it can last ; Example 33: O devises prperty t A and his heirs. The mdern presumptin is that the grantr cnveys as much as she has unless she says therwise. N future interest 2. Defeasible Fee A fee simple that can be cut shrt (culd g n frever, but might nt) a. Fee simple determinable A fee simple fr a perid Example 34: O t A and heirs the land is used as a farm. What future interest des O have? A pssibility f S lng as, while, during which time are duratinal terms. Pssibility f reverter is held by b. Fee simple subject t cnditin subsequent A fee simple that is terminated upn the happening f an r ; Trusts 2018 Themis Bar Review, LLC 15

Example 35: O t A. But if liqur is ever sld n the premises, O can enter and retake. O has a right f But if r n the cnditin that dente a cnditin subsequent. Right f entry must be elected (g t curt and evict); des nt happen autmatically 3. Life Estate A present pssessry estate that ends at the f the life tenant Example 36: S creates a trust fr the benefit f A fr life, then t B. A has an equitable life interest. B has a vested remainder; S has nthing. Reversin: A future interest held by the grantr fllwing a life estate Capable f becming pssessry at the natural terminatin f the grantee s life estate Example 37: O t A fr life. A has a life estate. O has retained the reversin in fee simple abslute. When des O s interest becme pssessry? When A dies. B. Future Interests f Grantr Pssibility f (assciated with fee simple ) Right f (assciated with fee simple subject t cnditin subsequent) Reversin (assciated with ) C. Future Interests f Transferees 1. Remainder A future interest capable f becming pssessry at the terminatin f the prir estate Must be held by a transferee a. Vested Remainderman is and there is nt a cnditin Example 38: O t A fr life, then t B. A has a life estate. B has a remainder. It is capable f becming pssessry the mment A dies. Is it vested? Is there a cnditin precedent? 16 2018 Themis Bar Review, LLC Trusts

If B dies befre A, it ges t estate. b. Vested as a class gift (vested subject t pen) There is a class f peple wh are suppsed t take; At least ne member f the class has Example 39: O t A fr life, then t O s children. O has ne child, B. Gift is vested as t B (because B is ascertained and vested). It is pen as t any laterbrn children. O is alive, and can have mre children. Every time a child is brn t O, that child will partially divest B. Key questin: When des the class clse? c. Cntingent The taker is either r is subject t a cnditin precedent. Example 40: O t A fr life, then t B, if B graduates frm law schl. B has a remainder. This is a cntingent remainder, because there is a cnditin precedent. What is the cnditin precedent? B must In this situatin, what des O have? A Example 41: O t A fr life, then t B s first child. B has n kids. This is a remainder, because the future interest hlder is nt ascertained. In this situatin, what des O have? A 2. Executry Interest An interest held by the grantee that will a prir vested interest (cuts shrt the prir interest) Springing: Divests the Example 42: O t A fr life, then t B, if B gives A a prper funeral. This cannt be pssessry the mment A dies, because B must give A a prper funeral. Because it is nt pssessry the mment A dies, it cannt be a remainder. When A dies, the prperty reverts back t O. O hlds the prperty subject t B s executry interest. The mment B gives A a prper funeral, the prperty will spring frm O t B. Example 43: O t A in ne year. A s springing executry interest will vest in ne year. In ne year, A will divest O. Shifting: Divests a prir Trusts 2018 Themis Bar Review, LLC 17

Example 44: O t A fr life, then t B and her heirs, but if B ges t law schl, then t C. Because C has a shifting executry interest, if B ges t law schl, C will divest B. B s interest is a vested remainder in fee simple subject t C s executry interest. D. Class Gifts and Similar Terms Generally, a gift t a grup f individuals with an autmatic right f On the death f a class member, that member s share is re-divided amng the surviving class members. RST 3rd: The share f a deceased class member ges t the class member s surviving Prir MEE questin: Facts: Testatr creates a trust that says, Trustee shall distribute supprt t Sn fr his life, then t my grandchildren, with the children f any deceased grandchild taking in their parent s place. When des the future interest becme pssessry? When What if the grandchild dies withut issue befre the sn? Des the interest vest in the predeceasing grandchild s estate, r des it fail? Tw appraches: Cmmn Law: The survival f a child is The deceased grandchild s estate takes the interest. Unifrm Prbate Cde: Future interests under a trust are cntingent n the beneficiary surviving until the Here, the distributin is when the sn dies, and under the UPC, the grandchild takes nthing (the gift fails). E. General Tips Wh is entitled t pssessin nw? Wh has the future interest? When, if ever, will the future interest vest? Example 45: Saul Bellwstein executes a deed f trust cnveying his estate t Arnld in trust fr Arnld s life, then t Saul s children, Bernie and Claudette. Wh has the present pssessry estate? 18 2018 Themis Bar Review, LLC Trusts

Wh has the future interest? have a vested remainder. When, if ever, will the future interest vest? [END OF HANDOUT] Trusts 2018 Themis Bar Review, LLC 19

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