Question 1

Cynthia is the trustee for property left in trust for her nephew, Marcus. The trust agreement states she is can invade principal, if needed, due to unforeseen circumstances. This is an example of

Question 2

Cynthia is the trustee for property left in trust for her nephew, Marcus. The trust agreement states she is pay $1,000 per month to Marcus until he turns 21. This is an example of

Question 3

Winona conveyed her small Santa Monica, CA home to Nancy (as trustee) to hold it in trust for and to pay the income to Yves. Although the house is right on the beach and in good repair, it is old and does not have a modern kitchen. As such, the house is only rentable for a very low rent. With a modern kitchen it would be rentable for at least $1,400 per month. Nancy contracts to have a new kitchen installed for $7,500. Afterwards, the house is rented for $1,500 per month. Nancy should be reimbursed from the trust for this expense.

Question 4

John is the trustee of two rental properties held in trust for the benefit of his niece, Carla. According to the trust agreement, the trust is to terminate when she finishes college. At that time, the properties pass to her. The trust has already been in effect for six years. Carla is currently 21 years old. Recently one of the units came up for renewal. The old tenant decided to move and a new tenant is looking at the apartment. Generally, tenants are offered a two-year lease. Standard for the area is either a one-year or two-year lease. The new tenant plans to stay in the area for four years while he attends a local university. To streamline the administration of the trust, John offers the tenant a four-year lease. The term of the lease is reasonable, given the circumstances.

Question 5

John is the trustee of two rental properties held in trust for the benefit of his niece, Carla. According to the trust agreement, the trust is to terminate when she finishes college. At that time, the properties pass to her. The trust has already been in effect for six years. Carla is currently 21 years old. Recently, a major developer offered John an attractive price to sell the two properties. John should take the offer.

Question 6

Miguel is the trustee for property held in trust for his sister, Emma, who is a minor. The trust is due to terminate when she reaches age 25. Their parents died in a car accident six months ago. Subsequently, the driver of the other vehicle filed a wrongful death claim against the trust in the amount of $500,000. Miguel's attorney estimates that it will take three to five years for the case to make its way through the courts. What should Miguel do?