Question 1

MATCHING:
-A trust that provides a fund for the maintenance of a beneficiary while safeguarding the fund against the beneficiary's extravagance or inexperience in spending money

Accepted Answer

A spendthrift trust is designed to provide financial support to a beneficiary while protecting the trust fund from the beneficiary's imprudent spending, creditors, or legal judgments.

Question 2

MATCHING:
-A resulting trust in which property is purchased and paid for by one person, at whose direction the seller transfers possession and title to another person

Accepted Answer

A purchase-money resulting trust occurs when one person pays for property but has it put in the name of another person. This arrangement implies that the person who paid for the property intended the title holder to hold the property in trust for the purchaser.

Question 3

MATCHING:
-A trust that is established when the value of property exceeds the amount needed for the purpose of a private express trust

Accepted Answer

An excessive endowment trust is a trust that is established when the value of property exceeds the amount needed for the purpose of a private express trust.

Question 4

All trusts must be either express or implied.

Accepted Answer

All trusts are either express or implied because these are the two main categories of trusts. An express trust is one that is created by the settlor's explicit declaration of intent, while an implied trust is one that is created by the court's interpretation of the settlor's intent.

Question 5

A living trust can decrease income taxes.

Accepted Answer

A living trust generally does not decrease income taxes; its primary purpose is to manage and distribute assets upon the grantor's death, avoiding probate, rather than providing tax benefits during the grantor's lifetime.

Question 6

MATCHING:
-A trust that is declared void for reasons other than that it has an illegal objective

Accepted Answer

A failed trust is one that is declared void for reasons other than having an illegal objective, such as not meeting certain legal requirements to be valid.

Question 7

A trust that provides income payments to a person whose spouse has died only until the person remarries opposes public policy.

Accepted Answer

Such a trust does not inherently oppose public policy as it is a legal mechanism to provide financial support with specific conditions, like remarriage, which can be a common stipulation in trusts and wills.

Question 8

Charitable trusts, as public trusts, must benefit the general public.

Accepted Answer

The answer of Charitable trusts, as public trusts, must benefit...

Question 9

If a settlor wishes to see how well a trust operates while he/she is alive, a testamentary trust should be established.

Accepted Answer

A testamentary trust is established through a will and only comes into effect upon the settlor's death, so it cannot be used to observe the trust's operation while the settlor is alive.

Question 10

The law will permit a public trust to end if the beneficiary no longer exists.

Accepted Answer

The answer of The law will permit a public trust...

Question 11

On the death of the settlor, a revocable living trust becomes irrevocable.

Accepted Answer

Upon the death of the settlor (the person who created the trust), a revocable living trust typically becomes irrevocable because the settlor is no longer alive to make changes to it.

Question 12

MATCHING:
-An express trust that can be either private or charitable

Accepted Answer

The answer of MATCHING:
-An express trust that can be either...

Question 13

The money in a Totten trust is a probate asset.

Accepted Answer

A Totten trust, also known as a payable-on-death account, allows the assets to pass directly to the named beneficiary upon the account holder's death, bypassing the probate process.

Question 14

MATCHING:
-A savings account in which money is deposited in the depositor's name as trustee for another person named as beneficiary and is payable upon the death of the depositor

Accepted Answer

A Totten trust, also known as a payable-on-death account, is a form of trust where the depositor opens a savings account in their own name as trustee for a beneficiary, who will receive the funds upon the depositor's death.

Question 15

Courts frequently use resulting trusts to settle legal disputes.

Accepted Answer

Resulting trusts are often used by courts as a remedy to resolve disputes over property ownership, ensuring that property is returned to the person who originally contributed the purchase price or is rightfully entitled to it, based on the intentions of the parties involved.

Question 16

MATCHING:
-A trust that may not be amended, revoked, or canceled after its creation

Accepted Answer

An irrevocable living trust is a type of trust that cannot be amended, revoked, or canceled after its creation, ensuring that the assets placed into the trust are managed according to the grantor's wishes without future changes.

Question 17

MATCHING:
-A trust made between living persons

Accepted Answer

An inter vivos trust is a trust created between living persons, as opposed to one created in a will to take effect after death.

Question 18

MATCHING:
-A trust made when a settlor retains title to property and simply declares himself/herself trustee of the property for the benefit of another person

Accepted Answer

A declaration of trust occurs when a settlor retains title to property and declares himself/herself trustee of the property for the benefit of another person. This involves the settlor's declaration that he or she holds the property as trustee.

Question 19

MATCHING:
-A trust for which the trustee has the authority and discretion to accumulate or distribute trust income or principal, or both, among the trust beneficiaries in varying amounts

Accepted Answer

A sprinkling trust, also known as a discretionary trust, gives the trustee the authority to distribute income or principal among the beneficiaries in varying amounts based on the trustee's discretion.

Question 20

The Rule Against Perpetuities places a time limit on how long a private noncharitable trust may exist.

Accepted Answer

The Rule Against Perpetuities is a legal principle that limits the duration of certain types of interests in property, including interests held in private noncharitable trusts, to prevent them from lasting indefinitely and thus tying up property for too long.

Quiz 13: Classification of Trusts, the Living Trust, and Other Special Trusts

MATCHING: -A trust that provides a fund for the maintenance of a beneficiary while safeguarding the fund against the beneficiary's extravagance or inexperience in spending money

MATCHING: -A resulting trust in which property is purchased and paid for by one person, at whose direction the seller transfers possession and title to another person

MATCHING: -A trust that is established when the value of property exceeds the amount needed for the purpose of a private express trust

All trusts must be either express or implied.

A living trust can decrease income taxes.

MATCHING: -A trust that is declared void for reasons other than that it has an illegal objective

A trust that provides income payments to a person whose spouse has died only until the person remarries opposes public policy.

Charitable trusts, as public trusts, must benefit the general public.

If a settlor wishes to see how well a trust operates while he/she is alive, a testamentary trust should be established.

The law will permit a public trust to end if the beneficiary no longer exists.

On the death of the settlor, a revocable living trust becomes irrevocable.

MATCHING: -An express trust that can be either private or charitable

The money in a Totten trust is a probate asset.

MATCHING: -A savings account in which money is deposited in the depositor's name as trustee for another person named as beneficiary and is payable upon the death of the depositor

Courts frequently use resulting trusts to settle legal disputes.

MATCHING: -A trust that may not be amended, revoked, or canceled after its creation

MATCHING: -A trust made between living persons

MATCHING: -A trust made when a settlor retains title to property and simply declares himself/herself trustee of the property for the benefit of another person

MATCHING: -A trust for which the trustee has the authority and discretion to accumulate or distribute trust income or principal, or both, among the trust beneficiaries in varying amounts

The Rule Against Perpetuities places a time limit on how long a private noncharitable trust may exist.