TRUST SCHOOL I STUDY EXAM
QUESTIONS AND ANSWERS
freedom of testation - Correct Answers -power to make will or testament specifying
details of where you want your money to go. U.S. allows a lot of freedom, other
countries may require some portions of wealth to go to certain heirs
personal property - Correct Answers -- all property that isn't real
- possessions such as jewelry, furniture, and boats
real property - Correct Answers -physical property such as land and buildings
things that are split I and P - Correct Answers -oil and gas income (depends on state,
some states 10% I 90% P), some trustee fees (for purposes of this, we assume 50/50 I
to P)
simple trust - Correct Answers -requires all of the trust income to be distributed
complex trust - Correct Answers -accumulates income over time and is not required to
make scheduled distributions
FAI - Correct Answers -fiduciary accounting income (aka Trust accounting income
(TAI))
traditional income definition - Correct Answers -return received on use or investment of
principal
unitrust income - Correct Answers -- state law or document redefines "income" as fixed
percentage of value of trust
- sometimes called Total Return Unitrust (TRU) or Total Return Trust (TRT)
- may use rolling average to calculate percentage
sprinkling trust - Correct Answers -A trust that distributes income according to need
rather than some preset formula. The trustee is given discretion
tangible property - Correct Answers -Property that has physical existence and can be
distinguished by the senses of touch and sight.
intangible property - Correct Answers -Property that has no physical form
, example of tangible personal property - Correct Answers -furniture, car, jewelry, clothes,
art
example of tangible real property - Correct Answers -house and land
example of intangible personal property - Correct Answers -stocks and bonds, data on
computer, cash (we determine value)
intangible real property - Correct Answers -rights for things like timber or oil and gas, air
rights, easements (right to traverse across a property)
types of interests in property - Correct Answers -- legal interest: holding title to property
- beneficial interest: receiving economic benefit, but not title
- present and future interests: types of beneficial interest
fee simple - Correct Answers -- present AND future interest
- outright ownership of property
- title holder has full rights of disposition
- no future interest bc it constitutes both present and ability to assign future interest
life estate - Correct Answers -- use or benefit of property for life
- terminates at death of holder
- holder has no rights of disposition at death
- at holder's death, either revert to Grantor or pass to remaindermen
estate for years - Correct Answers -- holder's use or benefit from property is limited to a
specified term of years
- holder generally has no rights of disposition at end of term
- at holder's death, rights either revert to Grantor or pass to remaindermen
determinable interest/subject to a condition - Correct Answers -- property passes to
another so that, upon occurrence, or failure of occurrence, estate shall be transferred
from holding grantee to another
- revert to Grantor (possibility of reverter)
- pass to predetermined remaindermen
- AKA "incentive trust"
reversionary interest - Correct Answers -back to grantor
remainder interest - Correct Answers -The property that passes to a beneficiary after
the expiration of an intervening income interest.
sole ownership - Correct Answers -- titled in name of one person
- full rights to property in life and death
- transfers under decedent's will or intestate estate
QUESTIONS AND ANSWERS
freedom of testation - Correct Answers -power to make will or testament specifying
details of where you want your money to go. U.S. allows a lot of freedom, other
countries may require some portions of wealth to go to certain heirs
personal property - Correct Answers -- all property that isn't real
- possessions such as jewelry, furniture, and boats
real property - Correct Answers -physical property such as land and buildings
things that are split I and P - Correct Answers -oil and gas income (depends on state,
some states 10% I 90% P), some trustee fees (for purposes of this, we assume 50/50 I
to P)
simple trust - Correct Answers -requires all of the trust income to be distributed
complex trust - Correct Answers -accumulates income over time and is not required to
make scheduled distributions
FAI - Correct Answers -fiduciary accounting income (aka Trust accounting income
(TAI))
traditional income definition - Correct Answers -return received on use or investment of
principal
unitrust income - Correct Answers -- state law or document redefines "income" as fixed
percentage of value of trust
- sometimes called Total Return Unitrust (TRU) or Total Return Trust (TRT)
- may use rolling average to calculate percentage
sprinkling trust - Correct Answers -A trust that distributes income according to need
rather than some preset formula. The trustee is given discretion
tangible property - Correct Answers -Property that has physical existence and can be
distinguished by the senses of touch and sight.
intangible property - Correct Answers -Property that has no physical form
, example of tangible personal property - Correct Answers -furniture, car, jewelry, clothes,
art
example of tangible real property - Correct Answers -house and land
example of intangible personal property - Correct Answers -stocks and bonds, data on
computer, cash (we determine value)
intangible real property - Correct Answers -rights for things like timber or oil and gas, air
rights, easements (right to traverse across a property)
types of interests in property - Correct Answers -- legal interest: holding title to property
- beneficial interest: receiving economic benefit, but not title
- present and future interests: types of beneficial interest
fee simple - Correct Answers -- present AND future interest
- outright ownership of property
- title holder has full rights of disposition
- no future interest bc it constitutes both present and ability to assign future interest
life estate - Correct Answers -- use or benefit of property for life
- terminates at death of holder
- holder has no rights of disposition at death
- at holder's death, either revert to Grantor or pass to remaindermen
estate for years - Correct Answers -- holder's use or benefit from property is limited to a
specified term of years
- holder generally has no rights of disposition at end of term
- at holder's death, rights either revert to Grantor or pass to remaindermen
determinable interest/subject to a condition - Correct Answers -- property passes to
another so that, upon occurrence, or failure of occurrence, estate shall be transferred
from holding grantee to another
- revert to Grantor (possibility of reverter)
- pass to predetermined remaindermen
- AKA "incentive trust"
reversionary interest - Correct Answers -back to grantor
remainder interest - Correct Answers -The property that passes to a beneficiary after
the expiration of an intervening income interest.
sole ownership - Correct Answers -- titled in name of one person
- full rights to property in life and death
- transfers under decedent's will or intestate estate
