TRUSTS AND ESTATES PRACTICE EXAM
100 QUESTIoNS wITh ANSwERS AND
RATIoNAlES PASS, PASS!!!!!! EXAM
AlREADY GRADED A+ EXAM
SECTION A: NATURE AND DEFINITIONS
Question 1
A trust is best defined as:
A) A contract between two parties for the transfer of property
B) A fiduciary arrangement where a person holds property for the benefit of another
C) A corporation formed for charitable purposes
D) A government agency that manages assets
Answer: B) A fiduciary arrangement where a person holds property for the benefit of another
Rationale: A trust is a fiduciary relationship in which a trustee holds legal title to property for
the benefit of another person (the beneficiary). The trustee has a duty to manage the property
for the benefit of the beneficiary.
Question 2
The person who creates a trust is called the:
A) Trustee
B) Beneficiary
C) Settlor (or grantor)
D) Executor
Answer: C) Settlor (or grantor)
Rationale: The settlor (also called grantor or trustor) is the person who creates the trust by
transferring property to the trustee. The settlor establishes the terms of the trust.
,Question 3
The person who holds legal title to trust property is called the:
A) Settlor
B) Beneficiary
C) Trustee
D) Executor
Answer: C) Trustee
Rationale: The trustee holds legal title to the trust property and manages it for the benefit of
the beneficiaries. The trustee has fiduciary duties to the beneficiaries.
Question 4
The person who benefits from a trust is called the:
A) Settlor
B) Trustee
C) Beneficiary
D) Executor
Answer: C) Beneficiary
Rationale: The beneficiary is the person (or entity) who receives the benefits of the trust. The
beneficiary has equitable title to the trust property.
Question 5
The trust property is also known as:
A) The trust estate
B) The trust corpus
C) The trust principal
D) All of the above
Answer: D) All of the above
Rationale: The trust property is referred to as the trust estate, trust corpus, or trust principal.
All three terms are used interchangeably.
,Question 6
The three certainties required for a valid trust are:
A) Certainty of parties, property, and purpose
B) Certainty of intent, subject matter, and objects
C) Certainty of time, place, and manner
D) Certainty of consideration, form, and duration
Answer: B) Certainty of intent, subject matter, and objects
Rationale: For a trust to be valid, there must be certainty of intention to create a trust, certainty
of subject matter (property), and certainty of objects (beneficiaries).
Question 7
A trust can be created:
A) Only during the settlor's lifetime
B) Only upon the settlor's death
C) Either during the settlor's lifetime or upon death
D) Only by court order
Answer: C) Either during the settlor's lifetime or upon death
Rationale: Trusts can be created inter vivos (during the settlor's lifetime) or testamentary (upon
the settlor's death through a will). Both are valid forms of trust creation.
Question 8
A "testamentary trust" is created:
A) During the settlor's lifetime
B) Through a will
C) By court order
D) By operation of law
Answer: B) Through a will
Rationale: A testamentary trust is created through a will and takes effect upon the settlor's
death. The will must clearly establish the trust terms.
, Question 9
An "inter vivos trust" is created:
A) During the settlor's lifetime
B) Through a will
C) By court order
D) By operation of law
Answer: A) During the settlor's lifetime
Rationale: An inter vivos trust (living trust) is created during the settlor's lifetime and becomes
effective immediately. It is not dependent on the settlor's death.
Question 10
A "charitable trust" is one that:
A) Benefits the trustee
B) Benefits a specific individual
C) Benefits the public or a charitable purpose
D) Benefits the settlor
Answer: C) Benefits the public or a charitable purpose
Rationale: A charitable trust is created for charitable purposes, such as education, religion, or
relief of poverty. It benefits the public rather than specific individuals.
SECTION B: TYPES OF TRUSTS
Question 11
A "revocable trust" is one that:
A) Cannot be changed
B) Can be changed by the settlor during their lifetime
C) Can only be changed by the beneficiaries
D) Can only be changed by court order
Answer: B) Can be changed by the settlor during their lifetime
100 QUESTIoNS wITh ANSwERS AND
RATIoNAlES PASS, PASS!!!!!! EXAM
AlREADY GRADED A+ EXAM
SECTION A: NATURE AND DEFINITIONS
Question 1
A trust is best defined as:
A) A contract between two parties for the transfer of property
B) A fiduciary arrangement where a person holds property for the benefit of another
C) A corporation formed for charitable purposes
D) A government agency that manages assets
Answer: B) A fiduciary arrangement where a person holds property for the benefit of another
Rationale: A trust is a fiduciary relationship in which a trustee holds legal title to property for
the benefit of another person (the beneficiary). The trustee has a duty to manage the property
for the benefit of the beneficiary.
Question 2
The person who creates a trust is called the:
A) Trustee
B) Beneficiary
C) Settlor (or grantor)
D) Executor
Answer: C) Settlor (or grantor)
Rationale: The settlor (also called grantor or trustor) is the person who creates the trust by
transferring property to the trustee. The settlor establishes the terms of the trust.
,Question 3
The person who holds legal title to trust property is called the:
A) Settlor
B) Beneficiary
C) Trustee
D) Executor
Answer: C) Trustee
Rationale: The trustee holds legal title to the trust property and manages it for the benefit of
the beneficiaries. The trustee has fiduciary duties to the beneficiaries.
Question 4
The person who benefits from a trust is called the:
A) Settlor
B) Trustee
C) Beneficiary
D) Executor
Answer: C) Beneficiary
Rationale: The beneficiary is the person (or entity) who receives the benefits of the trust. The
beneficiary has equitable title to the trust property.
Question 5
The trust property is also known as:
A) The trust estate
B) The trust corpus
C) The trust principal
D) All of the above
Answer: D) All of the above
Rationale: The trust property is referred to as the trust estate, trust corpus, or trust principal.
All three terms are used interchangeably.
,Question 6
The three certainties required for a valid trust are:
A) Certainty of parties, property, and purpose
B) Certainty of intent, subject matter, and objects
C) Certainty of time, place, and manner
D) Certainty of consideration, form, and duration
Answer: B) Certainty of intent, subject matter, and objects
Rationale: For a trust to be valid, there must be certainty of intention to create a trust, certainty
of subject matter (property), and certainty of objects (beneficiaries).
Question 7
A trust can be created:
A) Only during the settlor's lifetime
B) Only upon the settlor's death
C) Either during the settlor's lifetime or upon death
D) Only by court order
Answer: C) Either during the settlor's lifetime or upon death
Rationale: Trusts can be created inter vivos (during the settlor's lifetime) or testamentary (upon
the settlor's death through a will). Both are valid forms of trust creation.
Question 8
A "testamentary trust" is created:
A) During the settlor's lifetime
B) Through a will
C) By court order
D) By operation of law
Answer: B) Through a will
Rationale: A testamentary trust is created through a will and takes effect upon the settlor's
death. The will must clearly establish the trust terms.
, Question 9
An "inter vivos trust" is created:
A) During the settlor's lifetime
B) Through a will
C) By court order
D) By operation of law
Answer: A) During the settlor's lifetime
Rationale: An inter vivos trust (living trust) is created during the settlor's lifetime and becomes
effective immediately. It is not dependent on the settlor's death.
Question 10
A "charitable trust" is one that:
A) Benefits the trustee
B) Benefits a specific individual
C) Benefits the public or a charitable purpose
D) Benefits the settlor
Answer: C) Benefits the public or a charitable purpose
Rationale: A charitable trust is created for charitable purposes, such as education, religion, or
relief of poverty. It benefits the public rather than specific individuals.
SECTION B: TYPES OF TRUSTS
Question 11
A "revocable trust" is one that:
A) Cannot be changed
B) Can be changed by the settlor during their lifetime
C) Can only be changed by the beneficiaries
D) Can only be changed by court order
Answer: B) Can be changed by the settlor during their lifetime
