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TRUSTS
PROFESSOR ZACHARY A. KRAMER
ARIZONA STATE UNIVERSITY – SANDRA DAY O’CONNOR COLLEGE OF LAW
CHAPTER 1: INTRODUCTION
A. What’s What?
• A trust is a ______________________________ device
• Key feature: A ______________________________ transfer
• Trustee owns ______________________________ title and manages the property for the
benefit of the ______________________________.
Example 1: T-Bone Taylor transfers his stock portfolio to Hank Mardukas in
trust for the benefit of T-Bone’s children, Bonnie and Clyde. This is a bifurcated
transfer. Hank, as trustee, owns the ______________________________
interest. Bonnie and Clyde, as beneficiaries, own the
______________________________ interest.
• ______________________________: Original trust property and any increase in value
• ______________________________: Money invested by the trust
• Revocable trust can be revoked at any time during ______________________________ life
• Person who ______________________________ the trust is the settlor
• Irrevocable trust cannot be revoked
o Under the traditional rule, a trust is presumed to be ______________________________,
unless the trust documents say otherwise.
o The Uniform Trust Code (UTC) reverses this presumption; a trust is
______________________________ unless the trust documents say otherwise.
Editorial Note 1: A majority of jurisdictions have adopted the UTC approach
and presume that a trust is revocable unless the trust documents say
otherwise.
Exam Tip 1: On the MEE, mention both rules if you get this sort of question.
• Mandatory Trust: Trustee ______________________________ make distributions from the
trust
• ______________________________ Trust: Trustee may make distributions in her discretion
• Remedial Trust: Is a ______________________________ created by operation of law
o Often called a “passive trust”
o Trustee only has one power – to transfer the property
• Rule Against Perpetuities:
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o Applies to trusts
o “Wait and see” approach: Wait until an interest vests to determine its validity
B. Who’s Who?
• Person who creates trust is the ______________________________.
• Person who manages the trust is the ______________________________.
o Holds ______________________________ title to the property
o Has power to manage the property (i.e., sell, transfer, invest)
o Can be an individual, a bank, or a trust company
o A trust ______________________________ fail for lack of trustee
• The person who receives the benefit of the trust is the ______________________________.
o Holds ______________________________ title to the property
o Has power to ______________________________ the trust instrument
o Can have multiple classes of beneficiaries
Example 2: Husband devises property in trust “to Wife for life, then to
Husband’s children.” Wife is both trustee and income beneficiary. This is valid,
because Wife is not the sole beneficiary. Husband’s children have a remainder
interest. They have standing to bring an action against Wife to enforce her
duties as trustee.
Example 3: T-Bone Taylor wants to ensure that after his death, his beloved
Cockapoo, Robert Downey, Jr., Jr., is able to continue his luxurious lifestyle. He
creates a trust naming Hank Mardukas as trustee for the benefit of Robert
Downey, Jr., Jr.
What type of trust is this? ______________________________.
Is it valid? In a majority of jurisdictions, ______________________________.
Example 4: T-Bone Taylor transfers a substantial sum to his friend, Hank
Mardukas, in trust for the benefit of Hank’s children. The terms of the trust say
that Hank is to give each child $10,000 each year to pay for school until he
graduates from college.
What kind of trust is this? ______________________________.
Who is settlor? ______________________________.
Who is trustee? ______________________________.
Who are beneficiaries? ______________________________.
Trusts | © 2021 Themis Bar Review, LLC | 3
CHAPTER 2: EXPRESS TRUSTS
A. Express Trusts
• Owner ______________________________ indicates the intent to create a trust.
• May be private or ______________________________.
B. Private Express Trusts
1. Intent
o “Trust words” create a presumption of a trust (e.g., “in trust,” “for the benefit of”)
o Oral trusts are ______________________________.
Example 5: In front of his entire family, T-Bone Taylor declares, “I am giving
my savings to my wife, Charlene, in trust, for the benefit of my best friend, Hank
Mardukas.” This is enough to create a trust. No writing is necessary.
o Exceptions: When trust must be in writing:
Statute of Frauds (i.e., conveying real property)
A ______________________________ (i.e., trust created in a will)
• Property is not transferred by the will, but rather by the trust
• Trust must be in existence at the time the will was made or created simultaneously
• Trust avoids probate
Minority: A valid trust ______________________________ be in writing
o Watch out for:
______________________________ language
• Language that expresses donor’s ______________________________ or
______________________________ that the donee use property in a certain way
• Does not create a trust
Example 6: T-Bone transfers $10,000 to Hank Mardukas, “My wish being that
he will use the money to support his children’s educational pursuits.” This likely
does not create a trust.
Ambiguous language
Distinguishing between a trust and a gift
Exam Tip 2: Intent is tested frequently. Ask yourself, “Who has the beneficial
interest?” That should distinguish it from a gift. A gift is a revocable, outright
gift. A trust involves a bifurcated transfer – the settlor gives the property to one
person for the benefit of another.
2. Trust Res
o
There is no trust unless there is some piece of property in it.
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o ______________________________ trust: A trust without property
o Exception: ______________________________ trust
Trust terms must be in writing at time will is executed
Property need not be in trust at time of will
Exam Tip 3: Make sure you understand the difference between trusts and
debts. A debt is an obligation to pay a sum of money. The source you use to
pay the money usually does not matter. A trust necessarily involves a
segregated source of funds.
3. Trust Purpose
o Valid if not ______________________________ or contrary to public policy
4. Beneficiaries
o There must be an ______________________________ beneficiary
Either a specific person or some ______________________________ to determine who
the person is
Example 7: T-Bone transfers $10,000 to Hank “in trust for the benefit of the
members of the Hilly Flats High School marching band.” Are there beneficiaries
here? ______________________________. Who are they?
______________________________.
o Exceptions:
______________________________ children
Example 8: S conveys property to T in trust to benefit A for life, then to A’s
children. At the time of the trust, A does not have children. First class of
beneficiaries: ______________________________. Second class of
beneficiaries: ______________________________. This is a valid trust. We do
not know who A’s children are. However, by the time the life estate ends, we
will know who, if anyone, is in the class.
Class gifts
• The class must be definite.
Charitable trusts
C. Charitable Trusts
• Must have a charitable ______________________________, such as:
o Relief of ______________________________;
o Advancement of education or religion;
o Promotion of good health;
o Governmental or municipal purposes;
Trusts | © 2021 Themis Bar Review, LLC | 5
o Other purposes benefitting the ______________________________ at large or a particular
______________________________ of the community.
Example 9: Richie Rich conveys his estate to the Cure Tay-Sachs Foundation in
trust, to care for those suffering from Tay-Sachs disease. This disease is very
rare, and strikes very few people. Even though only a small number of people
are affected, the trust is still charitable in nature.
Modern trend: To validate a charitable trust
• Rule Against Perpetuities: ______________________________ apply!
• Cy pres doctrine:
o Court can modify a trust if the trust’s charitable purpose is no longer
______________________________.
Example 10: Richie Rich conveys to the Hilly Flats School of the Arts in trust to
support the school’s pottery program. Because of low enrollment, the school
replaces the pottery program with a graphic design program. Using cy pres, the
court can modify Richie Rich’s trust to support the new graphic design program.
o To modify, you need a ______________________________ charitable purpose
o Goal is to make the new purpose as close as possible to the
______________________________ purpose
o RST and Uniform Trust Code presume a general charitable purpose
o If there is no general charitable purpose, the property goes to a
______________________________ trust
Example 11: The settlor created a trust and directed that the remainder go to
a charity to end homelessness. This is a charitable purpose. Thirty years later,
the charity has closed its doors, and the question is whether the remainder will
go to the settlor’s estate, or if the probate court can use cy pres to substitute a
different charity. The settlor did have general charitable purpose, so the court
could modify the trust purpose. What facts would you need to suggest that
there is no general charitable purpose? We would need the settlor to say that
the money is only for a specific purpose.
• Standing:
o Attorney General’s office has standing to enforce the terms of a charitable trust
o Uniform Trust Code: Settlor also has standing
D. Creation of Express Trusts
1. Inter vivos transfer: Created during ______________________________ in one of the following
ways:
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a. Declaration of trust
Settlor declares herself holder of the property in trust for beneficiaries;
Settlor also serves as ______________________________.
b. Deed of trust
Settlor conveys property to a trustee;
Settlor is not the ______________________________.
2. Testamentary transfer: Created according to the terms of a will
CHAPTER 3: REMEDIAL TRUSTS; CREDITORS’ RIGHTS
A. In General
• Not driven by intent
• It is an ______________________________ remedy created by operation of law
• Key characteristic: It is ______________________________ in nature
o Trustee’s only duty is to convey the property back to the settlor
• Two Types:
o ______________________________ trust
o ______________________________ trust
B. Resulting Trusts
• Used when a trust ______________________________;
• Trustee must return property to ______________________________ or
______________________________ estate;
Example 12: Oliver’s will passes property in trust to Tony to benefit “Archer for
life, then to Archer’s children.” Archer dies without having children. What
happens to the trust property? The trust ______________________________,
and a ______________________________ trust is created. Tony’s sole duty is
to transfer the property to Oliver’s estate. Why to Oliver’s estate and not
Oliver? Because Oliver created the trust by will.
• Goal is to avoid ______________________________.
1. Purchase-Money Resulting Trust:
o Person One buys the property, but title is taken in Person Two’s name
o If Person Two is not the ______________________________ of Person One’s bounty (i.e.,
not a close friend or relative), a court will create a purchase-money resulting trust
Trusts | © 2021 Themis Bar Review, LLC | 7
2. Avoiding a Resulting Trust:
Create a ______________________________ clause
Example 13: Oliver’s will provides that if Archer dies without children, the
remaining trust property is to go to Henry or Henry’s heirs. This is a gift-over
clause.
C. Constructive Trusts
• A remedy used to prevent unjust enrichment if a ______________________________ takes
advantage of the settlor
• Key characteristic: ______________________________ conduct (e.g., fraud, undue influence)
Example 14: Darcy has been ill for a number of years. She suffers from
depression and occasional dementia. Her lawyer convinces her to disinherit her
beloved children, who are far away and unable to visit often, and give her entire
estate to him. This is ______________________________. The children
successfully challenge the will on this ground, and the will is invalidated. As a
remedy, the court will impose a constructive trust, making the lawyer a
constructive trustee whose job is to the hold the property for the benefit of
Darcy’s estate and convey it to her estate.
• Look for:
o Fraud;
o Duress;
o Undue influence;
o Breach of a duty;
o Detrimental reliance by a third party.
Example 15: Slayer cases. A killer is barred from benefiting from the victim’s
estate. The remedy is to create a constructive trust.
D. Types of Trust Distributions
1. Mandatory Trusts
Trustee has ______________________________ discretion as to whether he will make a
distribution
o “Trustee to pay all income”
o “Trustee to distribute $1,000 every month”
o “Trustee to distribute law school tuition for the next three years”
2. Discretionary Trusts
Trustee has ______________________________ discretion as to whether she will make a
distribution
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o “Trustee to make payments for the health and care of beneficiary”
o “Trustee to make payments, in her discretion, for the education of the beneficiary”
3. Support Trusts
Trustee makes distributions to ______________________________ the beneficiary
o “Trustee to make distributions for the support of the beneficiary”
E. Alienability of Trust Property and Creditors’ Ability to Reach
Two basic rules:
• Rule 1: A beneficiary’s equitable interest in trust property is
______________________________.
o Exception: Trust instrument or a statute limits this right
o Creditors can reach the beneficiary’s ______________________________ interest
Example 16: T-Bone devises his estate to Hank Mardukas, in trust, to make a
mandatory payment every month to T-Bone’s daughter, Bonnie. Bonnie can
transfer this interest. When can Bonnie’s creditors reach her interest in the
trust? As ______________________________ are made to her.
• Rule 2: A creditor ______________________________ reach trust principal or income until such
amounts become ______________________________ to the beneficiary or the beneficiary can
______________________________ it.
Example 17: T-Bone executed a deed of trust, conveying his savings to Hank in
trust for the benefit of T-Bone’s daughter, Bonnie. The trust gives Hank full
discretion in deciding when to make payments to Bonnie. Thus, Bonnie’s
creditors cannot reach the trust payment until, at the earliest, Hank makes a
payment.
F. Asset Protection Trusts
Goal is to shield beneficiaries from ______________________________ claims
1. Support Trust
o Creditors cannot reach trust property, because the beneficiary cannot
______________________________ payment.
o Creditors can reach when the trustee makes a ______________________________.
2. Discretionary Trust
o Creditors cannot reach trust property, because the beneficiary cannot
______________________________ payment.
o Creditors can reach when the trustee makes a ______________________________.
Trusts | © 2021 Themis Bar Review, LLC | 9
3. Spendthrift Trust
o Trust expressly restricts the beneficiary’s power to ______________________________ her
interest.
o Creditors cannot reach trust property until the trustee makes a payment.
Example 18: T-Bone’s son, Clyde, loves to play the ponies. He has incurred a
significant amount of personal debt. Concerned that Clyde will never be
financially secure, T-Bone inserts a spendthrift clause into the trust he created
for Clyde’s benefit. As a result, Clyde cannot alienate his interest in the trust
property. Additionally, Clyde’s creditors cannot reach the trust property, until
the trustee makes payments to Clyde.
o Exceptions: The following creditors can reach trust property:
Spousal or child support;
Those providing ______________________________ to the beneficiary;
Holders of federal or state tax liens.
CHAPTER 4: TRUST MODIFICATION AND TERMINATION
A. Termination
• Expiration: An express trust can ______________________________ at the end of a stated
term.
Example 19: T-Bone creates a trust for the benefit of his son, Clyde, which
terminates when Clyde turns 25. When Clyde turns 25, the trust automatically
terminates.
• Material purpose: If the trust has been ______________________________, the trust
automatically terminates.
Example 20: T-Bone creates a trust to pay for his daughter Rachel’s medical
school. After Rachel finishes medical school, the trust terminates.
• Unfulfilled material purpose doctrine: Claflin Doctrine
o Say the settlor is no longer alive. The beneficiary wants to terminate the trust prematurely
and the trustee ______________________________ termination.
Example 21: T-Bone creates a trust for the benefit of his son, Clyde, which
terminates when Clyde turns 25. On Clyde’s 22nd birthday, he notifies Hank
that he wants to terminate the trust. Hank opposes the termination. T-Bone is
no longer alive.
o Rule: A trustee can block premature termination if the trust is still serving some
______________________________.
10 | © 2021 Themis Bar Review, LLC | Trusts
Discretionary trusts;
______________________________ trusts;
Age-dependent trusts (e.g., example immediately above).
Example 22: S leaves her estate in trust, “to A for life, then to B.” B
predeceases A. B leaves A as her sole heir. In this situation, the material
purpose of the trust cannot be fulfilled. The material purpose is to provide for B
in the future. If A moves to prematurely terminate, a court is likely to allow it.
• Settlor’s power:
o Can unilaterally terminate, unless the trust is irrevocable
o If the trust is irrevocable, the settlor can still terminate if all beneficiaries consent
Editorial Note 2: Because trusts are now presumed revocable, a settlor need
not expressly reserve the right to terminate the trust.
B. Modification
• If settlor is alive:
o Can unilaterally modify, unless the trust is irrevocable
o If the trust is irrevocable, settlor can still terminate if all beneficiaries consent
Editorial Note 3: Here, too, because trusts are now presumed revocable, a
settlor need not expressly reserve the right to modify the trust.
• If settlor is dead, can generally modify in one of two situations:
o ______________________________ beneficiaries agree to a modification consistent with
material purpose of trust; or
o An unforeseen event has ______________________________ purpose of trust (i.e.,
equitable deviation)
Example 23: Saul Bellowstein created a trust for the benefit of his
grandchildren. Due to substantial changes in the tax code since the trust was
created, the grandchildren all agree that the terms of the trust should be
changed to lower the grandchildren’s tax burden. A court would likely approve
this modification because it is consistent with the purpose of the trust.
Example 24: Saul Bellowstein created a trust for the benefit of his daughter.
The trust provided that Saul’s house was not to be sold until his daughter died.
When the trust was created, the neighborhood was lovely. The purpose of this
trust is to provide her a place to live. After the local plant closed, the
neighborhood crumbled, and it is no longer a safe place to live. The daughter
wants to sell the home and move to a new neighborhood. She will argue that
the purpose of the trust (to provide her with a safe, decent place to live) is
frustrated.
Trusts | © 2021 Themis Bar Review, LLC | 11
Exam Tip 4: If you see a fact pattern involving unforeseen events on the exam,
be very clear about what the purpose of the trust is.
Note 1: A trustee ______________________________ terminate or modify a
trust through unilateral action.
C. Removal of a Trustee
• Generally a remedy when the trustee has breached a ______________________________ duty
or ______________________________ mismanaged the property
• Removal likely to be granted:
o Trustee became ______________________________ of performing duties (e.g., in jail,
incapacitated, seriously ill);
o Material breach of a duty;
o Trustee develops a conflict of ______________________________;
o A serious conflict between a trustee and a beneficiary;
o The trust persistently performs poorly as a result of the trustee’s action or inaction.
• Trustee can resign with ______________________________, if settlor is alive, to co-trustees
and beneficiaries
CHAPTER 5: PRINCIPAL AND INCOME; TRUST ADMINISTRATION
A. Principal vs. Income
• How should the trustee balance the interests of multiple beneficiaries when their interests are
different?
Example 25: Lifetime beneficiaries want a quick return, while remainder
holders want greater growth over time.
• Consider an example:
Example 26: Saul Bellowstein conveys a sum of money in trust to Tanya for the
benefit of Larry during Larry’s life, then to Rachel. The trustee’s job is to
allocate assets received between principal and income.
1. Old Rule: Classified income and principal based on nature of money
o The life beneficiary was entitled to ______________________________.
Example 27: Who is entitled to the income of the trust in the example above?
______________________________.
o The holder of the remainder interest was entitled to the
______________________________.
Example 28: In the example above, who is entitled to the principal?
______________________________.
12 | © 2021 Themis Bar Review, LLC | Trusts
2. Modern Approach: Less rigid, more wholistic
o Governed by the Uniform Principal and Income Act (UPAIA)
o Trustee is to focus on the ______________________________ of the trust portfolio
o Trustee can re-characterize and reallocate items as necessary to fulfill trust purposes
o Allocations must be ______________________________.
o Factors that trustee must balance:
______________________________ of settlor and language of trust instrument;
______________________________, ______________________________, and purpose
of trust;
Identities and circumstances of ______________________________;
Anticipated effect of ______________________________ conditions;
Anticipated ______________________________ consequences.
B. Trustee’s Powers
• Always look to the trust document first.
o If the trust documents are silent, then refer to statutory and common-law principles.
• Modern trend is to grant the trustee all those powers ______________________________ to
act as a reasonably ______________________________ person, including powers to:
o Sell or transfer;
o Lease trust property;
o Pay taxes;
o Sever or consolidate trust property.
• Trustee owns legal title and can act as owner.
C. Trustee’s Duties
1. In General
o A trustee has two primary duties: a duty of ______________________________ and a duty
of ______________________________.
o Designed to ensure the trustee acts in the best interests of the beneficiaries
o ______________________________ beneficiary has standing to enforce these duties.
o Duty of Loyalty:
Objective standard: Did the trustee act ______________________________?
o Duty of Care:
Subjective standard: Did the trustee act in good faith?
2. Duty of Loyalty
o Self-dealing is a breach of the duty of loyalty
Trusts | © 2021 Themis Bar Review, LLC | 13
Example 29: T-Bone Taylor serves as the trustee of a trust. T-Bone sells stock
from the trust to himself for fair market value. Is he liable for breach of his duty
of loyalty? ______________________________.
Governed by the ______________________________ rule
• If you have established self-dealing, the court does NOT inquire into the
reasonableness or good faith
Always a per se breach of duty of loyalty
Example 30: T-Bone served as the trustee of a trust created by his best friend,
Hank Mardukas. T-Bone borrowed money from the trust for his wife to take a
wine appreciation class. T-Bone paid the money back plus interest the following
week. Under no further inquiry, we do not inquire whether the trust was
harmed. This is a per se breach of T-Bone’s duty of loyalty.
Even if the trust documents ______________________________ self-dealing, the
transaction must still be ______________________________ and fair for the trustee to
avoid liability.
o Conflicts of ______________________________ are non-self-dealing transactions that may
still breach the duty of loyalty.
Assessed under ______________________________ and
______________________________ test
Example 31: Mr. T is the trustee for a trust that owns a valuable instrument
collection. The trust needs to sell some of its instruments. It contracts with
Music Auction Store to sell them. Although Mr. T is not formally affiliated with
Music Auction Store, he builds one-of-a-kind guitars, and the store agrees to sell
his guitars as well. He is not doing business with himself, but he is in a conflict
with himself, because the trust has done a deal with the store, and now the
store is going to do a deal with Mr. T. It seems like the store is doing business
with the trust to get Mr. T’s business.
3. Duty of Care
Editorial Note 4: This category of trustee duties may also be referred to as
duties of prudence.
o The care that a person of ordinary ______________________________ would practice in
the care of his own estate
o A trustee should treat the trust property as his own.
o Special skills:
Trustee must use those special skills
Trustee with special skills is held to a ______________________________ standard
14 | © 2021 Themis Bar Review, LLC | Trusts
a. Delegation
Common law: Trustee ______________________________ delegate authority
Modern law: ______________________________ delegation
• If it would be unreasonable for settlor to expect trustee to undertake such functions
(e.g., investment decisions)
• Trustee then has a duty to oversee.
b. Investments
Old Rule:
• Trustees were limited to specific ______________________________ of acceptable
investments.
• A trustee breached by making investments outside the list.
Modern Rule: Prudent Investor Rule
• A trustee has discretion to invest and manage property as would a prudent investor.
• Trustee is expected to ______________________________ assets to spread the risk
of ______________________________.
• Portfolio Approach: Measure the success of the portfolio
______________________________.
c. Duty of impartiality
Trustee has a duty to ______________________________ the competing interests of
present and future beneficiaries.
Old Rule:
• Life beneficiary entitled to ______________________________;
• Remainder holder entitled to ______________________________.
Modern Rule:
• The allocation between income and principal must be
______________________________ to treat life tenants and remainder holders
______________________________.
Example 32: T-Bone Taylor is the trustee of a trust benefitting Hank Mardukas
for life, with the remainder to Bonnie and Clyde. Because of the nature of the
trust property, the principal is increasing steadily, but the property is not
producing substantial income. The duty of impartiality requires T-Bone to
balance Hank’s interests with the interests of Bonnie and Clyde.
• Look at the total return.
• Trustee can reallocate as long as it is fulfilling the trust purpose.
Trusts | © 2021 Themis Bar Review, LLC | 15
• Must be reasonable
D. Administrative Duties
1. Duty to Inform Beneficiaries
o About the nature of the trust property
2. Duty to Account
o For ______________________________ taken on behalf of the trust
o Report on the health of the trust portfolio
CHAPTER 6: FUTURE INTERESTS
A. In General
Key question: Who has the right to possess property?
• Possessory estate holder has right to ______________________________ possession.
• Future interest holder has a present right to ______________________________ possession.
A. Fee Simple Interests
1. Fee Simple Absolute
o Largest estate because it can last ______________________________;
Example 33: O devises property to A and his heirs. The modern presumption is
that the grantor conveys as much as she has unless she says otherwise.
o No future interest
2. Defeasible Fee
A fee simple that can be cut short (could go on forever, but might not)
a. Fee simple determinable
A fee simple for a ______________________________ period
Example 34: “O to A and heirs ______________________________ the land is
used as a farm.” What future interest does O have? A possibility of
______________________________.
“So long as,” “while,” “during which time” are durational terms.
Possibility of reverter is held by ______________________________.
b. Fee simple subject to condition subsequent
A fee simple that is terminated upon the happening of an
______________________________ or ______________________________;
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Example 35: “O to A. But if liquor is ever sold on the premises, O can enter and
retake.” O has a right of ______________________________.
“But if” or “on the condition that” denote a condition subsequent.
Right of entry must be elected (go to court and evict); does not happen automatically
3. Life Estate
o A present possessory estate that ends at the ______________________________ of the life
tenant
Example 36: S creates a trust “for the benefit of A for life, then to B.” A has an
equitable life interest. B has a vested remainder; S has nothing.
o Reversion:
A future interest held by the grantor following a life estate
Capable of becoming possessory at the natural termination of the grantee’s life estate
Example 37: “O to A for life.” A has a life estate. O has retained the reversion
in fee simple absolute. When does O’s interest become possessory? When A
dies.
B. Future Interests of Grantor
• Possibility of ______________________________ (associated with fee simple
______________________________)
• Right of ______________________________ (associated with fee simple subject to condition
subsequent)
• Reversion (associated with ______________________________)
C. Future Interests of Transferees
1. Remainder
o A future interest capable of becoming possessory at the
______________________________ termination of the prior estate
o Must be held by a transferee
a. Vested
Remainderman is ______________________________ and there is not a condition
______________________________.
Example 38: “O to A for life, then to B.” A has a life estate. B has a remainder.
It is capable of becoming possessory the moment A dies.
Is it vested? ______________________________.
Is there a condition precedent? ______________________________.
Trusts | © 2021 Themis Bar Review, LLC | 17
If B dies before A, it goes to ______________________________ estate.
b. Vested as a class gift (vested subject to open)
There is a class of people who are supposed to take;
At least one member of the class has ______________________________.
Example 39: “O to A for life, then to O’s children.” O has one child, B. Gift is
vested as to B (because B is ascertained and vested). It is open as to any later-
born children. O is alive, and can have more children. Every time a child is born
to O, that child will partially divest B.
Key question: When does the class close? ______________________________.
c. Contingent
The taker is either ______________________________ or is subject to a condition
precedent.
Example 40: “O to A for life, then to B, if B graduates from law school.” B has
a remainder. This is a contingent remainder, because there is a condition
precedent.
What is the condition precedent? B must ______________________________.
In this situation, what does O have? A ______________________________.
Example 41: “O to A for life, then to B’s first child.” B has no kids. This is a
______________________________ remainder, because the future interest
holder is not ascertained.
In this situation, what does O have? A ______________________________.
2. Executory Interest
o An interest held by the grantee that will ______________________________ a prior vested
interest (cuts short the prior interest)
o Springing: Divests the ______________________________.
Example 42: “O to A for life, then to B, if B gives A a proper funeral.” This
cannot be possessory the moment A dies, because B must give A a proper
funeral. Because it is not possessory the moment A dies, it cannot be a
remainder. When A dies, the property reverts back to O. O holds the property
subject to B’s executory interest. The moment B gives A a proper funeral, the
property will “spring” from O to B.
Example 43: “O to A in one year.” A’s springing executory interest will vest in
one year. In one year, A will divest O.
o Shifting: Divests a prior ______________________________.
18 | © 2021 Themis Bar Review, LLC | Trusts
Example 44: “O to A for life, then to B and her heirs, but if B goes to law
school, then to C.” Because C has a shifting executory interest, if B goes to law
school, C will divest B. B’s interest is a vested remainder in fee simple subject to
C’s executory interest.
D. Class Gifts and Similar Terms
• Generally, a gift to a group of individuals with an automatic right of
______________________________.
o On the death of a class member, that member’s share is
______________________________ re-divided among the surviving class members.
o RST 3rd: The share of a deceased class member goes to the class member’s surviving
______________________________.
• Prior MEE question:
o Facts: Testator creates a trust that says, “Trustee shall distribute support to Son for his life,
then to my grandchildren, with the children of any deceased grandchild taking in their
parent’s place.”
o When does the future interest become possessory? When
______________________________.
o What if the grandchild dies without issue before Son? Does the interest vest in the
predeceasing grandchild’s estate, or does it fail?
o Two approaches:
Minority Common Law:
• The survival of a child is ______________________________.
• The deceased grandchild’s estate takes the interest.
Editorial Note 5: Under the majority common law rule, the interest is shared
among only those class members alive upon Son’s death and the deceased’s
estate would take nothing.
Uniform Probate Code:
• Future interests under a trust are contingent on the beneficiary surviving until the
______________________________.
o Here, the distribution is when Son dies, and under the UPC, the grandchild takes nothing
(the gift fails).
E. General Tips
• Who is entitled to possession now?
• Who has the future interest?
• When, if ever, will the future interest vest?
Trusts | © 2021 Themis Bar Review, LLC | 19
Example 45: Saul Bellowstein executes a deed of trust conveying his estate “to
Arnold in trust for Arnold’s life, then to Saul’s children, Bernie and Claudette.”
Who has the present possessory estate? ______________________________.
Who has the future interest? ______________________________ have a
vested remainder.
When, if ever, will the future interest vest?
______________________________.
[END OF HANDOUT]
20 | © 2021 Themis Bar Review, LLC | Trusts
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TRUSTS PROFESSOR ZACHARY A. KRAMER (City of Oakland)

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Completed 26 June 2022

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