CERTIFIED TRUST OPERATIONS
PROFESSIONAL (CTOP) QUESTION AND
CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2026 Q&A
INSTANT DOWNLOAD PDF
1. The primary purpose of trust operations is to
A. Maximize short-term profits
B. Administer trusts in accordance with governing documents and law
C. Eliminate fiduciary risk
D. Replace investment management
Rationale: Trust operations focuses on accurate, compliant administration
of trusts based on trust documents and fiduciary law.
2. A fiduciary duty requires a trustee to act
A. In the interest of regulators
B. In the interest of the bank
C. In the best interest of beneficiaries
D. In accordance with personal judgment
Rationale: Fiduciary duty legally obligates trustees to prioritize
beneficiaries’ interests.
3. The document that legally establishes a trust is the
A. Will
B. Trust agreement
C. Power of attorney
D. Account statement
, Rationale: A trust agreement sets the terms, parties, and purpose of the
trust.
4. The individual who creates a trust is called the
A. Trustee
B. Beneficiary
C. Grantor (or settlor)
D. Custodian
Rationale: The grantor establishes and funds the trust.
5. Legal ownership of trust assets rests with the
A. Beneficiary
B. Trustee
C. Grantor
D. Court
Rationale: Trustees hold legal title while beneficiaries hold equitable
interest.
6. Which trust is revocable during the grantor’s lifetime?
A. Testamentary trust
B. Revocable living trust
C. Irrevocable trust
D. Charitable remainder trust
Rationale: Revocable living trusts can be altered or revoked by the
grantor.
7. Income generated by trust assets is typically
A. Always retained by the trust
B. Always distributed
C. Distributed or accumulated per trust terms
D. Tax-free
Rationale: Distribution depends on trust provisions and trustee discretion.
8. A testamentary trust is created
A. During the grantor’s lifetime
, B. Through a will at death
C. By court order only
D. For charitable purposes only
Rationale: Testamentary trusts arise from wills upon death.
9. Which party has equitable ownership of trust assets?
A. Grantor
B. Beneficiary
C. Trustee
D. Custodian
Rationale: Beneficiaries hold beneficial (equitable) interest.
10.Trust accounting primarily differs from corporate accounting because it
A. Uses accrual accounting
B. Separates principal and income
C. Ignores expenses
D. Is unregulated
Rationale: Trust accounting distinguishes principal from income for
beneficiary rights.
11.The Uniform Prudent Investor Act emphasizes
A. Speculation
B. Capital preservation only
C. Portfolio-level risk and return
D. Guaranteed returns
Rationale: UPIA requires prudent portfolio management, not asset-by-
asset evaluation.
12.Which tax return is commonly filed for a trust?
A. Form 1040
B. Form 1041
C. Form 1099
PROFESSIONAL (CTOP) QUESTION AND
CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2026 Q&A
INSTANT DOWNLOAD PDF
1. The primary purpose of trust operations is to
A. Maximize short-term profits
B. Administer trusts in accordance with governing documents and law
C. Eliminate fiduciary risk
D. Replace investment management
Rationale: Trust operations focuses on accurate, compliant administration
of trusts based on trust documents and fiduciary law.
2. A fiduciary duty requires a trustee to act
A. In the interest of regulators
B. In the interest of the bank
C. In the best interest of beneficiaries
D. In accordance with personal judgment
Rationale: Fiduciary duty legally obligates trustees to prioritize
beneficiaries’ interests.
3. The document that legally establishes a trust is the
A. Will
B. Trust agreement
C. Power of attorney
D. Account statement
, Rationale: A trust agreement sets the terms, parties, and purpose of the
trust.
4. The individual who creates a trust is called the
A. Trustee
B. Beneficiary
C. Grantor (or settlor)
D. Custodian
Rationale: The grantor establishes and funds the trust.
5. Legal ownership of trust assets rests with the
A. Beneficiary
B. Trustee
C. Grantor
D. Court
Rationale: Trustees hold legal title while beneficiaries hold equitable
interest.
6. Which trust is revocable during the grantor’s lifetime?
A. Testamentary trust
B. Revocable living trust
C. Irrevocable trust
D. Charitable remainder trust
Rationale: Revocable living trusts can be altered or revoked by the
grantor.
7. Income generated by trust assets is typically
A. Always retained by the trust
B. Always distributed
C. Distributed or accumulated per trust terms
D. Tax-free
Rationale: Distribution depends on trust provisions and trustee discretion.
8. A testamentary trust is created
A. During the grantor’s lifetime
, B. Through a will at death
C. By court order only
D. For charitable purposes only
Rationale: Testamentary trusts arise from wills upon death.
9. Which party has equitable ownership of trust assets?
A. Grantor
B. Beneficiary
C. Trustee
D. Custodian
Rationale: Beneficiaries hold beneficial (equitable) interest.
10.Trust accounting primarily differs from corporate accounting because it
A. Uses accrual accounting
B. Separates principal and income
C. Ignores expenses
D. Is unregulated
Rationale: Trust accounting distinguishes principal from income for
beneficiary rights.
11.The Uniform Prudent Investor Act emphasizes
A. Speculation
B. Capital preservation only
C. Portfolio-level risk and return
D. Guaranteed returns
Rationale: UPIA requires prudent portfolio management, not asset-by-
asset evaluation.
12.Which tax return is commonly filed for a trust?
A. Form 1040
B. Form 1041
C. Form 1099
