1
CANNON TRUST SCHOOL I EXAM 2025/2026 |COMPLETE Q&A
STUDY GUIDE WITH VERIFIED ANSWERS AND DETAILED
RATIONALES | 200+ PRACTICE QUESTIONS | A+ GRADED
Core Domains:
1. Trust Fundamentals and Types of Trusts – Revocable vs. Irrevocable,
Testamentary, Living Trusts, Special Needs Trusts, Charitable Trusts
2. Fiduciary Law and Responsibilities – Trustee Duties, Prudent Investor Rule,
Standards of Care
3. Property Law and Estate Administration – Sole Ownership, Joint Tenancy,
Tenancy in Common, Community Property
4. Gift and Estate Taxation – Basic Exclusion Amount (BEA), Portability, Annual
Exclusion, GST Tax
5. Trust Administration and Accounting – Income vs. Principal, Distributions,
Fiduciary Accounting
6. Fiduciary Investment Principles – Modern Portfolio Theory, Asset Allocation,
Investment Policy Statements
7. Estate Planning Instruments – Wills, Powers of Attorney, Healthcare Directives
8. Ethical and Professional Responsibilities – Conflicts of Interest, Confidentiality,
Regulatory Compliance
Introduction:
This comprehensive Cannon Trust School I Exam preparation resource is
meticulously designed for trust professionals, wealth managers, and financial
advisors preparing for the Cannon Financial Institute Trust School I certification.
The assessment consists of over 200 practice questions that evaluate foundational
trust knowledge, fiduciary principles, estate and gift taxation, and professional
responsibilities. Each question includes a verified correct answer and a detailed
rationale to reinforce concept understanding and improve exam performance. This
resource is based on the 2025/2026 Cannon Trust School I curriculum and is
designed to mirror the actual exam format, difficulty, and content distribution.
pg. 1
,2
SECTION 1: TRUST FUNDAMENTALS AND TYPES OF TRUSTS
Question 1
A trust that is created during the settlor's lifetime and can be amended or
revoked by the settlor is called a:
A. Testamentary trust
B. Irrevocable living trust
C. Revocable living trust
D. Charitable remainder trust
C. Revocable living trust
RATIONALE: A revocable living trust (inter vivos trust) is created during the
settlor's lifetime and can be amended or revoked at any time by the settlor while
competent. It becomes irrevocable upon the settlor's death or incapacity.
Question 2
A trust that is created by a will and becomes effective only upon the death of the
testator is a:
A. Living trust
B. Testamentary trust
C. Inter vivos trust
D. Special needs trust
B. Testamentary trust
RATIONALE: A testamentary trust is created within a will and does not
operate until the will is probated and the testator dies. It cannot be used to avoid
probate.
Question 3
Which of the following is a key characteristic of an irrevocable trust?
pg. 2
,3
A. The settlor may amend the trust at any time
B. The settlor cannot revoke or modify the trust without beneficiary consent or
court order
C. The trust assets are included in the settlor's probate estate
D. The trust automatically terminates after 10 years
B. The settlor cannot revoke or modify the trust without beneficiary consent
or court order
RATIONALE: Irrevocable trusts cannot be modified or terminated unilaterally
by the settlor. They offer asset protection, estate tax benefits, and are permanent
unless beneficiaries agree or a court allows modification.
Question 4
A trust designed to hold assets for a person with a disability without disqualifying
them from government benefits (e.g., Medicaid, SSI) is called a:
A. Charitable trust
B. Spendthrift trust
C. Special needs trust (supplemental needs trust)
D. Totten trust
C. Special needs trust (supplemental needs trust)
RATIONALE: A special needs trust (also called a supplemental needs trust) is
designed to hold assets for a person with a disability without disqualifying them
from government benefits like Medicaid or SSI.
Question 5
A trust that requires mandatory distribution of all income to the beneficiary on an
annual basis, either outright or to a custodial account, is called a:
A. Complex trust
B. Simple trust
pg. 3
, 4
C. Grantor trust
D. Spendthrift trust
B. Simple trust
RATIONALE: A simple trust requires mandatory distribution of all income to
the beneficiary on an annual basis. It does not make distributions of principal and
does not have charitable beneficiaries.
Question 6
Which of the following is the most contractual, least fiduciary relationship?
A. Guardianship
B. Trustee
C. Custodian with no investment discretion
D. Executor
C. Custodian with no investment discretion
RATIONALE: A custodian with no investment discretion has the most
contractual and least fiduciary relationship. The custodian holds assets but does
not exercise investment discretion or make fiduciary decisions.
Question 7
All of the following are considered fiduciaries under OCC Regulation 9, EXCEPT:
A. Trustee
B. Executor/personal representative
C. Investment advisor in an agency account
D. Custodian with no investment discretion
D. Custodian with no investment discretion
RATIONALE: Under OCC Regulation 9, fiduciaries include trustees,
executors/personal representatives, and investment advisors in agency accounts.
pg. 4
CANNON TRUST SCHOOL I EXAM 2025/2026 |COMPLETE Q&A
STUDY GUIDE WITH VERIFIED ANSWERS AND DETAILED
RATIONALES | 200+ PRACTICE QUESTIONS | A+ GRADED
Core Domains:
1. Trust Fundamentals and Types of Trusts – Revocable vs. Irrevocable,
Testamentary, Living Trusts, Special Needs Trusts, Charitable Trusts
2. Fiduciary Law and Responsibilities – Trustee Duties, Prudent Investor Rule,
Standards of Care
3. Property Law and Estate Administration – Sole Ownership, Joint Tenancy,
Tenancy in Common, Community Property
4. Gift and Estate Taxation – Basic Exclusion Amount (BEA), Portability, Annual
Exclusion, GST Tax
5. Trust Administration and Accounting – Income vs. Principal, Distributions,
Fiduciary Accounting
6. Fiduciary Investment Principles – Modern Portfolio Theory, Asset Allocation,
Investment Policy Statements
7. Estate Planning Instruments – Wills, Powers of Attorney, Healthcare Directives
8. Ethical and Professional Responsibilities – Conflicts of Interest, Confidentiality,
Regulatory Compliance
Introduction:
This comprehensive Cannon Trust School I Exam preparation resource is
meticulously designed for trust professionals, wealth managers, and financial
advisors preparing for the Cannon Financial Institute Trust School I certification.
The assessment consists of over 200 practice questions that evaluate foundational
trust knowledge, fiduciary principles, estate and gift taxation, and professional
responsibilities. Each question includes a verified correct answer and a detailed
rationale to reinforce concept understanding and improve exam performance. This
resource is based on the 2025/2026 Cannon Trust School I curriculum and is
designed to mirror the actual exam format, difficulty, and content distribution.
pg. 1
,2
SECTION 1: TRUST FUNDAMENTALS AND TYPES OF TRUSTS
Question 1
A trust that is created during the settlor's lifetime and can be amended or
revoked by the settlor is called a:
A. Testamentary trust
B. Irrevocable living trust
C. Revocable living trust
D. Charitable remainder trust
C. Revocable living trust
RATIONALE: A revocable living trust (inter vivos trust) is created during the
settlor's lifetime and can be amended or revoked at any time by the settlor while
competent. It becomes irrevocable upon the settlor's death or incapacity.
Question 2
A trust that is created by a will and becomes effective only upon the death of the
testator is a:
A. Living trust
B. Testamentary trust
C. Inter vivos trust
D. Special needs trust
B. Testamentary trust
RATIONALE: A testamentary trust is created within a will and does not
operate until the will is probated and the testator dies. It cannot be used to avoid
probate.
Question 3
Which of the following is a key characteristic of an irrevocable trust?
pg. 2
,3
A. The settlor may amend the trust at any time
B. The settlor cannot revoke or modify the trust without beneficiary consent or
court order
C. The trust assets are included in the settlor's probate estate
D. The trust automatically terminates after 10 years
B. The settlor cannot revoke or modify the trust without beneficiary consent
or court order
RATIONALE: Irrevocable trusts cannot be modified or terminated unilaterally
by the settlor. They offer asset protection, estate tax benefits, and are permanent
unless beneficiaries agree or a court allows modification.
Question 4
A trust designed to hold assets for a person with a disability without disqualifying
them from government benefits (e.g., Medicaid, SSI) is called a:
A. Charitable trust
B. Spendthrift trust
C. Special needs trust (supplemental needs trust)
D. Totten trust
C. Special needs trust (supplemental needs trust)
RATIONALE: A special needs trust (also called a supplemental needs trust) is
designed to hold assets for a person with a disability without disqualifying them
from government benefits like Medicaid or SSI.
Question 5
A trust that requires mandatory distribution of all income to the beneficiary on an
annual basis, either outright or to a custodial account, is called a:
A. Complex trust
B. Simple trust
pg. 3
, 4
C. Grantor trust
D. Spendthrift trust
B. Simple trust
RATIONALE: A simple trust requires mandatory distribution of all income to
the beneficiary on an annual basis. It does not make distributions of principal and
does not have charitable beneficiaries.
Question 6
Which of the following is the most contractual, least fiduciary relationship?
A. Guardianship
B. Trustee
C. Custodian with no investment discretion
D. Executor
C. Custodian with no investment discretion
RATIONALE: A custodian with no investment discretion has the most
contractual and least fiduciary relationship. The custodian holds assets but does
not exercise investment discretion or make fiduciary decisions.
Question 7
All of the following are considered fiduciaries under OCC Regulation 9, EXCEPT:
A. Trustee
B. Executor/personal representative
C. Investment advisor in an agency account
D. Custodian with no investment discretion
D. Custodian with no investment discretion
RATIONALE: Under OCC Regulation 9, fiduciaries include trustees,
executors/personal representatives, and investment advisors in agency accounts.
pg. 4
