Question 1

Reese owns Sierra Ranch. Creating a trust for the benefit of Reese's children requires a designated or identified
A) beneficiary.
B) executor.
C) administrator.
D) collateral heir.

Accepted Answer

A trust requires a designated or identified beneficiary who will benefit from the trust's assets.

Question 2

Karen dies with a will. Her husband predeceased her. They had three children, all of whom sadly died before Karen. Logan left behind 2 children, Pete and Rona. Maria had one child, Sam. Nell had 2 children, Tess and Uriah. Describe who inherits how much of Karen's estate if she gives it to her heirs per stirpes . Who inherits (and how much) if Karen gives it per capita ?

Accepted Answer

The answer of Karen dies with a will. Her husband...

Question 3

Ralph creates a trust by his will for the benefit of Stella and her family to come into existence on Ralph's death. This is
A) a constructive trust.
B) a living trust.
C) a resulting trust.
D) a testamentary trust.

Accepted Answer

Ralph's creation of the trust is through his will and will only come into existence upon his death. This makes it a testamentary trust.

Question 4

Serena decides to create a trust for the benefit of her children. She deeds her property to the trust but retains the power to amend, alter, or revoke the trust. She also serves as the trustee and receives income earned by the property. This is
A) not a trust.
B) a revocable living trust.
C) an irrevocable living trust.
D) a constructive trust.

Accepted Answer

This is a revocable living trust. Serena has the power to amend, alter, or revoke the trust, which means she can change or cancel the trust at any time. She also serves as the trustee and receives income earned by the property.

Question 5

Kit has two children, Lea and Merl, both of whom predecease Kit. Lea is survived by her son Nat. Merl is survived by her daughters Opal and Pearl. On Kit's death, if the distribution of the estate is per capita, Pearl will receive
A) everything.
B) nothing.
C) one-half.
D) one-third.

Accepted Answer

Per capita indicates an equal distribution among the descendants at the same generational level. Since both Lea and Merl are deceased, their descendants will represent their shares. Nat, Opal, and Pearl are at the same generational level, so they will each receive an equal share. Therefore, Pearl will receive 1/3 of the estate.

Question 6

The conduct of Edie and Floyd indicate an intention to create a trust. The circumstances raise an inference that Edie is holding legal title to property for Floyd's benefit. This is
A) not a trust.
B) a living trust.
C) a resulting trust.
D) a constructive trust.

Accepted Answer

A resulting trust arises when a transfer of property occurs under circumstances that suggest the transferor did not intend for the transferee to have beneficial interest in the property, implying the property is held for the transferor's benefit or for someone they designate. In this scenario, the inference that Edie holds legal title for Floyd's benefit suggests a resulting trust, where the trust is implied by law based on the parties' conduct and intentions.

Question 7

Idina executes a deed conveying ownership of her home to a trust for the benefit of her son Jim. The trust designates Idina as the trustee. When she dies, the house will pass without going through probate to
A) Jim.
B) the decedent's estate.
C) Idina's grandchildren.
D) the state.

Accepted Answer

The trust is set up for the benefit of Jim, and as such, upon Idina's death, the house will pass directly to Jim without going through probate.

Question 8

Gwen and Hunt are partners in Investment Associates. Hunt takes advantage of a partnership opportunity for personal gain that causes the firm's business to suffer. A court orders Hunt to hold the profits in trust for the partnership. This is
A) a constructive trust.
B) an living trust.
C) a resulting trust.
D) a testamentary trust.

Accepted Answer

A constructive trust is imposed by a court when one party has wrongfully obtained property or funds from another party. In this case, Hunt took advantage of a partnership opportunity for personal gain which harmed the partnership. As a result, the court ordered Hunt to hold the profits in trust for the partnership as a form of restitution.

Question 9

Under intestacy laws, if a decedent has no heirs, then the property of his or her estate
A) passes to a person designated by a probate court.
B) reverts to the state.
C) devolves to a preselected charity.
D) is held in trust for future beneficiaries.

Accepted Answer

Under intestacy laws, if a decedent has no heirs, then the property of his or her estate reverts to the state.

Question 10

Geoff opens an account for $250,000 at Home Federal Bank. The account provides that the funds are held in trust for Harriet, Geoff's daughter. This is
A) a constructive trust.
B) a living trust.
C) a resulting trust.
D) a testamentary trust.

Accepted Answer

A living trust is created during the lifetime of the trustor, in this case, Geoff, who sets up the account for the benefit of his daughter, Harriet.

Question 11

Flem owns shares of stock in Gas & Oil Inc. To create a trust with the stock for the benefit of his spouse Hanna, Flem must convey the shares to
A) a grantor.
B) a settlor.
C) a trustee.
D) a court.

Accepted Answer

To create a trust for the benefit of his spouse, Flem must convey the shares to a trustee who will hold and manage the assets for the benefit of Hanna according to the terms of the trust. A grantor is the party who creates a trust, and a settlor is another term for the grantor. A court would not be involved in creating this type of trust.

Question 12

Aron owns several shares of stock with Beth, his sister, and an apartment building with Carl, his brother, in both cases as owners with rights of survivorship. Aron is a partner with Debra in Aron & Debra Accountants, and obtains a life insurance policy with Debra as the designated beneficiary. Aron writes a will that gives particular items of personal property, as well as specific amounts of cash, to his children and his friends. The will leaves the residue of the estate to Eve, Aron's favorite cousin. After Aron writes his will, Carl dies but Aron does not revise his will. Aron, on his deathbed, makes a gift to the United Way. Will the stock, the apartment building, the proceeds from the life insurance policy, and the gift to the United Way become part of Aron's estate and be distributed under the will? If not, how will these items be distributed and to whom?

Accepted Answer

The answer of Aron owns several shares of stock with...

Quiz 40: Wills and Trusts

Reese owns Sierra Ranch. Creating a trust for the benefit of Reese's children requires a designated or identified

Ralph creates a trust by his will for the benefit of Stella and her family to come into existence on Ralph's death. This is

Serena decides to create a trust for the benefit of her children. She deeds her property to the trust but retains the power to amend, alter, or revoke the trust. She also serves as the trustee and receives income earned by the property. This is

Kit has two children, Lea and Merl, both of whom predecease Kit. Lea is survived by her son Nat. Merl is survived by her daughters Opal and Pearl. On Kit's death, if the distribution of the estate is per capita, Pearl will receive

The conduct of Edie and Floyd indicate an intention to create a trust. The circumstances raise an inference that Edie is holding legal title to property for Floyd's benefit. This is

Idina executes a deed conveying ownership of her home to a trust for the benefit of her son Jim. The trust designates Idina as the trustee. When she dies, the house will pass without going through probate to

Gwen and Hunt are partners in Investment Associates. Hunt takes advantage of a partnership opportunity for personal gain that causes the firm's business to suffer. A court orders Hunt to hold the profits in trust for the partnership. This is

Under intestacy laws, if a decedent has no heirs, then the property of his or her estate

Geoff opens an account for $250,000 at Home Federal Bank. The account provides that the funds are held in trust for Harriet, Geoff's daughter. This is

Flem owns shares of stock in Gas & Oil Inc. To create a trust with the stock for the benefit of his spouse Hanna, Flem must convey the shares to