CANNON TRUST SCHOOL I EXAM 2026 |
Actual Real Exam Testing And Frequently Testing Questions
With Verified Answers With Rationales
Latest Update
Content Domains:
1. Trust Fundamentals and Types of Trusts
2. Fiduciary Law and Responsibilities
3. Property Law and Estate Administration
4. Gift and Estate Taxation
5. Trust Administration and Accounting
6. Fiduciary Investment Principles
7. Estate Planning Instruments
8. Ethical and Professional Responsibilities
SECTION 1: TRUST FUNDAMENTALS AND TYPES OF TRUSTS (Q1–Q40)
Question 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 person who provides financial advice
D) A person who executes a will
Correct Answer: B
Rationale: A fiduciary is a person who holds a position of trust and confidence
and is responsible for managing property for the benefit of another person.
Examples include trustees, executors, and guardians. Managing one's own property
(A) does not create fiduciary duties, and providing financial advice (C) does
not necessarily establish a fiduciary relationship. Executing a will (D) is an
administrative function.
Question 2
What is the highest duty a trustee owes to beneficiaries?
A) Duty of impartiality
B) Duty to invest prudently
1
,C) Duty of loyalty
D) Duty to account
Correct Answer: C
Rationale: The duty of loyalty requires the trustee to act solely in the
beneficiaries' interests, avoiding self-dealing or conflicts of interest. This
is considered the highest fiduciary duty. The duty to invest prudently (B) is
derived from the duty of loyalty, and accounting (D) is an administrative
obligation.
Question 3
The duty to administer the trust in accordance with its terms is known as:
A) Duty of care
B) Duty to follow trust terms
C) Duty of impartiality
D) Duty to provide information
Correct Answer: B
Rationale: The duty to follow trust terms requires the trustee to administer the
trust strictly in accordance with the trust instrument. The trustee cannot
deviate from the terms even if they believe different actions would be better.
The duty of care (A) refers to the standard of prudent administration.
Question 4
What is a "settlor" in trust law?
A) The person who creates a trust
B) The person who manages a trust
C) The person who benefits from a trust
D) The person who judges trust disputes
Correct Answer: A
Rationale: The settlor (also called grantor or trustor) is the person who
creates the trust by transferring property to the trustee. The trustee (B)
manages the trust, the beneficiary (C) receives benefits from the trust, and
the judge (D) resolves legal disputes.
Question 5
What is a "trustee" in trust law?
A) The person who creates the trust
B) The person who holds legal title to trust property and manages it for
the beneficiaries
C) The person who receives benefits from the trust
2
,D) The person who drafts the trust document
Correct Answer: B
Rationale: The trustee holds legal title to trust property and has fiduciary
duties to manage it for the benefit of the beneficiaries. The settlor creates
the trust (A), the beneficiary receives benefits (C), and an attorney may draft
the document (D).
Question 6
What is a "beneficiary" in trust law?
A) The person who creates the trust
B) The person who manages the trust
C) The person who receives benefits from the trust
D) The person who executes the trust document
Correct Answer: C
Rationale: The beneficiary is the person for whose benefit the trust is created.
They hold equitable title to trust property and are entitled to distributions
as specified in the trust instrument. The settlor creates the trust (A), and
the trustee manages it (B).
Question 7
What is "legal title" in trust law?
A) The interest held by the beneficiary
B) The interest held by the trustee
C) The interest held by the settlor
D) The interest held by the courts
Correct Answer: B
Rationale: The trustee holds legal title to trust property, giving them the
right to manage, invest, and transfer the property. The beneficiary holds
equitable title (A) which gives them the right to enjoy the benefits of the
property. This separation of legal and equitable title is a defining feature
of trusts.
Question 8
What is "equitable title" in trust law?
A) The interest held by the trustee
B) The interest held by the beneficiary
C) The interest held by the settlor
D) The interest held by the government
Correct Answer: B
3
, Rationale: The beneficiary holds equitable title, which entitles them to the
benefit, enjoyment, and use of the trust property. The trustee holds legal
title (A) for the benefit of the beneficiary. Equitable title is enforceable
in equity courts.
Question 9
Which of the following is a requirement for creating a valid express trust?
A) The trust must be in writing
B) The trust must have a definite beneficiary
C) The trust must have a purpose
D) All of the above
Correct Answer: D
Rationale: A valid express trust requires (1) a settlor, (2) a trustee,
(3) definite beneficiary (or charitable purpose), (4) trust property (res),
(5) intent to create a trust, and (6) a valid trust purpose. Depending on
state law, the trust instrument may need to be in writing.
Question 10
The property placed into a trust is known as:
A) The trust corpus
B) The trust principal
C) The trust res
D) All of the above
Correct Answer: D
Rationale: The property contributed to a trust may be called the corpus,
principal, or res. All three terms are used interchangeably in trust law.
Question 11
A trust created for a charitable purpose, such as education or relief of poverty,
is known as a:
A) Charitable trust
B) Sprinkling trust
C) Spendthrift trust
D) Totten trust
Correct Answer: A
Rationale: A charitable trust is created for a charitable purpose. Unlike private
trusts, charitable trusts do not require definite beneficiaries and may exist
in perpetuity. A sprinkling trust (B) gives the trustee discretion to distribute
4
Actual Real Exam Testing And Frequently Testing Questions
With Verified Answers With Rationales
Latest Update
Content Domains:
1. Trust Fundamentals and Types of Trusts
2. Fiduciary Law and Responsibilities
3. Property Law and Estate Administration
4. Gift and Estate Taxation
5. Trust Administration and Accounting
6. Fiduciary Investment Principles
7. Estate Planning Instruments
8. Ethical and Professional Responsibilities
SECTION 1: TRUST FUNDAMENTALS AND TYPES OF TRUSTS (Q1–Q40)
Question 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 person who provides financial advice
D) A person who executes a will
Correct Answer: B
Rationale: A fiduciary is a person who holds a position of trust and confidence
and is responsible for managing property for the benefit of another person.
Examples include trustees, executors, and guardians. Managing one's own property
(A) does not create fiduciary duties, and providing financial advice (C) does
not necessarily establish a fiduciary relationship. Executing a will (D) is an
administrative function.
Question 2
What is the highest duty a trustee owes to beneficiaries?
A) Duty of impartiality
B) Duty to invest prudently
1
,C) Duty of loyalty
D) Duty to account
Correct Answer: C
Rationale: The duty of loyalty requires the trustee to act solely in the
beneficiaries' interests, avoiding self-dealing or conflicts of interest. This
is considered the highest fiduciary duty. The duty to invest prudently (B) is
derived from the duty of loyalty, and accounting (D) is an administrative
obligation.
Question 3
The duty to administer the trust in accordance with its terms is known as:
A) Duty of care
B) Duty to follow trust terms
C) Duty of impartiality
D) Duty to provide information
Correct Answer: B
Rationale: The duty to follow trust terms requires the trustee to administer the
trust strictly in accordance with the trust instrument. The trustee cannot
deviate from the terms even if they believe different actions would be better.
The duty of care (A) refers to the standard of prudent administration.
Question 4
What is a "settlor" in trust law?
A) The person who creates a trust
B) The person who manages a trust
C) The person who benefits from a trust
D) The person who judges trust disputes
Correct Answer: A
Rationale: The settlor (also called grantor or trustor) is the person who
creates the trust by transferring property to the trustee. The trustee (B)
manages the trust, the beneficiary (C) receives benefits from the trust, and
the judge (D) resolves legal disputes.
Question 5
What is a "trustee" in trust law?
A) The person who creates the trust
B) The person who holds legal title to trust property and manages it for
the beneficiaries
C) The person who receives benefits from the trust
2
,D) The person who drafts the trust document
Correct Answer: B
Rationale: The trustee holds legal title to trust property and has fiduciary
duties to manage it for the benefit of the beneficiaries. The settlor creates
the trust (A), the beneficiary receives benefits (C), and an attorney may draft
the document (D).
Question 6
What is a "beneficiary" in trust law?
A) The person who creates the trust
B) The person who manages the trust
C) The person who receives benefits from the trust
D) The person who executes the trust document
Correct Answer: C
Rationale: The beneficiary is the person for whose benefit the trust is created.
They hold equitable title to trust property and are entitled to distributions
as specified in the trust instrument. The settlor creates the trust (A), and
the trustee manages it (B).
Question 7
What is "legal title" in trust law?
A) The interest held by the beneficiary
B) The interest held by the trustee
C) The interest held by the settlor
D) The interest held by the courts
Correct Answer: B
Rationale: The trustee holds legal title to trust property, giving them the
right to manage, invest, and transfer the property. The beneficiary holds
equitable title (A) which gives them the right to enjoy the benefits of the
property. This separation of legal and equitable title is a defining feature
of trusts.
Question 8
What is "equitable title" in trust law?
A) The interest held by the trustee
B) The interest held by the beneficiary
C) The interest held by the settlor
D) The interest held by the government
Correct Answer: B
3
, Rationale: The beneficiary holds equitable title, which entitles them to the
benefit, enjoyment, and use of the trust property. The trustee holds legal
title (A) for the benefit of the beneficiary. Equitable title is enforceable
in equity courts.
Question 9
Which of the following is a requirement for creating a valid express trust?
A) The trust must be in writing
B) The trust must have a definite beneficiary
C) The trust must have a purpose
D) All of the above
Correct Answer: D
Rationale: A valid express trust requires (1) a settlor, (2) a trustee,
(3) definite beneficiary (or charitable purpose), (4) trust property (res),
(5) intent to create a trust, and (6) a valid trust purpose. Depending on
state law, the trust instrument may need to be in writing.
Question 10
The property placed into a trust is known as:
A) The trust corpus
B) The trust principal
C) The trust res
D) All of the above
Correct Answer: D
Rationale: The property contributed to a trust may be called the corpus,
principal, or res. All three terms are used interchangeably in trust law.
Question 11
A trust created for a charitable purpose, such as education or relief of poverty,
is known as a:
A) Charitable trust
B) Sprinkling trust
C) Spendthrift trust
D) Totten trust
Correct Answer: A
Rationale: A charitable trust is created for a charitable purpose. Unlike private
trusts, charitable trusts do not require definite beneficiaries and may exist
in perpetuity. A sprinkling trust (B) gives the trustee discretion to distribute
4
