KY Bar Wills Trusts and Estates 3 — Questions and Answers
Question 1: What are the essential elements to create a valid private express trust in Kentucky?
- Intent, trust property, ascertainable beneficiaries, and a lawful purpose (Correct answer)
- A written document signed by two witnesses
- Court approval and a corporate trustee
- Consideration paid by the beneficiaries
Correct answer: Intent, trust property, ascertainable beneficiaries, and a lawful purpose
Kentucky's Uniform Trust Code (KRS 386B.4-020) requires settlor capacity and intent, definite beneficiaries, trustee duties, and a valid purpose.
Question 2: Under the Kentucky Uniform Trust Code, a trust is presumed revocable or irrevocable if the instrument is silent?
- Revocable (Correct answer)
- Irrevocable
- Revocable only if funded with personal property
- Irrevocable unless a court orders otherwise
Correct answer: Revocable
KRS 386B.6-020 provides that a settlor may revoke or amend a trust unless the terms expressly state it is irrevocable.
Question 3: A Kentucky trust instrument contains a spendthrift clause. Which creditor can still reach the beneficiary's interest?
- A claimant with a judgment for child support or maintenance (Correct answer)
- A general unsecured credit card lender
- A tort judgment creditor of the beneficiary
- A business partner of the beneficiary
Correct answer: A claimant with a judgment for child support or maintenance
Under KRS 386B.5-030, spendthrift protection does not bar claims for child support, spousal maintenance, or certain governmental claims.
Question 4: A trustee in Kentucky invests the entire trust corpus in a single speculative stock. Which duty has the trustee most likely breached?
- The duty of prudent investment, including diversification (Correct answer)
- The duty of loyalty
- The duty to inform beneficiaries
- The duty of impartiality
Correct answer: The duty of prudent investment, including diversification
The prudent investor rule requires trustees to diversify investments absent special circumstances.
Question 5: A trustee buys trust property for herself at fair market value without court approval or beneficiary consent. Under Kentucky law, this transaction is:
- Voidable by the beneficiaries as self-dealing regardless of fairness (Correct answer)
- Valid because fair value was paid
- Valid if the trustee acted in good faith
- Void only if the trustee profited
Correct answer: Voidable by the beneficiaries as self-dealing regardless of fairness
Self-dealing violates the duty of loyalty and is voidable under the no-further-inquiry rule even if the price was fair.
Question 6: Under Kentucky law, a charitable trust whose specific purpose becomes impossible may be reformed under which doctrine?
- Cy pres (Correct answer)
- Acts of independent significance
- Dependent relative revocation
- Incorporation by reference
Correct answer: Cy pres
Cy pres allows a court to modify a charitable trust to a purpose as near as possible to the settlor's original charitable intent.
Question 7: Which of the following trusts is valid in Kentucky despite lacking a human ascertainable beneficiary?
- A trust for the care of the settlor's pet animal (Correct answer)
- A trust for the settlor's unnamed future friends
- A trust with no stated beneficiary at all for private purposes indefinitely
- A trust for 'worthy people' selected at the trustee's whim without limit
Correct answer: A trust for the care of the settlor's pet animal
KRS 386B.4-080 authorizes pet trusts, which terminate on the death of the last covered animal.
KY Bar Wills Trusts and Estates 3
What are the essential elements to create a valid private express trust in Kentucky?