OH Bar Wills Trusts and Estates 3 — Questions and Answers
Question 1: Which elements are required to create a valid private express trust in Ohio?
- 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
Under the Ohio Trust Code, a valid trust requires a settlor with capacity and intent, definite trust property, ascertainable beneficiaries (with charitable and animal-trust exceptions), and a lawful purpose.
Question 2: Under the Ohio Trust Code, a trust is presumed to be what unless the terms expressly provide otherwise?
- Revocable by the settlor (Correct answer)
- Irrevocable
- Charitable
- Terminated at the settlor's death only with court approval
Correct answer: Revocable by the settlor
R.C. 5806.02 follows the UTC rule that a trust is revocable unless its terms expressly state it is irrevocable, reversing the common-law presumption.
Question 3: A settlor creates a spendthrift trust for his daughter in Ohio. Which creditor can nevertheless reach the daughter's interest?
- A claimant with a court order for child support against the daughter (Correct answer)
- A credit card company with a judgment
- A tort judgment creditor
- The daughter's landlord
Correct answer: A claimant with a court order for child support against the daughter
Under R.C. 5805.02, spendthrift provisions are generally enforceable, but exception creditors such as those holding child or spousal support orders can reach the beneficiary's interest.
Question 4: An Ohio trustee invests the entire trust corpus in a single speculative stock. Which fiduciary standard has the trustee most likely violated?
- The prudent investor rule's duty to diversify (Correct answer)
- The duty of loyalty
- The duty to inform beneficiaries
- The duty of impartiality
Correct answer: The prudent investor rule's duty to diversify
The Ohio Uniform Prudent Investor Act requires trustees to diversify investments and evaluate decisions in the context of the whole portfolio unless the trust provides otherwise.
Question 5: A trust instrument names no trustee, and the named trustee later dies. What happens to the trust under Ohio law?
- The trust continues; a court or the trust's mechanism appoints a successor trustee (Correct answer)
- The trust automatically terminates
- The property reverts to the settlor's estate immediately
- The beneficiaries become co-trustees by default
Correct answer: The trust continues; a court or the trust's mechanism appoints a successor trustee
A trust will not fail for want of a trustee; under the Ohio Trust Code a successor is appointed per the trust terms or by the court.
Question 6: Under Ohio law, when may an irrevocable noncharitable trust be terminated early by consent without court involvement concerns about material purpose?
- When the settlor and all beneficiaries consent, even if termination conflicts with a material purpose (Correct answer)
- Whenever a majority of beneficiaries agree
- Only after the trustee resigns
- Never, once the trust is irrevocable
Correct answer: When the settlor and all beneficiaries consent, even if termination conflicts with a material purpose
Under R.C. 5804.11, an irrevocable trust may be terminated with the consent of the settlor and all beneficiaries even if it is inconsistent with a material purpose; without the settlor, all beneficiaries may terminate only if no material purpose is frustrated.
Question 7: A settlor transfers property 'to T in trust for my friends.' Why does this private trust fail under Ohio law?
- The beneficiaries are not ascertainable (Correct answer)
- Friends cannot legally take trust property
- The trust lacks consideration
- A trust cannot be created by transfer to a trustee
Correct answer: The beneficiaries are not ascertainable
A private express trust requires definite, ascertainable beneficiaries, and 'friends' is too indefinite a class to satisfy that requirement.
OH Bar Wills Trusts and Estates 3
Which elements are required to create a valid private express trust in Ohio?