Documentation & Legal Requirements Flashcards

Under the Employee Retirement Income Security Act (ERISA), which document governs the distribution of retirement plan assets upon a participant's death and typically supersedes trust or will provisions?

Answer: The beneficiary designation form on file with the plan administrator

ERISA-governed plan assets pass according to the beneficiary designation form on file with the plan administrator, which takes precedence over wills or trust documents.

Which section of the Internal Revenue Code governs the reporting requirements for foreign trusts with U.S. owners, requiring annual filing of Form 3520-A?

Answer: IRC §6048

IRC §6048 imposes reporting obligations on U.S. persons who are owners or beneficiaries of foreign trusts, requiring the foreign trust to file Form 3520-A annually.

What is the primary legal document that a personal representative (executor) must obtain from the probate court to gain authority to administer a decedent's estate?

Answer: Letters testamentary or letters of administration

Letters testamentary (if there is a will) or letters of administration (if intestate) are issued by the probate court and grant the personal representative legal authority to act on behalf of the estate.

In a dynasty trust designed to last multiple generations, which legal mechanism in states like South Dakota and Nevada eliminates the common law rule against perpetuities?

Answer: Statutory abolition or the wait-and-see approach replacing the common law RAP

Several states have statutorily abolished the rule against perpetuities or replaced it with a wait-and-see approach, allowing dynasty trusts to hold assets indefinitely across generations.

Which documentation requirement applies when a trustee seeks to modify an irrevocable trust under the doctrine of equitable deviation due to unanticipated circumstances?

Answer: Petition to the court with supporting affidavits demonstrating the unanticipated circumstance and necessity

Equitable deviation requires the trustee to petition the court, supported by affidavits or evidence showing that the unanticipated circumstance would defeat or substantially impair the trust's purpose.

For a grantor retained annuity trust (GRAT), which documentation must be established at creation to comply with IRC §2702 and avoid gift tax inclusion of the entire transfer?

Answer: An irrevocable annuity payment schedule fixed in the trust document with a term and percentage compliant with §7520 rates

IRC §2702 requires the GRAT instrument to specify an irrevocable annuity amount or percentage for a fixed term, calculated using the §7520 rate, to qualify for the annuity exception to gift tax.

Under the Uniform Fiduciary Access to Digital Assets Act (UFADAA), what document gives a trustee the clearest legal authority to access a decedent's digital assets held in online accounts?

Answer: An explicit provision in the trust instrument or a separate online tool designation granting access

UFADAA prioritizes an online tool designation made directly with the service provider, followed by explicit trust or will language, as the clearest authority for fiduciary access to digital assets.