Chapter 12 introduction to trusts
All of the following are true of property place in a revocable trust except:
It is not subject to federal estate tax.
Similar to a sale or gift of property, payment by the beneficiary to the settlor based on the trust property's reasonable value is a requirement for the creation of a trust.
False
The Uniform Trust Code, which governs the creation, administration, and termination of trusts, is a federal statute that applies to all 50 states.
False
The same person cannot be the settlor and trustee of a trust, nor can the same person be the settlor and beneficiary of a trust.
False
The term principal identifies the property held in trust.
False
The trustee's main duty is to guide the settlor in creating the trust.
False
A trust may be terminated by merger of all interests (legal and equitable) in the same person.
True
A trustee who manages and administers a trust does not have the right to receive financial profit from it.
True
An equity court will not allow a trust to fail for lack of a trustee; thus, the court will appoint a trustee if it deems this necessary.
True
Once an irrevocable living trust is created, it cannot be revoked or changed by the settlor.
True
Remainder beneficiaries receive the principal of a trust after the rights of the income beneficiaries in the trust are terminated.
True
The beneficiary of a trust is not required to have the capacity to hold property or to make a contract, because the trustee has control of the trust property.
True
The doctrine of survivorship applies when the co-beneficiaries of a trust are joint tenants or tenants by the entireties.
True
Which of the following is a nontransferable property interest that is not permitted to be the subject matter of a trust?
a government pension
A settlor to a trust can name himself/herself any of the following except:
a sole trustee and sole beneficiary
Unless prohibited by statute or the trust agreement, beneficiaries may transfer their interest in a trust by:
an assignment
A cestui que trust is
the agreement that creates a trust
Which of the following is not a duty of a trustee?
the duty to personally carry out all acts of administration of the trust
A trustee is a fiduciary and, as such, owes fiduciary duties to act honestly and loyally for the sole benefit of the settlor.
False
A trustee is obliged to show all trust documents, records, and vouchers for all expenditures and disbursements only to the beneficiary or their guardian, and not to the settlor.
False
Property placed in a revocable or an irrevocable trust is subject to probate but not to federal estate taxes.
False
Which of the following makes oral trusts of real property invalid?
The Statute of Frauds
The purpose of the doctrine of survivorship is to apply to a trust when the co-beneficiaries:
fulfill a condition subsequent
Ground for the removal of a trustee include all of the following except:
hostility between the trustee and one or more beneficiaries.
The form of ownership of trust property held by a trustee who is given the right to control and manage the property for the benefit of another is a(n)
legal title of a trust.