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CTFA - FIDUCIARY & TRUST
ACTIVITIES
Constructive 57 Trusts 57 - 57 answer-- A 57 fraud 57 rectifying 57 trust, 57 imposed 57 by 57 a 57 court 57 to 57 protect 57 those 57 who 57 lose 57 prope rty 57 to 57 a 57 wrongdoer Resulting 57 Trust 57 - 57 answer-- An 57 intent 57 enforcing 57 trust 57 based 57 upon 57 the 57 presumed 57 intent 57 of 57 a 57 transferor 57 of 5 7 property Implied 57 Trust 57 - 57 answer-- An 57 implied 57 trust 57 is 57 an 57 element 57 of 57 trust 57 law, 57 and 57 refers 57 to 57 a 57 trust 57 that 57 has 57 not 57 been 57 "expressly 57 created 57 by 57 the 57 settlor."[1] 57 There 57 are 57 two 57 types 57 of 57 implie d 57 trust: Constructive 57 Trusts 57 and 57 Resulting 57 Trusts 57 are 57 always 57 - 57 answer--Implied 57 Trusts Can 57 a 57 minor 57 hold 57 an 57 interest 57 in 57 real 57 property? 57 - 57 answer--Yes 57 - 57 a 57 child 57 may 57 be 57 a 57 beneficiary 57 under 57 a 57 trust 57 regardless 57 of 57 the 57 nature 57 of 57 th e 57 trust 57 corpus Dad 57 creates 57 a 57 trust 57 under 57 which 57 he 57 declares 57 that 57 any 57 interest 57 in 57 real 57 prope rty 57 he 57 receives 57 under 57 the 57 will 57 of 57 his 57 uncle 57 are 57 held 57 in 57 trust 57 for 57 the 57 benefit 5 7 of 57 his 57 son. 57 An 57 enforceable 57 trust 57 has 57 not 57 been 57 created 57 because.... 57 - 57 answer--An 57 expectancy 57 under 57 a 57 will 57 is 57 not 57 a 57 transferable 57 property 57 interest Qualified 57 Terminable 57 Interest 57 Property 57 trust 57 (QTIP) 57 - 57 answer-- a 57 type 57 of 57 trust 57 that 57 enables 57 the 57 grantor 57 to 57 provide 57 for 57 a 57 surviving 57 spouse, 57 and 57 also 57 to 57 maintain 57 control 57 of 57 how 57 the 57 trust's 57 assets 57 are 57 distributed 57 once 57 t he 57 surviving 57 spouse 57 dies. 57 Income, 57 and 57 sometimes 57 principal, 57 generated 57 from 57 t he 57 trust 57 is 57 given 57 to 57 the 57 surviving 57 spouse 57 to 57 ensure 57 that 57 the 57 spouse 57 is 57 take n 57 care 57 of 57 for 57 the 57 rest 57 of 57 her 57 life Is 57 there 57 a 57 power 57 of 57 appointment 57 in 57 a 57 QTIP 57 trust? 57 - 57 answer--NO What 57 must 57 happen 57 for 57 a 57 QTIP 57 trust 57 to 57 qualify 57 for 57 the 57 marital 57 deduction? 57 - 57 answer--
An 57 irrevocable 57 QTIP 57 election 57 must 57 be 57 made 57 on 57 the 57 donor 57 spouse's 57 estate 57 t ax 57 return Annual 57 Exclusion 57 Trust
- 57 how 57 many 57 Benes?
- 57 is 57 a 57 minor 57 bene 57 entitled 57 to 57 I/P?
- 57 Age 57 at 57 which 57 trust 57 property 57 is 57 distributed 57 to 57 bene? 57
- 57 If 57 bene 57 dies 57 before 57 reaching 57 that 57 age, 57 how 57 must 57 the 57 property 57 pass? 57 - 57 answer--- 57157 beneficiary 57
- 57 I/P 57 must 57 be 57 made 57 available 57 for 57 the 57 benefit 57 of 57 minor 57 beneficiary
- 57 age 5721
57 if 57 the 57 beneficiary 57 dies 57 before 57 reaching 57 age 57 21, 57 the 57 trust 57 property 57 must 57 go 57 to 57 the 57 beneficiary's 57 estate 57 or 57 pass 57 through 57 a 57 valid 57 power 57 of 57 appointment Crummey 57 Trust
- 57 how 57 many 57 benes? 57
- 57 is 57 a 57 minor 57 bene 57 entitled 57 to 57 I/P?
- 57 Age 57 at 57 which 57 trust 57 property 57 is 57 distributed 57 to 57 bene? 57 - 57 answer--- 57 multiple 57 beneficiaries
57 give 57 trust 57 beneficiaries 57 a 57 power 57 to 57 withdraw 57 to 57 the 57 trust 57 for 57 a 57 small 57 period 57 of 57 time
- 57 can 57 continue 57 to 57 operate 57 beyond 57 a 57 beneficiary 57 reaching 57 the 57 age 57 of 5721 Can 57 a 57 power 57 of 57 appointment 57 trust 57 be 57 irrevocable? 57 - 57 answer--NO Who 57 is 57 the 57 beneficiary 57 of 57 an 57 estate 57 trust? 57 What 57 does 57 that 57 mean? 57 - 57 answer-
The 57 surviving 57 spouse 57 and 57 the 57 surviving 57 spouse's 57 estate. 57 Therefore, 57 income 57 n eed 57 not 57 be 57 paid 57 to 57 the 57 spouse 57 and 57 under 57 productive 57 property 57 may 57 be 57 retai ned 57 in 57 the 57 trust 57 without 57 jeopardizing 57 the 57 marital 57 deduction What 57 is 57 the 57 primary 57 disadvantage 57 of 57 an 57 estate 57 trust? 57 - 57 answer-- The 57 surviving 57 spouse 57 cannot 57 appoint 57 trust 57 property 57 during 57 their 57 lifetime How 57 does 57 an 57 estate 57 trust 57 differ 57 from 57 a 57 power 57 of 57 appointment 57 trust? 57 - 57 answer--Income 57 does 57 not 57 need 57 to 57 be 57 paid 57 to 57 the 57 spouse Credit 57 Shelter 57 Trust 57 - 57 answer-- A 57 credit 57 shelter 57 trust 57 is 57 a 57 type 57 of 57 trust 57 fund 57 that 57 allows 57 married 57 couples 57 to 5 7 reduce 57 estate 57 taxes 57 by 57 taking 57 full 57 advantage 57 of 57 state 57 and 57 federal 57 estate 57 tax 57 exemptions. 57 As 57 such, 57 it's 57 generally 57 only 57 applicable 57 in 57 cases 57 of 57 multimillion- dollar 57 estates
Grantor 57 Retained 57 Annuity 57 Trust 57 (GRAT) 57 - 57 answer-- a 57 financial 57 instrument 57 commonly 57 used 57 in 57 the 57 United 57 States 57 to 57 make 57 large 57 fin ancial 57 gifts 57 to 57 family 57 members 57 without 57 paying 57 a 57 U.S. 57 gift 57 tax. 57 A 57 donor 57 sets 5 7 up 57 a 57 GRAT 57 by 57 making 57 a 57 donation 57 into 57 a 57 trust. 57 The 57 trust 57 is 57 set 57 up 57 as 57 an 57 annuity 57 whereby 57 the 57 donor 57 receives 57 an 57 annual 57 payment 57 from 57 the 57 trust 57 for 57 a 57 fixed 57 period 57 of 57 time. 57 At 57 the 57 end 57 of 57 the 57 term, 57 any 57 remaining 57 value 57 in 57 the 57 trust 57 is 57 passed 57 on 57 to 57 a 57 beneficiary 57 of 57 the 57 trust 57 as 57 a 57 gift. The 57 main 57 weakness 57 of 57 a 57 GRAT? 57 - 57 answer-- If 57 a 57 grantor 57 dies 57 before 57 the 57 trust 57 period 57 ends, 57 the 57 assets 57 in 57 the 57 GRAT 57 are 5 7 included 57 in 57 the 57 grantor's 57 estate, 57 eliminating 57 any 57 potential 57 gift 57 tax 57 benefit Grantor 57 Retained 57 Unitrust 57 (GRUT) 57 - 57 answer-- an 57 irrevocable 57 trust 57 where 57 the 57 grantor 57 retains 57 the 57 right 57 to 57 receive 57 funds 57 ann ually 57 from 57 the 57 trust 57 based 57 on 57 a 57 fixed 57 percentage 57 that 57 is 57 recalculated 57 annuall y 57 based 57 on 57 the 57 new 57 value 57 of 57 the 57 trust. 57 The 57 grantor 57 transfers 57 property 57 into 57 the 57 trust 57 in 57 exchange 57 for 57 a 57 "variable 57 annuity" 57 type 57 payout 57 feature 57 where 57 the 5 7 annual 57 income 57 stream 57 will 57 vary 57 from 57 year-to- year, 57 depending 57 on 57 the 57 value 57 of 57 the 57 trust.
- 57 The 57 grantor 57 can 57 make 57 the 57 initial 57 gift 57 and 57 additional 57 gifts 57 to 57 the 57 trust.
57 An 57 excellent 57 way 57 to 57 remove 57 property 57 from 57 an 57 estate 57 utilizing 57 the 57 gift 57 tax 57 e xclusion 57 amounts.
57 Provides 57 a 57 variable 57 income 57 stream 57 to 57 the 57 grantor 57 for 57 a 57 set 57 number 57 of 57 yea rs 57 or 57 for 57 life.
57 When 57 the 57 term 57 of 57 the 57 GRUT 57 ends, 57 the 57 remaining 57 assets 57 are 57 transferred 57 ta x-free 57 to 57 the 57 named 57 beneficiaries.
57 If 57 the 57 grantor 57 does 57 not 57 out 57 live 57 the 57 term 57 of 57 the 57 trust, 57 all 57 of 57 the 57 property 57 is 57 brought 57 back 57 into 57 the 57 grantor's 57 estate Out 57 of 57 a 57 GRIT, 57 GRAT 57 or 57 GRUT, 57 which 57 one 57 is 57 sometimes 57 restricted 57 to 57 cert ain 57 types 57 of 57 assets? 57 - 57 answer--GRIT What 57 are 57 the 57257 primary 57 reasons 57 for 57 creating 57 an 57 Irrevocable 57 Trust? 57 - 57 answer--
- 57 Providing 57 a 57 vehicle 57 for 57 making 57 a 57 completed 57 gift 57 while 57 retaining 57 some 57 cont rol 57 over 57 the 57 use 57 and 57 enjoyment 57 of 57 the 57 property
- 57 Tax 57 savings What 57 are 57 the 57257 components 57 of 57 a 57 typical 57 A-B 57 estate 57 plan? 57 - 57 answer--
- 57 A 57 credit 57 shelter 57 trust 57
- 57 Marital 57 trust 57 or 57 bequest
What 57 are 57 the 57257 title 57 interests 57 in 57 property, 57 and 57 how 57 are 57 those 57 interests 57 divid ed 57 under 57 a 57 trust? 57 - 57 answer--1. 57 LEGAL 57 title 57 is 57 held 57 by 57 the 57 trustee
- 57 EQUITABLE 57 title 57 is 57 held 57 by 57 the 57 trust 57 and 57 the 57 beneficiaries 57 are 57 entitled 57 to 57 use 57 and 57 enjoy 57 the 57 property 57 within 57 the 57 confines 57 of 57 the 57 trust 57 and 57 applicable 5 7 law What 57 GRITS/GRATS/GRUTS 57 have 57 in 57 common
- 57 Revocable 57 or 57 Irrevocable?
- 57 Who 57 retains 57 a 57 current 57 interest 57 for 57 a 57 fixed 57 term 57 of 57 years?
- 57 Enables 57 the 57 grantor 57 to 57 make 57 a 57 completed 57 ___________ 57 of 57 the 57 _________ ____________ 57 which 57 because 57 it 57 is 57 a 57 future 57 benefit, 57 the 57 amount 57 of 57 the 57 gift 57 i s 57 ____________ 57 - 57 answer--1. 57 Irrevocable
- 57 Grantor
- 57 Gift 57 - 57 remainder 57 interest 57 - 57 discounted What 57 is 57 the 57 difference 57 between 57 a 57 charitable 57 lead 57 trust 57 and 57 a 57 charitable 57 rem ainder 57 trust? 57 - 57 answer--A 57 charitable 57 remainder 57 trust 57 has 57 non- charitable 57 current 57 beneficiaries 57 and 57 charitable 57 remainder 57 beneficiaries, 57 while 57 a 57 charitable 57 lead 57 trust 57 has 57 charitable 57 current 57 beneficiaries 57 and 57 non- charitable 57 remainder 57 beneficiaries What 57 is 57 the 57 difference 57 between 57 an 57 annuity 57 trust 57 and 57 a 57 unitrust? 57 - 57 answer-- Each 57 year, 57 an 57 annuity 57 trust 57 pays 57 a 57 fixed 57 sum, 57 whereas 57 a 57 unitrust 57 pays 57 a 57 fi xed 57 percentage 57 of 57 the 57 annually 57 determined 57 FMV 57 of 57 the 57 trust 57 assets What 57 kind 57 of 57 trust 57 becomes 57 operative 57 during 57 the 57 lifetime 57 of 57 the 57 settlor? 57 - 57 answer--An 57 intervivos 57 trust Precatory 57 Words 57 - 57 answer--hope, 57 desire, 57 request, 57 may 57 - 57 Do 57 not 57 create 57 legally 57 enforceable 57 duties 557 Common 57 law 57 requirements 57 of 57 an 57 express 57 trust 57 - 57 answer--
- 57 Intent 57 to 57 create 57 by 57
- 57 present 57 declaration 57 or 57 act 57 of 57 transfer 57 by 57 the 57 settlor
- 57 existence 57 of 57 trust 57 corpus
- 57 naming 57 of 57 a 57 trustee 57
- 57 identifiable 57 beneficiaries 457 categories 57 of 57 marital 57 trusts 57 - 57 answer--1. 57 Power 57 of 57 appointment 57 trust
- 57 Estate 57 Trust
- 57 QTIP 57 trust
- 57 Qualified 57 Domestic 57 Trust Qualified 57 Domestic 57 Trust 57 (QDOT) 57 - 57 answer-- trust 57 that 57 is 57 used 57 to 57 allow 57 a 57 non-
T/F 57 -
57 A 57 successor 57 trustee 57 may 57 exercise 57 all 57 of 57 the 57 powers 57 granted 57 to 57 the 57 original 57 trustee 57 - 57 answer--TRUE 57 - 57 unless 57 the 57 trust 57 instrument 57 otherwise 57 provides Under 57 the 57 UTC, 57 a 57 vacancy 57 in 57 trusteeship... 57 - 57 answer-- Must 57 be 57 filled 57 if 57 no 57 other 57 trustee 57 is 57 then 57 serving UTC 57 - 57 answer--Uniform 57 Trust 57 Code Must 57 a 57 beneficiary 57 disclaimer 57 be 57 accepted 57 and 57 approved 57 by 57 the 57 trustee? 57 - 57 answer--NO A 57 trustee 57 must 57 treat 57 all 57 beneficiaries 57 _____________ 57 - 57 answer--Impartially Traditionally 57 _________ 57 of 57 the 57 acting 57 co- trustees 57 are 57 required 57 to 57 act 57 on 57 behalf 57 of 57 the 57 trust. 57 Exceptions? 57 - 57 answer-- ALL 57 - 57 Exceptions 57 include 57 extreme 57 emergency, 57 if 57 fewer 57 than 57 the 57 all 57 of 57 the 57 trustees 57 attempt 57 to 57 exercise 57 trust 57 powers, 57 the 57 trust 57 instrument 57 or 57 local 57 laws 57 may 57 pr ovide 57 exceptions, 57 if 57 acting 57 with 57 proper 57 delegation 57 of 57 trustees 57 power Does 57 the 57 trustee 57 have 57 to 57 allow 57 beneficiaries 57 to 57 inspect 57 trust 57 property, 57 accoun ts 57 and 57 documents? 57 - 57 answer--YES CERCLA 57 - 57 answer-- Comprehensive 57 Environmental 57 Response, 57 Compensation, 57 and 57 Liability 57 Act 57 (Sup erfund) 57 1980; 57 To 57 facilitate 57 the 57 cleanup 57 of 57 any 57 abandoned 57 or 57 uncontrolled 57 site s 57 containing 57 hazardous 57 substances 57 and 57 to 57 impose 57 strict 57 liability 57 for 57 cleanup 57 c osts 57 on 57 potentially 57 responsible 57 parties Under 57 CERCLA, 57 must 57 the 57 environmental 57 liability 57 of 57 a 57 fiduciary 57 be 57 based 57 upo n 57 direct 57 ownership 57 or 57 operation 57 of 57 a 57 contaminated 57 property? 57 - 57 answer--NO 57 - 57 Indirect 57 ownership 57 or 57 operation 57 may 57 support 57 liability. 57 Ex 57 - 57 If 57 a 57 fiduciary 57 holds 57 closely 57 held 57 business 57 stock, 57 and 57 the 57 business 57 uses 57 or 5 7 owns 57 contaminated 57 property, 57 the 57 fiduciary 57 possesses 57 or 57 exercises 57 sufficient 57 management 57 authority 57 over 57 the 57 business 57 to 57 qualify 57 under 57 CERCLA, 57 then 57 the 5 7 fiduciary 57 may 57 be 57 held 57 liable 57 in 57 its 57 representative 57 capacity. Closely 57 held 57 stock 57 - 57 answer--issued 57 stock 57 but 57 not 57 sold 57 to 57 open 57 public Under 57 what 57 circumstances 57 may 57 a 57 trustee 57 delegate 57 one 57 of 57 its 57 powers? 57 - 57 answer-- When 57 a 57 trustee 57 is 57 authorized 57 by 57 the 57 terms 57 of 57 the 57 trust, 57 state 57 law, 57 a 57 court 57 or 57 you 57 have 57 the 57 consent 57 of 57 all 57 the 57 beneficiaries.
Can 57 a 57 trustee 57 invest 57 trust 57 assets 57 in 57 its 57 own 57 common 57 trust 57 fund? 57257 condition s HINT: 57 Counter 57 intuitive 57 - 57 answer--YES 57
- 57 The 57 purchased 57 assets 57 be 57 earmarked 57 for 57 trust 57 investment
- 57 The 57 total 57 fees 57 assessed 57 to 57 a 57 participating 57 trust 57 be 57 reasonable Opportunity 57 Doctrine 57 - 57 answer-- The 57 rule 57 that 57 a 57 trustee 57 cannot 57 acquire 57 property 57 for 57 itself 57 that 57 it 57 is 57 required 57 to 57 acquire 57 for 57 the 57 trust What 57 options 57 are 57 available 57 if 57 the 57 trustee 57 discovers 57 a 57 conflict 57 of 57 interest 57 invol ving 57 a 57 trust 57 under 57 its 57 administration, 57 and 57 the 57 existence 57 of 57 such 57 a 57 conflict 57 is 57 not 57 authorized 57 by 57 the 57 trust 57 instrument 57 or 57 applicable 57 statute? 57 - 57 answer-- The 57 trustee 57 may 57 resign 57 or 57 remove 57 the 57 conflicting 57 interest When 57 may 57 a 57 fiduciary 57 be 57 personally 57 liable 57 under 57 CERCLA? 57 - 57 answer-- When 57 a 57 fiduciary 57 negligently 57 causes 57 contamination When 57 may 57 a 57 trustee 57 lend 57 money 57 to 57 a 57 beneficiary 57 and 57 use 57 trust 57 assets 57 to 57 secure 57 the 57 loan? 57 - 57 answer--NEVER 57 (unless 57 state 57 law 57 permits) When 57 will 57 a 57 court 57 interfere 57 with 57 a 57 trustee's 57 exercise 57 of 57 a 57 properly 57 granted 57 d iscretionary 57 power? 57 - 57 answer-- When 57 the 57 trustee 57 has 57 abused 57 the 57 power 57 or 57 acted 57 in 57 bad 57 faith When 57 will 57 a 57 trustee 57 not 57 be 57 liable 57 for 57 a 57 loss 57 or 57 depreciation 57 in 57 value 57 of 57 tru st 57 property? 57 - 57 answer-- When 57 the 57 trustee 57 has 57 exercised 57 due 57 care 57 and 57 skill 57 and 57 has 57 not 57 breached 57 it s 57 fiduciary 57 duty Which 57 of 57 the 57 following 57 is 57 a 57 valid 57 defense 57 to 57 an 57 alleged 57 breach 57 of 57 the 57 trust ee's 57 duty 57 of 57 loyalty 57 in 57 a 57 particular 57 transaction? 57 - 57 answer-- TRICK 57 QUESTION! 57 Equity 57 deems 57 it 57 better 57 to 57 forbid 57 all 57 disloyalty 57 rather 57 than 5 7 attempt 57 to 57 separate 57 harmless 57 from 57 harmful 57 acts. The 57 legal 57 and 57 equitable 57 remedies 57 available 57 to 57 beneficiaries 57 against 57 a 57 trustee 5 7 who 57 commits 57 a 57 breach 57 of 57 trust? 57 - 57 answer--
- 57 Reducing 57 or 57 denying 57 the 57 trustee's 57 compensation
- 57 Appointment 57 of 57 a 57 receiver
- 57 Requiring 57 the 57 trustee 57 to 57 provide 57 information 57 to 57 the 57 beneficiaries 57 regarding 57 trust 57 administration
- 57 enjoining 57 the 57 trustee 57 from 57 taking 57 particular 57 action
- 57 obtaining 57 a 57 decree 57 of 57 specific 57 performance 57 requiring 57 the 57 trustee 57 to 57 perfor m 57 a 57 particular 57 action
- 57 setting 57 aside 57 a 57 trustee's 57 wrongful 57 act
When 57 is 57 a 57 transaction 57 permissible 57 between 57 two 57 trusts 57 administered 57 by 57 the 57 s ame 57 trustee? 57 - 57 answer--When 57 the 57 transaction 57 is 57 fair 57 to 57 both 57 trusts When 57 may 57 a 57 trustee 57 not 57 diversify 57 trust 57 investments? 57 - 57 answer-- Although 57 uncommon, 57 it 57 can 57 be 57 prudent 57 not 57 to 57 diversify 57 and 57 sometimes 57 a 57 tru st 57 will 57 direct 57 investment 57 in 57 certain 57 things When 57 may 57 a 57 trust 57 retain 57 or 57 acquire 57 a 57 closely 57 held 57 business 57 interest? 57 - 57 answer-- Only 57 if 57 authorized 57 by 57 the 57 governing 57 instrument, 57 applicable 57 statue 57 or 57 state 57 law 57 but 57 is 57 generally 57 a 57 bad 57 idea 57 because 57 the 57 trustee 57 may 57 be 57 held 57 liable 57 for 57 a ny 57 loss 57 to 57 the 57 trust What 57 are 57 the 57 advantages 57 of 57 a 57 common 57 trust 57 funds 57 to 57 the 57 participating 57 trusts 57 (that 57 are 57 probably 57 small)? 57 - 57 answer---Better 57 diversification
- 57 Better 57 investment 57 opportunities
- 57 Administrating 57 one 57 large 57 trust 57 may 57 be 57 simpler 57 that 57 seprately What 57 are 57 the 57357 ethical 57 concerns 57 raised 57 by 57 a 57 trustees 57 investment 57 of 57 trust 57 as sets 57 in 57 mutual 57 funds? 57 - 57 answer--
- 57 May 57 constitute 57 an 57 impermissible 57 delegation 57 of 57 investment 57 authority
- 57 It 57 is 57 an 57 impermissible 57 comingling 57 of 57 trust 57 assets
- 57 It 57 is 57 a 57 potential 57 breach 57 of 57 the 57 fiduciary 57 duty 57 because 57 mutual 57 funds 57 are 57 i nherently 57 risky Are 57 mutual 57 funds 57 risky? 57 - 57 answer--YES Kristi 57 maintains 57 accounts 57 at 57 Frost 57 Bank. 57 Her 57 deceased 57 husband 57 named 57 Frost 57 as 57 trustee 57 of 57 a 57 trust 57 created 57 for 57 the 57 benefit 57 of 57 their 57 children. 57 One 57 son, 57 Ev an, 57 engages 57 in 57 activities 57 that 57 Kristi 57 considers 57 shocking. 57 Kristi 57 has 57 made 57 it 57 k nown 57 to 57 Frost 57 that 57 she 57 does 57 not 57 want 57 Evan 57 to 57 be 57 allowed 57 to 57 squander 57 tru st 57 income 57 or 57 principal. 57 Can 57 Frost 57 consider 57 Kristi's 57 request? 57 - 57 answer-- NO 57 because 57 Frost 57 must 57 satisfy 57 its 57 fiduciary 57 duty 57 to 57 Evan 57 without 57 interference Uniform 57 Principal 57 and 57 Income 57 Act 57 (UPIA) 57 - 57 answer-- TX 57 enacted, 57 governs 57 the 57 allocation 57 of 57 receipts 57 and 57 expenses 57 between 57 the 57 in come 57 and 57 principal 57 accounts. 57 Act 57 gives 57 trustee 57 an 57 adjustment 57 power 57 to 57 reall ocate 57 investment 57 returns 57 (like 57 capital 57 gains 57 and 57 stock). 57 trustee 57 is 57 under 57 duty 5 7 to 57 administer 57 trust 57 impartially The 57 purpose 57 of 57 the 57 UPAIA 57 (sometimes 57 referred 57 to 57 as 57 the 57 UPIA) 57 is 57 to 57 provi de 57 procedures 57 by 57 which 57 trustees 57 administering 57 trusts, 57 and 57 personal 57 representa tives 57 administering 57 estates, 57 allocate 57 receipts 57 and 57 payments 57 to 57 principal 57 and 57 in come. 57 The 57 aim 57 of 57 the 57 law 57 is 57 to 57 ensure 57 that 57 the 57 intention 57 of 57 the 57 trust 57 creat or 57 or 57 decedent 57 is 57 carried 57 out, 57 and 57 to 57 govern 57 the 57 proper 57 distribution 57 of 57 asset s 57 to 57 trust 57 beneficiaries, 57 heirs 57 and 57 devisees.
(UPIA): 57 Why 57 are 57 rent 57 and 57 net 57 profits 57 allocated 57 to 57 income? 57 - 57 answer-- Because 57 they 57 are, 57 in 57 theory, 57 different 57 types 57 of 57 income 57 generated 57 by 57 capital 57 assets (UPIA): 57 Why 57 are 57 proceeds 57 from 57 eminent 57 domain 57 allocated 57 to 57 principal? 57 - 57 answer-- Because 57 it 57 involves 57 the 57 condemnation 57 and 57 taking 57 of 57 property 57 by 57 the 57 govern ment, 57 and 57 proceeds 57 from 57 these 57 actions 57 are 57 reimbursed 57 for 57 the 57 loss 57 of 57 prope rty Under 57 the 57 revised 57 UPIA, 57 how 57 are 57 proceeds 57 from 57 the 57 sale 57 of 57 minerals 57 allocat ed? 57 - 57 answer--Income 57 AND 57 Principal (UPIA): 57 Cash 57 dividend's 57 declared 57 but 57 not 57 yet 57 paid 57 to 57 a 57 trust 57 as 57 of 57 the 57 date 57 of 57 the 57 trust's 57 termination 57 are 57 allocated 57 to 57 - 57 answer--INCOME (UPIA): 57 How 57 are 57 stock 57 dividends 57 and 57 cash 57 dividends 57 allocated? 57 - 57 answer-- Stock 57 - 57 P Cash 57 - 57 I (UPIA): 57 Crops 57 received 57 from 57 a 57 tenant 57 under 57 a 57 crop 57 share 57 lease 57 are 57 allocate d 57 to.... 57 - 57 answer-- INCOME 57 because 57 the 57 receipt 57 of 57 the 57 crops 57 is 57 treated 57 like 57 rental 57 income (UPIA): 57 Life 57 insurance 57 proceeds 57 are 57 generally 57 considered 57 - 57 answer-- PRINCIPAL What 57357 conditions 57 must 57 be 57 met 57 for 57 a 57 trustee 57 to 57 adjust 57 between 57 Income 57 and 57 Principal? 57 - 57 answer--
- 57 The 57 trustee 57 must 57 comply 57 with 57 the 57 prudent 57 investor 57 rule
- 57 The 57 distribution 57 amounts 57 are 57 described 57 in 57 reference 57 to 57 trust 57 income
- 57 The 57 trustee 57 cannot 57 administer 57 the 57 trust 57 impartially 57 without 57 adjusting If 57 a 57 trustee 57 breaches 57 its 57 fiduciary 57 duties, 57 what 57 can 57 happen 57 to 57 its 57 compensati on? 57 - 57 answer-- A 57 supervising 57 court 57 can 57 reduce 57 compensation, 57 either 57 partially 57 or 57 totally, 57 if 57 wa rranted, 57 and 57 can 57 also 57 impose 57 compensatory 57 damages Personal 57 representatives, 57 guardians 57 and 57 conservators 57 are 57 typically 57 required 57 to 5 7 provide 57 annual 57 reports 57 to 57 what 57 entity? 57 Can 57 the 57 requirement 57 be 57 waived? 57 - 57 answer--A 57 supervising 57 court Yes 57 via 57 the 57 Will 57 or 57 the 57 Court
- 57 The 57 trust 57 terminates 57 by 57 operation 57 of 57 law 57 (ex 57 - 57 trust 57 purpose 57 has 57 become 57 illegal) Chinese 57 Wall 57 - 57 answer-- The 57 separation 57 that 57 is 57 supposed 57 to 57 exist 57 between 57 the 57 investment 57 banking 57 de partment 57 and 57 the 57 traders 57 and 57 registered 57 representatives 57 in 57 order 57 to 57 prevent 57 i nsider 57 trading 57 violations Under 57 OCC 57 regulations, 57 how 57 often 57 must 57 a 57 national 57 bank 57 audit 57 its 57 collective 57 i nvestment 57 funds? 57 - 57 answer--Once 57 every 57 year Securities 57 Exchange 57 Commission 57 - 57 answer-- an 57 agency 57 created 57 in 57193457 that 57 monitors 57 the 57 stock 57 market 57 and 57 enforces 57 law s 57 regulating 57 the 57 sale 57 of 57 stocks 57 and 57 bonds SEC 57 Rule 5714457 - 57 answer-- Provides 57 objective 57 criteria 57 for 57 determining 57 when 57 certain 57 securities 57 are 57 exempt 57 from 57 registration 57 requirements 457 properties 57 of 57 a 57 Chinese 57 Wall 57 - 57 answer--
- 57 Employee 57 training 57 on 57 federal 57 and 57 state 57 security 57 laws
- 57 Restrictions 57 on 57 employee 57 trading
- 57 Physical 57 barriers 57 between 57 departments
- 57 limitations 57 on 57 proprietary 57 trading 57 by 57 the 57 entity Cy 57 Pres 57 allows 57 the 57 court 57 to.... 57 - 57 answer-- Modify 57 the 57 provisions 57 of 57 a 57 charitable 57 trust 57 to 57 make 57 them 57 workable Can 57 a 57 charitable 57 remainder 57 unitrust 57 or 57 annuity 57 trust 57 establish 57 a 57 term 57 for 57 lon ger 57 than 572057 years? 57 - 57 answer--NO A 57 declaration 57 of 57 trust 57 is 57 the 57 creation 57 of 57 a 57 trust 57 by.... 57 - 57 answer-- Stating 57 in 57 writing 57 that 57 the 57 declarant 57 is 57 holding 57 certain 57 assets 57 in 57 trust 57 for 57 ano ther According 57 to 57 the 57 ______________ 57 Financial 57 Institutions 57 must 57 perform 57 due 57 dilig ence 57 and 57 investigation 57 when 57 opening 57 and 57 maintaining 57 accounts 57 to 57 ensure 57 tha t 57 the 57 accounts 57 are 57 not 57 linked 57 to 57 financing 57 terrorism 57 or 57 assisting 57 in 57 money 57 la undering 57 - 57 answer--US 57 Patriot 57 Act USA 57 Patriot 57 Act 57 - 57 answer-- Section 5732657 of 57 the 57 USA 57 PATRIOT 57 ACT 57 requires 57 all 57 financial 57 institutions 57 to 57 o btain, 57 verify, 57 and 57 record 57 information 57 that 57 identifies 57 each 57 person 57 who 57 opens 57 a n 57 account 57 or 57 changes 57 an 57 existing 57 account. 57 This 57 federal 57 requirement 57 applies 57 t o 57 all 57 new 57 customers 57 and 57 current 57 customers. 57 This 57 information 57 is 57 used 57 to 57 assi
st 57 the 57 United 57 States 57 government 57 in 57 the 57 fight 57 against 57 the 57 funding 57 of 57 terrorism 57 and 57 money-laundering 57 activities Except 57 in 57 a 57 case 57 of 57 illegality, 57 when 57 an 57 express 57 trust 57 fails... 57 - 57 answer-- A 57 resulting 57 trust 57 is 57 established 57 for 57 the 57 settlor 57 or 57 settlor's 57 successors 57 in 57 intere st. For 57 a 57 trust 57 that 57 contains 57 complex 57 financial 57 assets, 57 should 57 a 57 trustee 57 with 57 disc retionary 57 powers 57 hire 57 a 57 professional 57 investor 57 advisor? 57 - 57 answer-- YES 57 unless 57 the 57 trustee 57 has 57 specific 57 expertise 57 in 57 managing 57 complex 57 investme nts, 57 it 57 may 57 have 57 the 57 duty 57 to 57 delegate An 57 A- B 57 estate 57 plan 57 will 57 be 57 superior 57 if 57 ________________ 57 tax 57 planning 57 is 57 more 57 im portant 57 to 57 you 57 than 57 income 57 tax 57 planning 57 - 57 answer--Estate If 57 the 57 retention 57 or 57 acquisition 57 of 57 of 57 a 57 closely 57 held 57 business 57 interest 57 is 57 autho rized 57 by 57 the 57 trust 57 instrument, 57 which 57 of 57 the 57 following 57 accurately 57 describes 57 the 5 7 trustees 57 position? 57 - 57 answer-- The 57 trustee's 57 position 57 with 57 respect 57 to 57 the 57 distributions 57 of 57 business 57 receipts 57 wi ll 57 be 57 governed 57 by 57 the 57 express 57 of 57 limited 57 terms 57 of 57 the 57 trust John 57 creates 57 a 57 trust 57 with 57 income 57 during 57 life 57 to 57 Sam, 57 with 57 the 57 remainder 57 to 5 7 Sue. 57 John 57 retains 57 the 57 right 57 to 57 amend 57 or 57 revoke 57 the 57 agreement. 57 Sue 57 will 57 h ave 57 to 57 disclaim 57 her 57 interest 57 in 57 the 57 trust 57 within 57957 months 57 of... 57 - 57 answer-- John's 57 death One 57 of 57 the 57 major 57 advantages 57 to 57 a 57 revocable 57 living 57 trust 57 is 57 that 57 it 57 can 57 provi de 57 for 57 the 57 settlor 57 becoming 57 incapacitated 57 how... 57 - 57 answer-- Gives 57 the 57 trustee 57 the 57 authority 57 to 57 act 57 on 57 behalf 57 of 57 the 57 individual. 57 Thus, 57 the 5 7 trust 57 can 57 function 57 as 57 a 57 substitute 57 for 57 a 57 guardianship, 57 conservatorship, 57 or 57 co mmittee. 57 If 57 the 57 settlor 57 becomes 57 incapacitated, 57 the 57 trustee 57 can 57 step 57 in 57 and 57 h andle 57 the 57 settlor's 57 affairs 57 without 57 disruption According 57 to 57 the 57 UTC, 57 how 57 long 57 do 57 beneficiaries 57 have 57 to 57 bring 57 a 57 suit 57 again st 57 a 57 trustee 57 for 57 breach 57 of 57 trust? 57 - 57 answer-- One 57 year 57 from 57 the 57 date 57 of 57 receiving 57 a 57 report 57 that 57 adequately 57 disclosed 57 the 57 existence 57 for 57 a 57 potential 57 claim 57 for 57 breach 57 of 57 trust 57 and 57 informing 57 them 57 of 57 the 57 time 57 allowed 57 for 57 commencing 57 a 57 proceeding. Precatory 57 Language 57 - 57 answer--Non- binding 57 language 57 like: 57 "I 57 would 57 like" 57 "I 57 request" 57 "My 57 wish 57 and 57 desire" The 57 Chinese 57 wall 57 can 57 best 57 be 57 described 57 as 57 prohibiting... 57 - 57 answer-- Disclosure 57 of 57 material, 57 non-
T/F 57 - 57 If 57 a 57 trustee 57 commits 57 a 57 breach 57 of 57 trust, 57 they 57 must 57 resign? 57 - 57 answer-- FALSE 357 proper 57 actions 57 when 57 taking 57 over 57 as 57 successor 57 trustee 57 - 57 answer--
- 57 Obtain 57 and 57 review 57 an 57 accounting 57 from 57 the 57 prior 57 trustee 57 including 57 statemen ts 57 since 57 inception 57 of 57 their 57 relationship 57 if 57 possible
- 57 Obtain 57 tax 57 records 57 going 57 back 57 at 57 least 57357 years, 57 resolve 57 any 57 discrepancie s, 57 and 57 make 57 sure 57 you 57 are 57 comfortable 57 with 57 the 57 stance 57 they 57 took 57 regarding 57 any 57 tax 57 issues
- 57 Make 57 sure 57 the 57 language 57 under 57 which 57 you 57 are 57 serving 57 provides 57 you 57 with 57 sufficient 57 authority 57 to 57 act 57 as 57 successor 57 trustee Restatement 57 of 57 Trusts 57 (Third) 57 - 57 answer-- A 57 publication 57 of 57 the 57 American 57 Law 57 Institute 57 that 57 synthesizes 57 the 57 legal 57 reason ing 57 from 57 relevant 57 court 57 decisions 57 and 57 statutes 57 and 57 provides 57 comments 57 on 57 ea ch 57 of 57 the 57 general 57 principals 57 on 57 their 57 relevance.
