Mostly Tested Relevant Coverage Areas (10 Numbered List)
1. Trust Creation Requirements and Essential Elements (intent, capacity,
ascertainable beneficiaries, trust res, lawful purpose)
2. Types and Classification of Trusts (revocable, irrevocable, testamentary, inter
vivos, charitable, spendthrift, Totten trust)
3. Fiduciary Duties and Responsibilities (duty of loyalty, impartiality, prudence,
accounting, confidentiality)
4. Uniform Trust Code (UTC) Provisions and Qualified Beneficiary Rights
5. Uniform Principal and Income Act (UPIA) Allocation Rules (income vs. principal,
capital gains, depreciation reserves)
6. Fiduciary Income Taxation (grantor trust rules, IRC Sections 671-679, Form 1041,
distributable net income)
7. Estate and Gift Taxation Fundamentals (gross estate inclusion, annual exclusion,
unified credit, marital deduction)
8. Property Law Concepts Relevant to Trusts (real vs. personal property, joint
tenancy, tenancy in common, fixtures, title transfer)
9. Trust Administration and Funding Mechanics (retitling assets, pour-over wills,
beneficiary designations, successor trustee authority)
,10. Fiduciary Investment Principles and Prudent Investor Rule (diversification,
loyalty vs. impartiality, principal preservation)
Cannon Trust School I Certification Exam
Cannon Trust School I Certification Exam
250 Multiple Choice Questions with Answers and Rationales
Question 1: A grantor executes a written trust instrument naming his daughter as
trustee and identifying his two minor grandchildren as the sole beneficiaries of the
trust estate, but he never actually transfers any assets into the trust during his
lifetime. Which essential element for creating a valid trust is most clearly missing
from this arrangement?
☐ The settlor lacked the legal capacity to execute a binding trust instrument
☐ There was no ascertainable beneficiary identified in the trust document
☑ There was no identifiable trust property (res) delivered to the trustee
☐ The trustee did not formally accept the responsibilities of the position
Rationale: A valid trust requires four essential elements: intent, capacity,
ascertainable beneficiaries, and identifiable trust property (res). While the
grandchildren are ascertainable and intent appears present, no assets were
,transferred, meaning the res is missing. A trust cannot exist without property
subject to the fiduciary obligation . 10
Question 2: Under the Uniform Trust Code, when a remainder beneficiary who is a
qualified beneficiary makes a reasonable written request for a complete
accounting of trust activities covering the prior three years, the corporate trustee
must generally respond by doing which of the following?
☐ Denying the request because remainder beneficiaries only receive accountings
at termination
☐ Providing only a summary of income distributions made to current income
beneficiaries
☑ Furnishing a complete accounting of all trust transactions upon reasonable
request
☐ Petitioning the probate court for permission before disclosing any information
Rationale: UTC Section 813 entitles qualified beneficiaries, including remainder
beneficiaries, to a full accounting upon reasonable request. The trustee cannot
limit disclosures to income beneficiaries only, as remainder beneficiaries have a
vested interest in trust administration . 2 5
Question 3: A trust instrument directs the trustee to distribute all net income
quarterly to the grantor's surviving spouse but contains no language addressing
the treatment of realized capital gains from the sale of trust securities. Under the
, Uniform Principal and Income Act default rules, those capital gains should be
allocated to which category?
☐ Income, because they represent liquid proceeds available for distribution
☑ Principal, because capital gains are considered corpus unless the document
directs otherwise
☐ Equally between income and principal to balance beneficiary interests
☐ The beneficiary with the greatest financial need as determined by the trustee
Rationale: Under UPIA, capital gains are allocated to principal by default. This
preserves the trust corpus for remainder beneficiaries. The trust instrument can
override this rule, but when silent, the statutory default applies . 2 5
Question 4: Helen writes a letter to her son stating "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 before her death. Her son
subsequently claims the property under a trust theory. What is the most likely
legal outcome?
☐ A valid inter vivos trust was created because the son accepted the duties
described in the letter
☐ A constructive trust automatically arises whenever a parent expresses such a
wish about property
☑ No trust exists because the letter is precatory language lacking present intent
1. Trust Creation Requirements and Essential Elements (intent, capacity,
ascertainable beneficiaries, trust res, lawful purpose)
2. Types and Classification of Trusts (revocable, irrevocable, testamentary, inter
vivos, charitable, spendthrift, Totten trust)
3. Fiduciary Duties and Responsibilities (duty of loyalty, impartiality, prudence,
accounting, confidentiality)
4. Uniform Trust Code (UTC) Provisions and Qualified Beneficiary Rights
5. Uniform Principal and Income Act (UPIA) Allocation Rules (income vs. principal,
capital gains, depreciation reserves)
6. Fiduciary Income Taxation (grantor trust rules, IRC Sections 671-679, Form 1041,
distributable net income)
7. Estate and Gift Taxation Fundamentals (gross estate inclusion, annual exclusion,
unified credit, marital deduction)
8. Property Law Concepts Relevant to Trusts (real vs. personal property, joint
tenancy, tenancy in common, fixtures, title transfer)
9. Trust Administration and Funding Mechanics (retitling assets, pour-over wills,
beneficiary designations, successor trustee authority)
,10. Fiduciary Investment Principles and Prudent Investor Rule (diversification,
loyalty vs. impartiality, principal preservation)
Cannon Trust School I Certification Exam
Cannon Trust School I Certification Exam
250 Multiple Choice Questions with Answers and Rationales
Question 1: A grantor executes a written trust instrument naming his daughter as
trustee and identifying his two minor grandchildren as the sole beneficiaries of the
trust estate, but he never actually transfers any assets into the trust during his
lifetime. Which essential element for creating a valid trust is most clearly missing
from this arrangement?
☐ The settlor lacked the legal capacity to execute a binding trust instrument
☐ There was no ascertainable beneficiary identified in the trust document
☑ There was no identifiable trust property (res) delivered to the trustee
☐ The trustee did not formally accept the responsibilities of the position
Rationale: A valid trust requires four essential elements: intent, capacity,
ascertainable beneficiaries, and identifiable trust property (res). While the
grandchildren are ascertainable and intent appears present, no assets were
,transferred, meaning the res is missing. A trust cannot exist without property
subject to the fiduciary obligation . 10
Question 2: Under the Uniform Trust Code, when a remainder beneficiary who is a
qualified beneficiary makes a reasonable written request for a complete
accounting of trust activities covering the prior three years, the corporate trustee
must generally respond by doing which of the following?
☐ Denying the request because remainder beneficiaries only receive accountings
at termination
☐ Providing only a summary of income distributions made to current income
beneficiaries
☑ Furnishing a complete accounting of all trust transactions upon reasonable
request
☐ Petitioning the probate court for permission before disclosing any information
Rationale: UTC Section 813 entitles qualified beneficiaries, including remainder
beneficiaries, to a full accounting upon reasonable request. The trustee cannot
limit disclosures to income beneficiaries only, as remainder beneficiaries have a
vested interest in trust administration . 2 5
Question 3: A trust instrument directs the trustee to distribute all net income
quarterly to the grantor's surviving spouse but contains no language addressing
the treatment of realized capital gains from the sale of trust securities. Under the
, Uniform Principal and Income Act default rules, those capital gains should be
allocated to which category?
☐ Income, because they represent liquid proceeds available for distribution
☑ Principal, because capital gains are considered corpus unless the document
directs otherwise
☐ Equally between income and principal to balance beneficiary interests
☐ The beneficiary with the greatest financial need as determined by the trustee
Rationale: Under UPIA, capital gains are allocated to principal by default. This
preserves the trust corpus for remainder beneficiaries. The trust instrument can
override this rule, but when silent, the statutory default applies . 2 5
Question 4: Helen writes a letter to her son stating "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 before her death. Her son
subsequently claims the property under a trust theory. What is the most likely
legal outcome?
☐ A valid inter vivos trust was created because the son accepted the duties
described in the letter
☐ A constructive trust automatically arises whenever a parent expresses such a
wish about property
☑ No trust exists because the letter is precatory language lacking present intent
