Deck 31: Trusts

Question 1

What term describes a person holding the beneficial title to the property?

A) Beneficiary
B) Cestui que trust
C) All of the above
D) None of the above

Answer 1

All of the above

Question 2

What term describes the property held in trust?

A) Corpus
B) Gross estate
C) Beneficial estate
D) Beneficial fund

Answer 2

Corpus

Question 3

What term describes the right to beneficial enjoyment of a property?

A) Equitable title
B) Beneficial title
C) All of the above
D) None of the above

Answer 3

All of the above

Question 4

Who establishes a trust?

A) Settlor
B) Benefactor
C) Supporter
D) Patron

Question 5

What trust is created by the trustor while he or she is alive?

A) Living trust
B) Inter vivos trust
C) All of the above
D) None of the above

Question 6

What term describes the instrument creating a trust?

A) Trust petition
B) Trust indenture
C) Trust bond
D) Trust agreement

Question 7

What is a purpose of a spendthrift trust?

A) Provide resources for the maintenance of a beneficiary
B) Secure resources against the beneficiary's improvidence
C) All of the above
D) None of the above

Question 8

What is DAPT?

A) Domestic asset protection trusts
B) Domestic asset preservation trusts
C) Domestic asset perpetuation trusts
D) Domestic asset precaution trusts

Question 9

What term describes a trust established for express charitable purposes?

A) Community trust
B) Beneficial trust
C) Civic trust
D) Public trust

Question 10

What Latin term means "as near as possible"?

A) Res ipse loquitur
B) Cy press
C) Locus sigilli
D) Nudum pactum

Question 11

What term describes a trust allowing the trustee to use discretion in deciding how much to give to each beneficiary?

A) Spray
B) Sprinkling
C) Discretionary
D) All of the above

Question 12

What is included in a spray trust?

A) Built-in spendthrift provisions
B) Fixed amount of income is given annually to a beneficiary
C) Fixed amount of income is given annually to a charity
D) None of the above

Question 13

What allows trust beneficiaries to withdraw the money contributed each year to the trust during that year?

A) Crummey powers
B) Cy pres doctrine
C) Statute
D) Administrative regulation

Question 14

What term describes a trust arising when a person's created trust is deficient in some significant respect?

A) Living trust
B) Sprinkling trust
C) Charitable reminder unitrust
D) Resulting trust

Question 15

What is a precatory trust?

A) Inter vivos trust
B) Express trust
C) Implied trust
D) None of the above

Question 16

What is a characteristic of a precatory trust?

A) Polite language of a testator in his or her will
B) Will is not worded strong enough to be a trust
C) All of the above
D) None of the above

Question 17

What is a "pour-over trust"?

A) Implied trust
B) A-B trust
C) Gift
D) Provision in a will

Question 18

What would be a better name for a "pour-over trust"?

A) Pour-over contribution
B) Pour-over will
C) Pour-over provision
D) Pour-over donation

Question 19

What is a characteristic of the QTIP trust?

A) Gives all trust income to a surviving spouse for life
B) Upon the surviving spouse's death, the principal passes to someone else
C) All of the above
D) None of the above

Question 20

What is a type of a marital deduction trust?

A) Credit-shelter trust
B) A-B trust
C) Bypass trust
D) All of the above

Question 21

Any person having the legal capacity to own and transfer property can be a trustee.

Question 22

Corporations cannot serve as trustees.

Question 23

After the trustor dies, his or her testamentary trust comes into existence.

Question 24

A revocable living trust itself or its beneficiaries pay the taxes on the trust's income.

Question 25

In all states there is a presumption that a trust is a spendthrift trust unless it states otherwise.

Question 26

A DAPT helps wealthy individuals to protect their assets from creditors.

Question 27

Under a charitable remainder trust, a beneficiary receives a fixed amount of income annually, and the remainder is given to a charity.

Question 28

Under the cy pres doctrine, the court may allow the charitable trust fund to be held for another purpose that meets as nearly as possible the grantor's original intent for the trust.

Question 29

A sprinkling trust is also called a public trust.

Question 30

A trustee's discretion may be an advantage and a disadvantage of a discretionary trust.

Question 31

A resulting trust occurs when a buyer purchases property but transfers its title to another person for the purposes of a third person.

Question 32

A constructive trust is a type of a marital deduction trust.

Question 33

A precatory trust is an implied trust.

Question 34

A precatory trust is a trust by the court's decree, rather than by a trustor's design.

Question 35

A "pour-over trust" is a section in a will leaving a bequest to the trustee of an existing living

Question 36

After the death of the trustor, his or her will pours the particular gift into the "pour-over trust."

Question 37

The marital deduction is not taxable under the federal estate tax law, regardless of the citizenship status of the decedent's surviving spouse.

Question 38

The credit-shelter trust provides for the surviving spouse for life.

Question 39

The absolute ownership of the property is called a(n) ________ title.

Question 40

A trust created by a will is called a(n) ________ trust.

Question 41

A person spending money uneconomically is called a(n) ________.

Question 42

A charitable trust is not affected by the rule against ________.

Question 43

The spray trust gives the ________ too much control over the distribution of the trust property.

Question 44

A trust imposed by a court to avoid the unjust enrichment of one party at the expense of the other is called a(n) ________ trust.

Question 45

An express trust that sometimes arises from the use of polite language by a trustor in a will is called a(n) ________ trust.

Question 46

A "pour-over ________" is a misnomer.

Question 47

One type of marital deduction trust is called exemption ________ trust.

Question 48

A trust arranged to make maximum use of the marital deduction that is found in the federal estate tax law is called a(n) ________ deduction trust.

Question 49

Match the terms with their descriptions:

-Resulting trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 50

Match the terms with their descriptions:

-Trust deed

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 51

Match the terms with their descriptions:

-Equitable title

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 52

Match the terms with their descriptions:

-Spray trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 53

Match the terms with their descriptions:

-Domestic asset protection trusts

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 54

Match the terms with their descriptions:

-Qualified terminable interest property trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 55

Match the terms with their descriptions:

-Public trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 56

Match the terms with their descriptions:

-Pour-over trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 57

Match the terms with their descriptions:

-Precatory trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 58

Match the terms with their descriptions:

-Trust

A) Trust allowing the trustee to decide how much to give to each beneficiary
B) Implied trust
C) Trust established for charitable purposes
D) After death of the trustor, the will pours the particular gift into the trust
E) Self-settled trusts having independent trustees
F) One type of marital deduction trusts
G) Form of property ownership in which someone controls the property for the benefit of another
H) Express trust that sometimes arises from the use of polite language by a trustor in a will
I) Right to beneficial enjoyment
J) Instrument creating the trust

Question 59

Define a living trust. Compare and contrast a revocable living trust and an irrevocable living trust.

Question 60

Define a public trust. Discuss different types of public trusts.

Question 61

Compare and contrast a resulting trust and a constructive trust.

Question 62

Lucas wants to establish a trust that would allow his daughter Karen to receive a certain sum of money annually, and the rest of his income would go to the charity. Lucas wants to establish another trust to provide for his sister Doris for life and also give money to charity. Discuss what kinds of charitable trusts Lucas can establish.

Question 63

Marion wants to establish a trust to provide, after her death, for her sisters. She also wants to establish two trusts during her lifetime. In the first trust, for the benefit of her children, the trust income should not be taxable to her. As for the second trust, for the benefit of her grandchildren, she wants to be able to change it. Discuss what types of trusts are available for Marion.