Cannon Trust School III Final Exam
Review Questions And Answers 2025 2026
Guaranteed A+
D
O
N
O
T
C
All of the following are considered fiduciaries under OCC
Regulation 9, EXCEPT:
O
PY
A. trustee.
B. executor/personal representative.
C. investment advisor in an agency account.
D. custodian with no investment discretion. - CORRECT ANSWER-
D. custodian with no investment discretion.
,Your bank is sole trustee of a credit shelter trust. The trust
portfolio is invested in a diversified portfolio of domestic stocks
and bonds. The current beneficiary requests that the trustee
delegate a portion of its investment management responsibility to
a recognized third-party advisor who specializes in international
investing. The trust is governed by a state recognizing the Prudent
Investor Rule. The trustee should:
D
A. decline the request as an impermissible delegation of its
O
trust powers.
B. agree to the request subject to the review and approval of its
N
risk management committee.
O
C. agree to the request so long as it obtains authorization and
T
indemnification from all beneficiaries and reconfirm on an annual
C
basis.
O
D. agree to the request if satisfied that delegation will promote
investment diversification, and monitor the investment advisor's
PY
activities and performance. - CORRECT ANSWER-D. agree to the
request if satisfied that delegation will promote investment
diversification, and monitor the investment advisor's activities and
performance.
Your client used your firm's standard trust document. He requests
that you draft an amendment to the document. You should:
,A. refer him to several qualified estate planning attorneys.
B. refer him to his accountant before you draft the amendment.
C. draft the amendment and have your firm's counsel review it.
D. draft the amendment using your firm's will manual as a
template. - CORRECT ANSWER-A. refer him to several qualified
estate planning attorneys.
D
Chris Jones is a trust officer with ABC Bank and Trust. Chris just
O
received a phone call from his old roommate, Fred Jones. Fred
works for XYZ Company, an engineering company. Fred told Chris
N
that his company has just developed a new product that will
O
revolutionize its industry. The company has decided not to
announce the product until the product is patented. Chris
T
purchases shares in his own name and also invests a large amount
C
of trust monies for his two largest trust accounts. Which
statement is correct?
O
PY
A. Fred has violated Rule 10b-5, but Chris has not.
B. Chris has not violated 10b-5 because Chris is not an insider.
C. Chris and Fred have not violated 10b-5, but they may have
violated 16b depending on the timing of their trades.
D. Chris and Fred have violated Rule 10b-5 by trading on
nonpublic information. - CORRECT ANSWER-D. Chris and Fred
have violated Rule 10b-5 by trading on nonpublic information.
, A Trust Department Manager is standing in a lunch line at a
crowded restaurant with a Trust Officer. They are surrounded by
individuals who are not bank employees. The trust officer receives
an email on his smartphone and loudly says "Yes! We just closed
the Miller account, a funded irrevocable trust with a $50,000 fee.
That's fantastic, lunch is on me!" Which of the following is the
MOST appropriate response for the Trust Department Manager?
D
O
A. Ask how you can be of assistance in the opening of the
account.
N
O
B. Publicly berate the Trust Officer for a breach of confidentiality.
C. Privately discuss with the Trust Officer that this may have been
T
a breach of confidentiality.
C
D. Offer congratulations and accept their offer to buy lunch. -
O
CORRECT ANSWER-C. Privately discuss with the Trust Officer
that this may have been a breach of confidentiality.
PY
Each of the following is a valid defense to a charge of Self Dealing
by a Trustee, except one. Which of the following is NOT a valid
defense for the Trustee?
A. The Trust Administration Committee approved the action.
B. A specific exculpatory provision is in the instrument permitting
the action.
Review Questions And Answers 2025 2026
Guaranteed A+
D
O
N
O
T
C
All of the following are considered fiduciaries under OCC
Regulation 9, EXCEPT:
O
PY
A. trustee.
B. executor/personal representative.
C. investment advisor in an agency account.
D. custodian with no investment discretion. - CORRECT ANSWER-
D. custodian with no investment discretion.
,Your bank is sole trustee of a credit shelter trust. The trust
portfolio is invested in a diversified portfolio of domestic stocks
and bonds. The current beneficiary requests that the trustee
delegate a portion of its investment management responsibility to
a recognized third-party advisor who specializes in international
investing. The trust is governed by a state recognizing the Prudent
Investor Rule. The trustee should:
D
A. decline the request as an impermissible delegation of its
O
trust powers.
B. agree to the request subject to the review and approval of its
N
risk management committee.
O
C. agree to the request so long as it obtains authorization and
T
indemnification from all beneficiaries and reconfirm on an annual
C
basis.
O
D. agree to the request if satisfied that delegation will promote
investment diversification, and monitor the investment advisor's
PY
activities and performance. - CORRECT ANSWER-D. agree to the
request if satisfied that delegation will promote investment
diversification, and monitor the investment advisor's activities and
performance.
Your client used your firm's standard trust document. He requests
that you draft an amendment to the document. You should:
,A. refer him to several qualified estate planning attorneys.
B. refer him to his accountant before you draft the amendment.
C. draft the amendment and have your firm's counsel review it.
D. draft the amendment using your firm's will manual as a
template. - CORRECT ANSWER-A. refer him to several qualified
estate planning attorneys.
D
Chris Jones is a trust officer with ABC Bank and Trust. Chris just
O
received a phone call from his old roommate, Fred Jones. Fred
works for XYZ Company, an engineering company. Fred told Chris
N
that his company has just developed a new product that will
O
revolutionize its industry. The company has decided not to
announce the product until the product is patented. Chris
T
purchases shares in his own name and also invests a large amount
C
of trust monies for his two largest trust accounts. Which
statement is correct?
O
PY
A. Fred has violated Rule 10b-5, but Chris has not.
B. Chris has not violated 10b-5 because Chris is not an insider.
C. Chris and Fred have not violated 10b-5, but they may have
violated 16b depending on the timing of their trades.
D. Chris and Fred have violated Rule 10b-5 by trading on
nonpublic information. - CORRECT ANSWER-D. Chris and Fred
have violated Rule 10b-5 by trading on nonpublic information.
, A Trust Department Manager is standing in a lunch line at a
crowded restaurant with a Trust Officer. They are surrounded by
individuals who are not bank employees. The trust officer receives
an email on his smartphone and loudly says "Yes! We just closed
the Miller account, a funded irrevocable trust with a $50,000 fee.
That's fantastic, lunch is on me!" Which of the following is the
MOST appropriate response for the Trust Department Manager?
D
O
A. Ask how you can be of assistance in the opening of the
account.
N
O
B. Publicly berate the Trust Officer for a breach of confidentiality.
C. Privately discuss with the Trust Officer that this may have been
T
a breach of confidentiality.
C
D. Offer congratulations and accept their offer to buy lunch. -
O
CORRECT ANSWER-C. Privately discuss with the Trust Officer
that this may have been a breach of confidentiality.
PY
Each of the following is a valid defense to a charge of Self Dealing
by a Trustee, except one. Which of the following is NOT a valid
defense for the Trustee?
A. The Trust Administration Committee approved the action.
B. A specific exculpatory provision is in the instrument permitting
the action.
