CANNON TRUST SCHOOL I EXAM (2026|2027)
EXAM 200 ACTUAL QUESTIONS AND CORRECT
ANSWERS WITH RATIONALES ALREADY
GRADED A+ PASS GUARANTEED
The Cannon Trust School I Exam assesses foundational competencies in trust
administration, fiduciary law, property ownership, and estate planning. This
practice set contains 200 multiple-choice questions organized by subject area, each
with a single correct answer and a detailed rationale explaining the underlying rule
or principle. Questions are designed to mirror the content domains and difficulty
level of the actual Cannon Trust School I examination. Topics are distributed
across the following areas: Trust Fundamentals and Types (Q1–30), Fiduciary
Duties and Standards (Q31–60), Property Law and Ownership (Q61–90), Principal
and Income Accounting (Q91–120), Estate and Tax Planning (Q121–150), Trust
Administration and Investments (Q151–175), and Ethics and Professional
Responsibility (Q176–200).
Section 1: Trust Fundamentals and Types
1. Which of the following best defines a “fiduciary”?
A. A person who manages their own property
B. A person who holds a position of trust and confidence involving the
management of property for another
C. A court officer who oversees probate
D. A beneficiary of a trust
Correct Answer: B
Rationale: A fiduciary is someone who acts in a position of trust, managing assets
for the benefit of another. This relationship is characterized by unequal bargaining
,power, where one party places trust and confidence in the other, creating a duty to
act in the other’s best interest.
2. Which of the following is a required element to create a valid trust under
UTC Section 402?
A. Notarization of the trust instrument
B. Recording the trust in the county land records
C. Manifestation of present intent to create the trust
D. Approval by the probate court
Correct Answer: C
Rationale: UTC Section 402 requires capacity, intent to create the trust, a definite
or ascertainable beneficiary, and duties for the trustee. Neither notarization nor
recording is required, and court approval is not a creation requirement.
3. A “testamentary trust” is created:
A. During the grantor’s lifetime
B. By a provision in a will
C. By operation of law without a written document
D. Only for charitable purposes
Correct Answer: B
Rationale: A testamentary trust is established by the terms of a will and becomes
effective upon the testator’s death. It is distinguishable from an inter vivo trust,
which is created during the settlor’s lifetime.
4. Helen writes to her son: “I would like you to have my lake house someday,
so please take care of it for me,” but she never transfers title, delivers a deed,
or executes any trust instrument. What is the most likely result?
A. A valid inter vivo trust was created because the son accepted the duties in the
letter
,B. A constructive trust automatically arises whenever a parent expresses such a
wish
C. No trust was created because Helen did not manifest a present intent to create a
trust and did not transfer the property
D. A resulting trust arises in favor of the son because he performed services
Correct Answer: C
Rationale: The letter expresses only a hope (“I would like you to have”) rather
than a present command imposing enforceable duties. Courts treat such language
as precatory and insufficient to create a trust. Additionally, no property was ever
transferred, so there is no trust res.
5. Which of the following transfers are includable in the gross estate of the
donor if made within 3 years of death?
A. Gift of $8,000 cash value life insurance policy to son
B. Gift of $9,800 cash to daughter
C. Gift of $10,000 cash to friend
D. Gift of $5,000 stock in a closely held company to parent
Correct Answer: A
Rationale: Gifts of life insurance policies made within three years of death are
includable in the gross estate under IRC § 2035. Cash gifts and stock gifts
generally are not brought back into the estate merely because they were made
within three years of death.
6. Maria establishes a revocable living trust that earns $40,000 of taxable
interest and dividends. Who is responsible for reporting and paying the
federal income tax on this income?
A. The trust, on Form 1041, because the trustee is a separate legal entity
B. Maria, on her individual Form 1040, because a revocable trust is a grantor trust
under IRC Sections 671 and 676
C. The beneficiaries, on Schedule K-1, because income follows the beneficial
, interest
D. No one owes tax because revocable trusts are exempt from federal income
taxation
Correct Answer: B
Rationale: A revocable trust is a grantor trust under IRC §§ 671 and 676. All items
of income, deduction, and credit are reported on the grantor’s individual Form
1040 regardless of who serves as trustee. Form 1041 is used only as an
informational return.
7. A client establishes a revocable living trust but dies before retitling her
brokerage account or updating her 401(k)-beneficiary designation, although
her will contains a pour-over provision to the trust. How will these two assets
reach the trust?
A. The brokerage account passes through probate under the pour-over will, while
the 401(k) passes directly to the trust only if the trust is named beneficiary or the
designation defaults to the estate
B. Both assets pass to the trust automatically because the trust deed controls all
property of the settlor
C. Neither asset can ever be transferred to a trust after the settlor’s death
D. The successor trustee may simply retitle both accounts without any court or
beneficiary-designation process
Correct Answer: A
Rationale: A pour-over will catches probate assets, such as a brokerage account
still titled in the settlor’s name. Retirement plan assets pass outside the will
entirely, governed by the plan’s beneficiary designation. If the trust is not named,
the plan terms control.
8. Under joint tenancy with rights of survivorship, when one tenant dies,
which of the following best describes the result?
EXAM 200 ACTUAL QUESTIONS AND CORRECT
ANSWERS WITH RATIONALES ALREADY
GRADED A+ PASS GUARANTEED
The Cannon Trust School I Exam assesses foundational competencies in trust
administration, fiduciary law, property ownership, and estate planning. This
practice set contains 200 multiple-choice questions organized by subject area, each
with a single correct answer and a detailed rationale explaining the underlying rule
or principle. Questions are designed to mirror the content domains and difficulty
level of the actual Cannon Trust School I examination. Topics are distributed
across the following areas: Trust Fundamentals and Types (Q1–30), Fiduciary
Duties and Standards (Q31–60), Property Law and Ownership (Q61–90), Principal
and Income Accounting (Q91–120), Estate and Tax Planning (Q121–150), Trust
Administration and Investments (Q151–175), and Ethics and Professional
Responsibility (Q176–200).
Section 1: Trust Fundamentals and Types
1. Which of the following best defines a “fiduciary”?
A. A person who manages their own property
B. A person who holds a position of trust and confidence involving the
management of property for another
C. A court officer who oversees probate
D. A beneficiary of a trust
Correct Answer: B
Rationale: A fiduciary is someone who acts in a position of trust, managing assets
for the benefit of another. This relationship is characterized by unequal bargaining
,power, where one party places trust and confidence in the other, creating a duty to
act in the other’s best interest.
2. Which of the following is a required element to create a valid trust under
UTC Section 402?
A. Notarization of the trust instrument
B. Recording the trust in the county land records
C. Manifestation of present intent to create the trust
D. Approval by the probate court
Correct Answer: C
Rationale: UTC Section 402 requires capacity, intent to create the trust, a definite
or ascertainable beneficiary, and duties for the trustee. Neither notarization nor
recording is required, and court approval is not a creation requirement.
3. A “testamentary trust” is created:
A. During the grantor’s lifetime
B. By a provision in a will
C. By operation of law without a written document
D. Only for charitable purposes
Correct Answer: B
Rationale: A testamentary trust is established by the terms of a will and becomes
effective upon the testator’s death. It is distinguishable from an inter vivo trust,
which is created during the settlor’s lifetime.
4. Helen writes to her son: “I would like you to have my lake house someday,
so please take care of it for me,” but she never transfers title, delivers a deed,
or executes any trust instrument. What is the most likely result?
A. A valid inter vivo trust was created because the son accepted the duties in the
letter
,B. A constructive trust automatically arises whenever a parent expresses such a
wish
C. No trust was created because Helen did not manifest a present intent to create a
trust and did not transfer the property
D. A resulting trust arises in favor of the son because he performed services
Correct Answer: C
Rationale: The letter expresses only a hope (“I would like you to have”) rather
than a present command imposing enforceable duties. Courts treat such language
as precatory and insufficient to create a trust. Additionally, no property was ever
transferred, so there is no trust res.
5. Which of the following transfers are includable in the gross estate of the
donor if made within 3 years of death?
A. Gift of $8,000 cash value life insurance policy to son
B. Gift of $9,800 cash to daughter
C. Gift of $10,000 cash to friend
D. Gift of $5,000 stock in a closely held company to parent
Correct Answer: A
Rationale: Gifts of life insurance policies made within three years of death are
includable in the gross estate under IRC § 2035. Cash gifts and stock gifts
generally are not brought back into the estate merely because they were made
within three years of death.
6. Maria establishes a revocable living trust that earns $40,000 of taxable
interest and dividends. Who is responsible for reporting and paying the
federal income tax on this income?
A. The trust, on Form 1041, because the trustee is a separate legal entity
B. Maria, on her individual Form 1040, because a revocable trust is a grantor trust
under IRC Sections 671 and 676
C. The beneficiaries, on Schedule K-1, because income follows the beneficial
, interest
D. No one owes tax because revocable trusts are exempt from federal income
taxation
Correct Answer: B
Rationale: A revocable trust is a grantor trust under IRC §§ 671 and 676. All items
of income, deduction, and credit are reported on the grantor’s individual Form
1040 regardless of who serves as trustee. Form 1041 is used only as an
informational return.
7. A client establishes a revocable living trust but dies before retitling her
brokerage account or updating her 401(k)-beneficiary designation, although
her will contains a pour-over provision to the trust. How will these two assets
reach the trust?
A. The brokerage account passes through probate under the pour-over will, while
the 401(k) passes directly to the trust only if the trust is named beneficiary or the
designation defaults to the estate
B. Both assets pass to the trust automatically because the trust deed controls all
property of the settlor
C. Neither asset can ever be transferred to a trust after the settlor’s death
D. The successor trustee may simply retitle both accounts without any court or
beneficiary-designation process
Correct Answer: A
Rationale: A pour-over will catches probate assets, such as a brokerage account
still titled in the settlor’s name. Retirement plan assets pass outside the will
entirely, governed by the plan’s beneficiary designation. If the trust is not named,
the plan terms control.
8. Under joint tenancy with rights of survivorship, when one tenant dies,
which of the following best describes the result?
