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True/False
Indicate whether the statement is true or false.
1. Beneficiaries of a trust must be defined by name.
2. Trustees must generally be paid.
3. The settlor’s retention of control over the trust arrangement exposes the settlor to tax liability for the trust income.
4. If there are two trustees, one may make a determination to take action without the other’s consent.
5. Charitable trusts, as public trusts, must benefit the general public.
6. The law will permit a public trust to end if the beneficiary no longer exists.
7. If a settlor wishes to see how well the trust operates while he or she is alive, a testamentary trust should be established.
8. Courts frequently use resulting trusts to settle legal disputes.
9. The money in a Totten trust is a probate asset.
10. On the death of the settlor, a revocable living trust becomes irrevocable.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
11. Which is NOT an essential element of a trust? a. One or more trustees b. A sale or gift of property c. One or more beneficiaries d. Real or personal property
12. To be a settlor, a person must: a. Have the right or power to dispose of a property interest b. Own no property c. Be a minor d. Act as the beneficiary
13. Which is an invalid trust combination? a. The settlor is also the beneficiary, and another person is the trustee b. The settlor is also the trustee and beneficiary c. The settlor, trustee, and beneficiary are three different people d. The settlor is also a co-trustee and a co-beneficiary
14. Which duty prohibits the trustee from personally profiting from his or her position as trustee (other than the compensation allowed by contract or law)?