A trust is an arrangement by which property is transferred from one person to a trustee to be administered for the transferor's or another party's...

1. A trust is an arrangement by which property is transferred from one person to a trustee to be administered for the transferor's or another party's benefit.

 a. True

 b. False

2. The essential elements of a trust are a designated legatee

Select

beneficiary

heir

Item 1

 to receive the income or principal of the trust, a designated executor

Select

trustee

trustor

Item 2

 to manage the trust, a fund sufficiently identified to enable benefits

Select

title

Item 3

 to pass to the trustee, and actual intent

Select

delivery

Item 4

 by the settlor to the trustee with the intention of passing title.

3. Another name for a living trust is:

a. excellent trust

b. nuncupative trust

c. inter vivos trust

d. life trust

4. An inter vivos trust is executed by a grantor at the end of his or her lifetime in his or her will.

 a. True

 b. False

5. Select the two types of living trusts.

a. Revocableb. Irrevocablec. Nuncupatived. Holographice. Retrievable

6. Match the term with the correct definition.

 Spendthrift trust

A trust created by will and which comes into existence upon the death of the settlorCharitable trust

A trust created to provide for the maintenance of a beneficiary by allowing her or him to receive only a certain portion of the total amount at any one timeInter vivos trust

A trust executed by a settlor during his or her lifetime, which may be revocable or irrevocableTestamentary trust

A trust designed for the benefit of a specific, but potentially unidentified, population of the public or for the public in general

7. A trust that arises by court order, typically when one party wrongfully takes title to property, is called a resulting

Select

constructive

Item 1

 trust. Another trust created by court order when it is apparent that the parties intended for a trust to be created but some technical aspect was wrong, is called a resulting

Select

constructive

Item 2

 trust.

8. A trustee's specific duties include maintaining clear and          accounts of the trust's administration; furnishing          and correct information to the beneficiary; keeping trust assets         from personal assets; paying income to an income beneficiary at reasonable intervals; and limiting the risk of loss from investments by reasonable          .

Fill in the blanks with words that would best complete the passage.

diversification financial complete perfect accurate separate regulated

9. A trustee is legally obligated to do all of the following except:

a. furnish complete and accurate information to beneficiaries

b. provide sound investment advice to beneficiaries

c. keep accurate accounts of the trust's administration

d. act with honesty, good faith, and prudence while administering the trust

10. Typically, a trustee is able to manage the trust assets, or invest, with total discretion based on the trustee's experience in investing as a default under state law.

 a. True

 b. False

11. Sometimes a trust provides for income to a beneficiary for life, and then the principal goes to a different beneficiary after the death of the first beneficiary. The general rule in allocating expenses is that extraordinary

Select

ordinary

Item 1

 expenses are chargeable to the income beneficiary and extraordinary

Select

ordinary

Item 2

expenses are allocated to the principal beneficiary.

12. If a trust instrument does not provide for the termination of the trust, the death of either the trustee or the beneficiary will terminate the trust.

 a. True

 b. False