CANNON TRUST SCHOOL I EXAM 2026 COMPLETE 300
PRACTICE QUESTIONS WITH VERIFIED ANSWERS &
DETAILED RATIONALES LATEST UPDATE
SECTION 1: TRUST FUNDAMENTALS AND TYPES OF TRUSTS
(Q1–Q40)
Question 1
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 2
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 3
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
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,D) The interest held by the government
Correct Answer: B
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 4
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 5
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 6
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
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,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
income among beneficiaries, a spendthrift trust (C) protects beneficiaries from
creditors, and a Totten trust (D) is a bank account payable on death.
Question 7
What is a "revocable trust"?
A) A trust that cannot be changed
B) A trust that can be amended or revoked by the settlor during their lifetime
C) A trust that terminates only at death
D) A trust that is created by will
Correct Answer: B
Rationale: A revocable trust (also called a living trust) allows the settlor to
amend, modify, or revoke the trust during their lifetime. An irrevocable trust
(A) cannot be changed after creation. A testamentary trust (D) is created by
will and becomes effective at death.
Question 8
What is an "irrevocable trust"?
A) A trust that can be amended at any time
B) A trust that cannot be amended or revoked without the consent of all
beneficiaries
C) A trust that terminates automatically
D) A trust created during the settlor's lifetime
Correct Answer: B
Rationale: An irrevocable trust cannot be amended or revoked by the settlor
without the consent of all beneficiaries (and sometimes court approval). Once
assets are transferred to an irrevocable trust, the settlor gives up control,
which has significant estate and gift tax implications.
Question 9
What is a "testamentary trust"?
A) A trust created during the settlor's lifetime
B) A trust created by a will and effective at death
C) A trust that is revocable
D) A trust that has no beneficiaries
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, Correct Answer: B
Rationale: A testamentary trust is created by a will and becomes effective upon
the settlor's death. It is subject to probate and is supervised by the probate
court. An inter vivos trust (A) is created during lifetime and is effective
immediately.
Question 10
What is a "living trust" (inter vivos trust)?
A) A trust created by will
B) A trust created during the settlor's lifetime
C) A trust for the benefit of a living person
D) A trust that terminates at death
Correct Answer: B
Rationale: A living trust (inter vivos trust) is created during the settlor's
lifetime and is effective immediately. It may be revocable or irrevocable.
A testamentary trust (A) is created by will, not during lifetime.
Question 11
What is the primary purpose of a revocable living trust?
A) Asset protection from creditors
B) Reducing estate taxes
C) Probate avoidance
D) Protecting assets for charity
Correct Answer: C
Rationale: The primary purpose of a revocable living trust is to avoid probate.
Because the trust owns the assets, they do not pass through probate and are not
subject to the public nature and expenses of probate. Revocable trusts do not
provide asset protection (A) from the settlor's creditors.
Question 12
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
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PRACTICE QUESTIONS WITH VERIFIED ANSWERS &
DETAILED RATIONALES LATEST UPDATE
SECTION 1: TRUST FUNDAMENTALS AND TYPES OF TRUSTS
(Q1–Q40)
Question 1
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 2
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 3
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
1
,D) The interest held by the government
Correct Answer: B
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 4
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 5
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 6
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
2
,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
income among beneficiaries, a spendthrift trust (C) protects beneficiaries from
creditors, and a Totten trust (D) is a bank account payable on death.
Question 7
What is a "revocable trust"?
A) A trust that cannot be changed
B) A trust that can be amended or revoked by the settlor during their lifetime
C) A trust that terminates only at death
D) A trust that is created by will
Correct Answer: B
Rationale: A revocable trust (also called a living trust) allows the settlor to
amend, modify, or revoke the trust during their lifetime. An irrevocable trust
(A) cannot be changed after creation. A testamentary trust (D) is created by
will and becomes effective at death.
Question 8
What is an "irrevocable trust"?
A) A trust that can be amended at any time
B) A trust that cannot be amended or revoked without the consent of all
beneficiaries
C) A trust that terminates automatically
D) A trust created during the settlor's lifetime
Correct Answer: B
Rationale: An irrevocable trust cannot be amended or revoked by the settlor
without the consent of all beneficiaries (and sometimes court approval). Once
assets are transferred to an irrevocable trust, the settlor gives up control,
which has significant estate and gift tax implications.
Question 9
What is a "testamentary trust"?
A) A trust created during the settlor's lifetime
B) A trust created by a will and effective at death
C) A trust that is revocable
D) A trust that has no beneficiaries
3
, Correct Answer: B
Rationale: A testamentary trust is created by a will and becomes effective upon
the settlor's death. It is subject to probate and is supervised by the probate
court. An inter vivos trust (A) is created during lifetime and is effective
immediately.
Question 10
What is a "living trust" (inter vivos trust)?
A) A trust created by will
B) A trust created during the settlor's lifetime
C) A trust for the benefit of a living person
D) A trust that terminates at death
Correct Answer: B
Rationale: A living trust (inter vivos trust) is created during the settlor's
lifetime and is effective immediately. It may be revocable or irrevocable.
A testamentary trust (A) is created by will, not during lifetime.
Question 11
What is the primary purpose of a revocable living trust?
A) Asset protection from creditors
B) Reducing estate taxes
C) Probate avoidance
D) Protecting assets for charity
Correct Answer: C
Rationale: The primary purpose of a revocable living trust is to avoid probate.
Because the trust owns the assets, they do not pass through probate and are not
subject to the public nature and expenses of probate. Revocable trusts do not
provide asset protection (A) from the settlor's creditors.
Question 12
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
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