CANNON TRUST SCHOOL
Cannon Trust School I Exam
2026/2027 Edition
Official Practice Exam - Certified Questions, Verified Correct Answers & Detailed Explanations
Trust Administration Fundamentals | Fiduciary Law Basics | Trust Taxation | Investments & Ethics
Questions Minutes Passing Score Format
100 120 80% Multiple Choice
TABLE OF CONTENTS
Section 1: Trust Administration Fundamentals Q1-Q20
Section 2: Fiduciary Law Basics Q21-Q38
Section 3: Trust Taxation Q39-Q58
Section 4: Investments & Asset Management Q59-Q76
Section
EXAM 5: Ethics & Professional Responsibility
INSTRUCTIONS Q77-Q88
Section 6: Beneficiary Rights & Distributions Q89-Q100
1. This exam consists of 100 multiple-choice questions across 6 sections. You have 120 minutes to complete all
questions.
2. Each question has four answer choices (A, B, C, D). Select the single best answer for each question.
3. A passing score of 80% (80 out of 100 questions correct) is required to pass this exam.
4. Read each question carefully. Every question begins with a realistic scenario relevant to trust administration practice.
5. After completing the exam, review the answer key and detailed rationales provided at the end of this document.
6. The correct answer for each question is printed in green immediately below the question, followed by a detailed
rationale.
7. This practice exam is designed to mirror the content, format, and difficulty of the actual Cannon Trust School I Exam.
8. Do not use any reference materials during the exam. Time yourself to simulate actual testing conditions.
Cannon Trust School I - 2026/2027 | Passing Score: 80% | Page 1
,Section 1: Trust Administration Fundamentals 20 Questions
Q1 Question 1 of 100
A 62-year-old grantor establishes a revocable living trust and names his eldest daughter as
successor trustee. The grantor becomes incapacitated 18 months later. The daughter asks what
authority she now holds over trust assets. Which statement accurately describes her powers?
A. She may manage and distribute trust assets according to the trust terms without court
supervision
B. She must petition the probate court for a conservatorship before acting
C. She can only pay medical bills; all other distributions require beneficiary consent
D. She must liquidate all trust assets and hold proceeds in a court-monitored account
Correct Answer: A
Rationale:
A successor trustee of a revocable living trust steps into the grantor's role upon incapacity and administers the
trust per its terms without court involvement. A conservatorship is unnecessary because the trust already
provides authority. The trustee's powers are not limited to medical expenses, nor is liquidation required.
Q2 Question 2 of 100
A corporate trustee receives a demand from a remainder beneficiary to furnish a full accounting of
trust activities for the past three years. The trustee has been sending annual summaries to the
income beneficiaries only. Under the Uniform Trust Code, which response is correct?
A. The trustee may deny the request because remainder beneficiaries have no right to accountings
B. The trustee must provide the remainder beneficiary a complete accounting upon reasonable
request
C. The trustee need only provide accountings to income beneficiaries named in the trust instrument
D. The trustee must obtain court approval before disclosing information to a remainder beneficiary
Correct Answer: B
Rationale:
Under UTC Section 813, a qualified beneficiary is entitled to a full accounting upon reasonable request.
Remainder beneficiaries are qualified beneficiaries, so the corporate trustee must comply. Denying the request
or limiting disclosures to income beneficiaries alone violates the code.
,Section 1: Trust Administration Fundamentals Continued
Q3 Question 3 of 100
A trust instrument directs the trustee to distribute income quarterly but is silent on how to handle
capital gains. During the fiscal year the trust realizes $45,000 in capital gains. The trustee must
determine the proper allocation between income and principal. Under the Uniform Principal and
Income Act, capital gains are allocated to
A. income because they increase the trust's liquid assets
B. both income and principal equally to balance distributions
C. principal unless the trust instrument directs otherwise
D. the beneficiary with the greatest financial need at the trustee's discretion
Correct Answer: C
Rationale:
The Uniform Principal and Income Act allocates capital gains to principal by default. Trust instruments can
override this, but when silent, the default applies. Allocating gains to income would unfairly benefit current
income beneficiaries over remainder beneficiaries.
Q4 Question 4 of 100
A grantor funds an irrevocable trust with $500,000 and retains no powers or benefits. Two years
later, a creditor of the grantor attempts to attach trust assets to satisfy an unpaid debt. Under most
state laws, the creditor will
A. succeed because grantor-created trusts are always reachable by the grantor's creditors
B. succeed only if the debt existed before the trust was created
C. fail only if the trust contains a spendthrift clause protecting the grantor
D. fail because the grantor retained no beneficial interest and the transfer was not fraudulent
Correct Answer: D
Rationale:
An irrevocable trust funded by a grantor who retains no beneficial interest generally protects assets from the
grantor's creditors, provided the transfer was not made to defraud creditors. The timing of the debt and the
presence of a spendthrift clause are relevant to edge cases but do not determine the core principle.
Cannon Trust School I - 2026/2027 | Passing Score: 80% | Page 3
, Section 1: Trust Administration Fundamentals Continued
Q5 Question 5 of 100
A trustee discovers that a co-trustee made an imprudent investment that lost $80,000. The other
trustee objected in writing at the time but took no further action. Under the Uniform Trust Code, the
objecting trustee is
A. still potentially liable because objecting alone does not relieve a co-trustee's duty to take
corrective action
B. fully protected because the written objection creates a safe harbor
C. not liable because only the trustee who made the decision bears responsibility
D. liable only if the loss exceeded 10 percent of the trust's total value
Correct Answer: A
Rationale:
Under UTC Section 703, a co-trustee who objects to an action must also take reasonable steps to prevent it. A
mere written objection without further remedial effort does not absolve liability. Each co-trustee has a duty of
oversight.
Q6 Question 6 of 100
A settlor creates a charitable remainder trust that will pay 7 percent of the initial fair market value
annually to the settlor's spouse for life, then distribute the remainder to a qualified charity. The
trust's investments underperform and the annual payout exceeds trust income. The trustee must
A. reduce the payout to match actual trust income for that year
B. pay the fixed annuity amount from principal if income is insufficient
C. suspend payments until investment performance improves
D. petition the court to modify the payout percentage downward
Correct Answer: B
Rationale:
A charitable remainder annuity trust pays a fixed percentage of the initial fair market value regardless of actual
income. If income is insufficient, the trustee must make up the difference from principal. Reducing the payout
would violate the trust terms and IRS requirements.
Cannon Trust School I - 2026/2027 | Passing Score: 80% | Page 4
Cannon Trust School I Exam
2026/2027 Edition
Official Practice Exam - Certified Questions, Verified Correct Answers & Detailed Explanations
Trust Administration Fundamentals | Fiduciary Law Basics | Trust Taxation | Investments & Ethics
Questions Minutes Passing Score Format
100 120 80% Multiple Choice
TABLE OF CONTENTS
Section 1: Trust Administration Fundamentals Q1-Q20
Section 2: Fiduciary Law Basics Q21-Q38
Section 3: Trust Taxation Q39-Q58
Section 4: Investments & Asset Management Q59-Q76
Section
EXAM 5: Ethics & Professional Responsibility
INSTRUCTIONS Q77-Q88
Section 6: Beneficiary Rights & Distributions Q89-Q100
1. This exam consists of 100 multiple-choice questions across 6 sections. You have 120 minutes to complete all
questions.
2. Each question has four answer choices (A, B, C, D). Select the single best answer for each question.
3. A passing score of 80% (80 out of 100 questions correct) is required to pass this exam.
4. Read each question carefully. Every question begins with a realistic scenario relevant to trust administration practice.
5. After completing the exam, review the answer key and detailed rationales provided at the end of this document.
6. The correct answer for each question is printed in green immediately below the question, followed by a detailed
rationale.
7. This practice exam is designed to mirror the content, format, and difficulty of the actual Cannon Trust School I Exam.
8. Do not use any reference materials during the exam. Time yourself to simulate actual testing conditions.
Cannon Trust School I - 2026/2027 | Passing Score: 80% | Page 1
,Section 1: Trust Administration Fundamentals 20 Questions
Q1 Question 1 of 100
A 62-year-old grantor establishes a revocable living trust and names his eldest daughter as
successor trustee. The grantor becomes incapacitated 18 months later. The daughter asks what
authority she now holds over trust assets. Which statement accurately describes her powers?
A. She may manage and distribute trust assets according to the trust terms without court
supervision
B. She must petition the probate court for a conservatorship before acting
C. She can only pay medical bills; all other distributions require beneficiary consent
D. She must liquidate all trust assets and hold proceeds in a court-monitored account
Correct Answer: A
Rationale:
A successor trustee of a revocable living trust steps into the grantor's role upon incapacity and administers the
trust per its terms without court involvement. A conservatorship is unnecessary because the trust already
provides authority. The trustee's powers are not limited to medical expenses, nor is liquidation required.
Q2 Question 2 of 100
A corporate trustee receives a demand from a remainder beneficiary to furnish a full accounting of
trust activities for the past three years. The trustee has been sending annual summaries to the
income beneficiaries only. Under the Uniform Trust Code, which response is correct?
A. The trustee may deny the request because remainder beneficiaries have no right to accountings
B. The trustee must provide the remainder beneficiary a complete accounting upon reasonable
request
C. The trustee need only provide accountings to income beneficiaries named in the trust instrument
D. The trustee must obtain court approval before disclosing information to a remainder beneficiary
Correct Answer: B
Rationale:
Under UTC Section 813, a qualified beneficiary is entitled to a full accounting upon reasonable request.
Remainder beneficiaries are qualified beneficiaries, so the corporate trustee must comply. Denying the request
or limiting disclosures to income beneficiaries alone violates the code.
,Section 1: Trust Administration Fundamentals Continued
Q3 Question 3 of 100
A trust instrument directs the trustee to distribute income quarterly but is silent on how to handle
capital gains. During the fiscal year the trust realizes $45,000 in capital gains. The trustee must
determine the proper allocation between income and principal. Under the Uniform Principal and
Income Act, capital gains are allocated to
A. income because they increase the trust's liquid assets
B. both income and principal equally to balance distributions
C. principal unless the trust instrument directs otherwise
D. the beneficiary with the greatest financial need at the trustee's discretion
Correct Answer: C
Rationale:
The Uniform Principal and Income Act allocates capital gains to principal by default. Trust instruments can
override this, but when silent, the default applies. Allocating gains to income would unfairly benefit current
income beneficiaries over remainder beneficiaries.
Q4 Question 4 of 100
A grantor funds an irrevocable trust with $500,000 and retains no powers or benefits. Two years
later, a creditor of the grantor attempts to attach trust assets to satisfy an unpaid debt. Under most
state laws, the creditor will
A. succeed because grantor-created trusts are always reachable by the grantor's creditors
B. succeed only if the debt existed before the trust was created
C. fail only if the trust contains a spendthrift clause protecting the grantor
D. fail because the grantor retained no beneficial interest and the transfer was not fraudulent
Correct Answer: D
Rationale:
An irrevocable trust funded by a grantor who retains no beneficial interest generally protects assets from the
grantor's creditors, provided the transfer was not made to defraud creditors. The timing of the debt and the
presence of a spendthrift clause are relevant to edge cases but do not determine the core principle.
Cannon Trust School I - 2026/2027 | Passing Score: 80% | Page 3
, Section 1: Trust Administration Fundamentals Continued
Q5 Question 5 of 100
A trustee discovers that a co-trustee made an imprudent investment that lost $80,000. The other
trustee objected in writing at the time but took no further action. Under the Uniform Trust Code, the
objecting trustee is
A. still potentially liable because objecting alone does not relieve a co-trustee's duty to take
corrective action
B. fully protected because the written objection creates a safe harbor
C. not liable because only the trustee who made the decision bears responsibility
D. liable only if the loss exceeded 10 percent of the trust's total value
Correct Answer: A
Rationale:
Under UTC Section 703, a co-trustee who objects to an action must also take reasonable steps to prevent it. A
mere written objection without further remedial effort does not absolve liability. Each co-trustee has a duty of
oversight.
Q6 Question 6 of 100
A settlor creates a charitable remainder trust that will pay 7 percent of the initial fair market value
annually to the settlor's spouse for life, then distribute the remainder to a qualified charity. The
trust's investments underperform and the annual payout exceeds trust income. The trustee must
A. reduce the payout to match actual trust income for that year
B. pay the fixed annuity amount from principal if income is insufficient
C. suspend payments until investment performance improves
D. petition the court to modify the payout percentage downward
Correct Answer: B
Rationale:
A charitable remainder annuity trust pays a fixed percentage of the initial fair market value regardless of actual
income. If income is insufficient, the trustee must make up the difference from principal. Reducing the payout
would violate the trust terms and IRS requirements.
Cannon Trust School I - 2026/2027 | Passing Score: 80% | Page 4
