Question 1

The characteristics of a totten trust include:

Accepted Answer

A totten trust, also known as a payable-on-death account, is indeed a type of tentative trust account created by a depositor who retains control over the funds during their lifetime, with the account passing to the beneficiary upon the depositor's death. This encompasses all the characteristics listed: it is often set up as a joint bank account by the settlor (A), it is considered tentative because the settlor can change beneficiaries or withdraw funds at any time (B), and the transfer of ownership to the beneficiary is complete only upon the depositor's death (C).

Question 2

A trustee has a duty to make proper allocation of benefits and burdens between income beneficiaries and remaindermen. Which of the following statements is true concerning this allocation?

Accepted Answer

Extraordinary expenses, such as those related to the sale of trust property or significant repairs, are typically chargeable to the remaindermen because they are considered to benefit the trust as a whole, including the future interest of the remaindermen, rather than the current income beneficiaries.

Question 3

All of the following may, in general, revoke a will by operation of law EXCEPT:

Accepted Answer

Subsequent divorce does not revoke a will by operation of law.

Question 4

A statement signed by the required number of witnesses who observe the execution of a valid will is called a(n):

Accepted Answer

An attestation clause is a statement signed by witnesses who observe the execution of a valid will. It typically states that the testator was of sound mind and capacity at the time of signing and that the witnesses were present to witness the signing. A validity clause refers to a provision within the will itself that addresses its validity. An ambulatory clause is a provision in a will that allows for changes to be made in the future. A fiduciary clause refers to a provision naming a person or entity as a fiduciary or executor of the will.

Question 5

An amendment to a will is called a(n):

Accepted Answer

An amendment to a will is called a codicil. It is a document that amends, modifies or revokes portions of an existing will.

Question 6

Probate is the:

Accepted Answer

Probate is the legal process through which a deceased person's estate is properly distributed to heirs and designated beneficiaries and any debt owed to creditors is paid off.

Question 7

Which of the following is true about a constructive trust?

Accepted Answer

A constructive trust is not created by a trust document or the intentions of a trustee but is imposed by a court to prevent unjust enrichment or correct wrongdoing. It does not contain detailed instructions, is not revocable by the trustee, and does not carry out the trustee's intentions.

Question 8

Which of the following statements about wills is correct?

Accepted Answer

Another writing can indeed be incorporated by reference into a will, provided certain legal requirements are met, such as the document being in existence at the time the will is executed and clearly identified by the will's language.

Question 9

A valid will must be witnessed. Which of the following statements about witnesses is correct?

Accepted Answer

The witnesses must sign the will to validate it, ensuring they attest to the testator's signature and capacity.

Question 10

In most states, a trustee's investment decisions are usually governed by:

Accepted Answer

The prudent person rule is a legal principle that requires trustees to exercise the same level of care and diligence in managing trust assets that a prudent person would exercise in managing their own assets. This rule guides investment decisions made by a trustee and is the standard used to evaluate whether a trustee has breached their fiduciary duties.

Question 11

A living will is a document that:

Accepted Answer

A living will specifies a person's preferences for medical treatment in situations where they may be unable to communicate their decisions.

Question 12

Testamentary capacity refers to:

Accepted Answer

Testamentary capacity involves the mental capability of an individual to understand the nature and extent of their property, recognize the natural beneficiaries of their estate, and devise a coherent plan for the distribution of their assets upon death. This concept is distinct from the general capacity required to enter into contracts or the influence of others, focusing instead on the specific understanding and intentions regarding one's estate planning.

Question 13

Almost all jurisdictions require that:

Accepted Answer

Most jurisdictions follow the Statute of Frauds, which requires that express trusts of real property be in writing to be enforceable. This is to prevent fraud and misunderstandings regarding the trust's terms. The other options are not commonly required by law.

Question 14

Which of the following may invalidate a will?

Accepted Answer

All of these factors—duress, undue influence, and fraud—can invalidate a will because they indicate that the will was not made as a result of the free and informed decision of the testator.

Question 15

In order to be valid, a will must generally include all but which one of the following?

Accepted Answer

While the signature of the executor may be present in a will, it is not required for the will to be considered valid. The other three items are necessary for a will to be considered legally binding.

Question 16

Megan, who has no heirs or next of kin, makes a will leaving her estate to her best friend, Pat. If Megan's will is witnessed by only two instead of three people as required by her state statute, upon her death her estate will:

Accepted Answer

In situations where a will does not meet the legal requirements set forth by state law, such as having an insufficient number of witnesses, the will may be considered invalid. If Megan has no heirs or next kin and her will is invalid, her estate would escheat, or revert, to the state. This is a common legal procedure when there are no valid claims to an estate.

Question 17

A trust created by will and effective after the death of a testator is called a(n):

Accepted Answer

A testamentary trust is established through a will and becomes effective upon the death of the person who created the will (testator). This type of trust does not come into effect during the lifetime of the testator, unlike an inter vivos trust, which is created and operates during the trustor's lifetime.

Question 18

The characteristics of a spendthrift trust include which of the following?

Accepted Answer

Spendthrift trusts are designed to protect the trust's assets from being claimed by creditors of the beneficiaries and to prevent beneficiaries from squandering their inheritance. A key characteristic of a spendthrift trust is that it contains provisions preventing the beneficiary from transferring (by assignment or otherwise) their rights to future payments of income or principal, thereby protecting the trust's assets from creditors and ensuring the beneficiary's inability to prematurely access or misuse their inheritance.

Question 19

A trust will fail for lack of:

Accepted Answer

A trust requires definite and specific property to form the trust corpus; without it, the trust cannot be established.

Question 20

Which of the following will be acceptable as a witness to a will?

Accepted Answer

The answer of Which of the following will be acceptable...

Quiz 50: Trusts and Wills