OR Bar Wills Trusts and Estates 4

Question 1

Under the Oregon Trust Code, which elements are required to create a valid express private trust?

Accepted Answer

Intent to create a trust, a trustee, a definite beneficiary, and trust property (the res)

Answer

A notarized writing, named trustee, definite beneficiary, and property transfer

Answer

Court approval, settlor capacity, trustee consent, and a written instrument

Answer

A written instrument, two witnesses, a trustee, and named beneficiaries

Question 2

What does a spendthrift clause in a trust accomplish?

Accepted Answer

Prevents the beneficiary from voluntarily transferring their interest and shields it from most creditors before distribution

Answer

Authorizes the trustee to spend principal for the beneficiary's support without court approval

Answer

Limits trust distributions to amounts necessary for the beneficiary's health and support only

Answer

Terminates the trust automatically if the beneficiary becomes insolvent

Question 3

Under Oregon's Trust Code, which category of creditors CAN reach a beneficiary's interest despite a valid spendthrift clause?

Accepted Answer

Child or spousal support claimants

Answer

Unsecured credit card creditors

Answer

Medical creditors for non-emergency elective care

Answer

Former business partners asserting contract claims

Question 4

The cy pres doctrine permits a court to modify a charitable trust when:

Accepted Answer

The trust's specific charitable purpose has become illegal, impossible, or impractical to fulfill

Answer

The trustee commits a breach of fiduciary duty that damages the trust

Answer

All income beneficiaries consent to changing the trust's stated purpose

Answer

Trust assets fall below a minimum threshold specified in the trust instrument

Question 5

A trustee's duty of loyalty under the Oregon Trust Code requires the trustee to:

Accepted Answer

Administer the trust solely in the interest of the beneficiaries, avoiding self-dealing and conflicts of interest

Answer

Invest trust assets for maximum return regardless of risk

Answer

Distribute trust income equally among all beneficiaries each calendar year

Answer

Seek court approval before making any significant trust investment decision

Question 6

Under the Claflin doctrine as applied in Oregon, a trust cannot be terminated by unanimous consent of all beneficiaries if:

Accepted Answer

Termination would defeat a material purpose of the trust

Answer

The trust has more than five beneficiaries

Answer

The settlor did not expressly authorize modification in the trust instrument

Answer

The trust has been in existence for less than ten years

Question 7

A resulting trust arises in which of the following situations?

Accepted Answer

An express trust fails or does not exhaust all trust property, and equity implies a return of the beneficial interest to the settlor

Answer

A trustee embezzles trust funds and reinvests them in personal assets

Answer

A beneficiary disclaims their interest in a testamentary trust

Answer

A settlor transfers property to a trust but retains an express power to revoke