Deck 8: Introduction to Trusts

Question 1

The settlor's retention of control over the trust arrangement exposes the settlor to tax liability for the trust income.

Answer 1

True

Question 2

MATCHING

A contract,made between and signed by the settlor and trustee,that creates a trust

Answer 2

E

Question 3

A settlor may cancel a trust if a property transfer is accomplished through duress.

Answer 3

True

Question 4

MATCHING

Oral testimony or written evidence

Question 5

MATCHING

The authority on trust law in most states

Question 6

Beneficiaries of a trust must be defined by name.

Question 7

If there are two trustees,one may make a determination to take action without the other's consent.

Question 8

An infant may be a beneficiary of a trust.

Question 9

MATCHING

A trust included in a will

Question 10

MATCHING

The capital or property of a trust

Question 11

The trust instrument must either specifically describe the trust property or clearly define the procedure to be followed in identifying the trust property.

Question 12

MATCHING

The monetary gain that is generated from the principal of a trust

Question 13

MATCHING

The person who has the enjoyment and benefit of trust property

Question 14

Any transferable interest in an object of ownership may become trust property.

Question 15

A single trust may have only one beneficiary.

Question 16

MATCHING

A uniform law available for adoption by states to provide a uniform codified law on trusts

Question 17

After the creation of a trust,title to property placed in the trust passes to at least two persons with the trustee receiving the equitable title and the beneficiary receiving the legal title.

Question 18

MATCHING

The right of the beneficiary to receive the benefits of the trust

Question 19

MATCHING

The form of ownership of trust property held by the trustee and giving him or her the right to control and manage the property for another's benefit

Question 20

Trustees must generally be paid.

Question 21

The court may appoint or replace a trustee in all of the following circumstances EXCEPT:

A)The named trustee is also a co-beneficiary.
B)The named trustee declines the position.
C)The trustee dies.
D)The trustee is incompetent.

Question 22

Which judicial remedy can a beneficiary use to be compensated monetarily either directly or through the trust)for a trustee's breach of trust?

A)Civil lawsuit to compel the trustee to reimburse the trust for any loss or depreciation in value of the trust property
B)Removal of the trustee and appointment of a new trustee
C)An injunction to compel the trustee to do or refrain from doing the act that would constitute the breach of trust
D)Suing for specific performance

Question 23

The trustee in the trust instrument is granted the power to do all of the following EXCEPT:

A)Delegate the performance of personal duties
B)Hire attorneys and stockbrokers
C)Subdivide or exchange real property
D)Lend or borrow money

Question 24

Which is NOT a trustee's duty?

A)Duty to prevent the investment of the trust property
B)Duty of performance and due care
C)Duty to make payments of income and principal to the named beneficiaries
D)Duty to account

Question 25

Which is NOT considered valid grounds for the removal of a trustee?

A)Resignation of the trustee
B)Lack of capacity
C)Commission of a crime
D)Showing favoritism to one or more beneficiaries

Question 26

Which is an invalid trust combination?

A)The settlor is also the trustee and beneficiary.
B)The settlor is also a co-trustee and a co-beneficiary.
C)The settlor,trustee,and beneficiary are three different people.
D)The settlor is also the beneficiary,and another person is the trustee.

Question 27

To be a settlor,a person must meet all of the following requirements EXCEPT:

A)Act as the beneficiary
B)Have the right or power to dispose of a property interest
C)Own a transferable interest in property
D)Have contractual capacity

Question 28

Which is an example of remainder beneficiary expenses?

A)Costs incurred in the sale or purchase of principal
B)Depreciation
C)Stock splits
D)Royalties

Question 29

Which duty prohibits a trustee from personally profiting from his or her position as trustee other than the compensation allowed by contract or law)?

A)Duty of loyalty
B)Duty to take possession of and preserve trust property
C)Duty to prevent the investment of the trust property
D)Duty to make payments of income and principal to the named beneficiaries

Question 30

Which is NOT an essential element of a trust?

A)A sale or gift of property
B)One or more beneficiaries
C)Real or personal property
D)One or more trustees