Documentation & Legal Requirements Flashcards

A trustee seeking to avoid personal liability for trust contracts should ensure that all contracts are signed in what manner?

Answer: As 'John Smith, Trustee of the ABC Trust' or similar fiduciary capacity notation

Signing in a fiduciary capacity (e.g., 'as Trustee') clearly identifies that the obligation belongs to the trust, not the individual, protecting the trustee from personal liability.

Under the Hague Convention on the Law Applicable to Trusts and on their Recognition, which document is critical for establishing that a trust is recognized internationally?

Answer: A notarized copy of the trust deed with an apostille

For international recognition under the Hague Convention, a notarized trust deed with an apostille is the standard method of authenticating the document for use in signatory countries.

Which type of documentation is specifically required when a trustee wishes to delegate investment functions to an external investment manager under the Uniform Prudent Investor Act?

Answer: A written delegation agreement specifying scope, terms, and standards

UPIA requires a written delegation agreement that covers the scope of authority, investment standards, and terms of the agent's compensation before investment functions can be delegated.

When documenting a charitable remainder trust (CRT), which IRS requirement must be included in the trust instrument itself to maintain tax-exempt status?

Answer: A specific payout rate and term meeting IRC §664 requirements stated in the document

IRC §664 requires that the CRT instrument itself specify the payout percentage (at least 5%, no more than 50%) and term (fixed years up to 20 or life) to qualify for tax benefits.

What documentation is required when a U.S. person receives a gift or bequest from a foreign person exceeding $100,000 in a tax year?

Answer: Form 3520, Annual Return to Report Transactions with Foreign Trusts

Form 3520 must be filed by U.S. persons who receive gifts or bequests from foreign persons exceeding $100,000, or who have transactions with foreign trusts.

For estate planning purposes, what is the critical legal requirement for a valid holographic will in states that recognize them?

Answer: The material provisions and signature must be in the testator's own handwriting

A holographic will requires the material provisions and the testator's signature to be handwritten; no witnesses or notarization are required in states that recognize them.

Which document is used to give a financial institution evidence of a trust's existence and the trustee's authority without disclosing the full trust terms?

Answer: Certification (or certificate) of trust

A certification of trust (authorized under UTC §1013) allows trustees to prove the trust's existence and their authority to act without revealing confidential trust terms to third parties.