In appointing a trustee, which of the following clauses is an inappropriate clau
ID: 453826 • Letter: I
Question
In appointing a trustee, which of the following clauses is an inappropriate clause?
a. The appointment clause in which the grantor designates at the time of the creation of the trust, his choices for the trustee, as well as his choices for possible successor trustees in the event the original trustee can no longer serve for any reason.
b. The ability for the heirs to agree by a majority vote to remove a trustee in the event there is agreement that the trustee's services are inadequate.
c. A clause that awards a corporate trustee fees in accordance with the fee schedules customarily charged in that geographic location.
d. A clause in an irrevocable trust created to remove appreciating assets from the grantor's estate by gifting them into the trust under the shelter of the unified credit applicable exclusion amount, a clause that allows the grantor to remove and replace the trustee.
Explanation / Answer
a. The appointment clause in which the grantor designates at the time of the creation of the trust, his choices for the trustee, as well as his choices for possible successor trustees in the event the original trustee can no longer serve for any reason.
Yes, This is an appropriate clause while appointing not even a trustee but also possible successor trustees.
b. The ability for the heirs to agree by a majority vote to remove a trustee in the event there is agreement that the trustee's services are inadequate.
True, If a trustee is not responsive to his or her duties, then that trustee should be removed by heirs with a majority vote, an appropriate clause of trustee’s appointment.
c. A clause that awards a corporate trustee fees in accordance with the fee schedules customarily charged in that geographic location.
This is also an appropriate clause related to the payment of the trustee during his appointment.
d. A clause in an irrevocable trust created to remove appreciating assets from the grantor's estate by gifting them into the trust under the shelter of the unified credit applicable exclusion amount, a clause that allows the grantor to remove and replace the trustee.
The above clause is not an inappropriate clause in appointing a trustee as it is more related to asset management and duties of trust not the appointment of trustee.
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