California Trusts and Estates in Real Estate
exam 2026 questions and rationales answers
1. What is a trust in California real estate?
A. A type of mortgage
B. A zoning classification
C. A legal arrangement in which property is held by a trustee for beneficiaries
D. A form of joint tenancy
Rationale: A trust separates legal title and beneficial interests, with the trustee holding and
managing property for the beneficiaries.
2. Who generally holds legal title to real property placed in a trust?
A. The beneficiary
B. The settlor's attorney
C. The trustee
D. The real estate salesperson
Rationale: The trustee generally holds legal title and administers the trust property according to
the trust instrument.
3. The person who creates a trust is commonly called the:
A. Trustee
B. Beneficiary
C. Remainderman
D. Settlor (or trustor)
Rationale: The settlor establishes the trust and transfers property into it.
4. The person or persons entitled to receive benefits from a trust are:
A. Trustees
B. Grantors
C. Executors
D. Beneficiaries
Rationale: Beneficiaries receive the economic benefits of trust property according to the trust
terms.
5. Which party manages trust property?
,A. Beneficiary
B. Trustee
C. Executor
D. Heir
Rationale: The trustee is responsible for administering trust assets and following the trust's
instructions.
6. A California real estate broker dealing with property owned by a trust should primarily
determine:
A. The beneficiary's credit score
B. Who has authority to act for the trust
C. The trustee's employment history
D. The property's original purchase price
Rationale: Confirming the trustee's authority is essential before entering into a transaction
involving trust property.
7. A revocable living trust generally allows the settlor to:
A. Avoid all taxes permanently
B. Eliminate all creditors' rights
C. Modify or revoke the trust while the settlor has the applicable power to do so
D. Transfer property without a deed
Rationale: A revocable trust generally permits the settlor to change or revoke the trust subject to
its terms and applicable law.
8. An irrevocable trust generally differs from a revocable trust because:
A. It cannot own real estate
B. It has no beneficiaries
C. The settlor generally has limited or no power to revoke or amend it unilaterally
D. It cannot have a trustee
Rationale: Irrevocable trusts generally restrict the settlor's ability to revoke or modify the trust.
9. When a trustee sells trust-owned real estate, the trustee is generally acting:
A. Personally as a beneficiary
B. As a tenant
C. In a fiduciary capacity for the trust
D. As an appraiser
, Rationale: A trustee owes fiduciary duties in administering trust property.
10. Which document commonly identifies the trustee's authority in a trust transaction?
A. Property tax bill
B. Purchase receipt
C. Trust instrument or appropriate certification/proof of trust authority
D. Home inspection report
Rationale: The transaction should establish the trustee's authority through appropriate trust
documentation.
11. What is a fiduciary duty?
A. A duty to maximize taxes
B. A duty to act loyally and in the best interests of the person or entity represented
C. A duty to guarantee a profit
D. A duty to avoid written contracts
Rationale: Fiduciaries must act with loyalty, care, and good faith within the scope of their duties.
12. A trustee's primary responsibility regarding trust property is to:
A. Use it for personal benefit
B. Administer it according to the trust and applicable law
C. Give it immediately to the broker
D. Sell it regardless of the trust terms
Rationale: Trustees must follow the governing trust document and applicable legal
requirements.
13. If a trust owns a California home, the deed may identify the:
A. Beneficiary as the sole legal owner in every case
B. Trustee, in the trustee's capacity
C. Real estate broker
D. Escrow officer
Rationale: Legal title to trust property is generally held by the trustee or trustees.
14. A trustee who sells property for less than its reasonable value for personal benefit may
violate:
A. Zoning laws only
B. Fiduciary duties
exam 2026 questions and rationales answers
1. What is a trust in California real estate?
A. A type of mortgage
B. A zoning classification
C. A legal arrangement in which property is held by a trustee for beneficiaries
D. A form of joint tenancy
Rationale: A trust separates legal title and beneficial interests, with the trustee holding and
managing property for the beneficiaries.
2. Who generally holds legal title to real property placed in a trust?
A. The beneficiary
B. The settlor's attorney
C. The trustee
D. The real estate salesperson
Rationale: The trustee generally holds legal title and administers the trust property according to
the trust instrument.
3. The person who creates a trust is commonly called the:
A. Trustee
B. Beneficiary
C. Remainderman
D. Settlor (or trustor)
Rationale: The settlor establishes the trust and transfers property into it.
4. The person or persons entitled to receive benefits from a trust are:
A. Trustees
B. Grantors
C. Executors
D. Beneficiaries
Rationale: Beneficiaries receive the economic benefits of trust property according to the trust
terms.
5. Which party manages trust property?
,A. Beneficiary
B. Trustee
C. Executor
D. Heir
Rationale: The trustee is responsible for administering trust assets and following the trust's
instructions.
6. A California real estate broker dealing with property owned by a trust should primarily
determine:
A. The beneficiary's credit score
B. Who has authority to act for the trust
C. The trustee's employment history
D. The property's original purchase price
Rationale: Confirming the trustee's authority is essential before entering into a transaction
involving trust property.
7. A revocable living trust generally allows the settlor to:
A. Avoid all taxes permanently
B. Eliminate all creditors' rights
C. Modify or revoke the trust while the settlor has the applicable power to do so
D. Transfer property without a deed
Rationale: A revocable trust generally permits the settlor to change or revoke the trust subject to
its terms and applicable law.
8. An irrevocable trust generally differs from a revocable trust because:
A. It cannot own real estate
B. It has no beneficiaries
C. The settlor generally has limited or no power to revoke or amend it unilaterally
D. It cannot have a trustee
Rationale: Irrevocable trusts generally restrict the settlor's ability to revoke or modify the trust.
9. When a trustee sells trust-owned real estate, the trustee is generally acting:
A. Personally as a beneficiary
B. As a tenant
C. In a fiduciary capacity for the trust
D. As an appraiser
, Rationale: A trustee owes fiduciary duties in administering trust property.
10. Which document commonly identifies the trustee's authority in a trust transaction?
A. Property tax bill
B. Purchase receipt
C. Trust instrument or appropriate certification/proof of trust authority
D. Home inspection report
Rationale: The transaction should establish the trustee's authority through appropriate trust
documentation.
11. What is a fiduciary duty?
A. A duty to maximize taxes
B. A duty to act loyally and in the best interests of the person or entity represented
C. A duty to guarantee a profit
D. A duty to avoid written contracts
Rationale: Fiduciaries must act with loyalty, care, and good faith within the scope of their duties.
12. A trustee's primary responsibility regarding trust property is to:
A. Use it for personal benefit
B. Administer it according to the trust and applicable law
C. Give it immediately to the broker
D. Sell it regardless of the trust terms
Rationale: Trustees must follow the governing trust document and applicable legal
requirements.
13. If a trust owns a California home, the deed may identify the:
A. Beneficiary as the sole legal owner in every case
B. Trustee, in the trustee's capacity
C. Real estate broker
D. Escrow officer
Rationale: Legal title to trust property is generally held by the trustee or trustees.
14. A trustee who sells property for less than its reasonable value for personal benefit may
violate:
A. Zoning laws only
B. Fiduciary duties
