Question 1

Describe the basic trust arrangement, and

discuss typical reasons for establishing trust.
What essential qualities should a trustee
possess?
Trust is a relationship created when one party, the
grantor (also called the settler or creator) transfers
property to a second party, the trustee, for the
benefit of third parties,beneficiaries, who may or
may not include the grantor.

The trustee holds the legal title to the property in

the trust and must use the property and any
income it produces solely for the benefit of trust
beneficiaries.
 The trust generally is created by a written
document. The grantor spells out the substantive
provisions as well as certain administrative
provisions. A trust may be living (created during
the grantor's lifetime) or testamentary (created
after the will is probated) and/or revocable or
irrevocable .

Trusts are created for many reasons, with the

most common motives being to attain income and
estate tax savings and to manage and conserve
the property over a long period of time.
 What essential qualities should a trustee
possess?
A trustee must:
(1) possesses sound business knowledge and judgement
(2) have an intimate knowledge of the beneficiary's
needs and financial situation
(3) be skilled in investment and trust management
(4) be available to beneficiaries (specifically, this means
the trustee should be young enough to survive the trust
term)
(5) be able to make decisions impartially.
3) What are the ways in which a testator can
revoke a will?
A testator can revoke a will in one of four ways:

1) Make a later will that

a) expressly revokes prior wills
b) is inconsistent with a former will

3) Making a codicil that expressly revokes all wills

earlier than the one being modified

4) Physically mutilating, burning, tearing, or

defacing the will with the intention of revoking it
4) Describe and explain the purpose of a codicil.
A codicil is a simple and convenient legal means
of modifying a will. It is a single-page document
reaffirming all the existing provisions in the will
except the one to be changed. The codicile
should be executed and witnessed in the same
formal manner as a will.

The purpose of a codicil is to make minor changes

to an existing will.
5) What are the requirements of a valid will?
 Validity of a Will
To be valid, a will must be the product of a person with a
sound mind. This means that one:

-Know what a will is and are aware that one is making

and signing one.

- are able to decide how to distribute the property

- understand one's relationship with persons for whom

one would normally provide and who would generally
be expected to receive the estate (even though one
might not be required to leave anything to them)
There must have been no undue influence
(influence that would remove the testator's
freedom of choice) example:
Threats
Misrepresentation
Inordinate flattery
Or some physical or mental coercion,

The will itself must have been properly executed

and its execution must be free from fraud. The
will must be in writing and be signed by the
testator and requirements for witnesses.