ACP Trust Administration & Probate Filing 2 — Questions and Answers
Question 1: When a trustee distributes trust assets to a beneficiary with a spendthrift provision, which third party claim is MOST likely to be barred?
- A creditor of the beneficiary seeking to attach the interest (Correct answer)
- A co-trustee seeking reimbursement for administration expenses
- The IRS asserting a federal tax lien
- A former spouse seeking court-ordered alimony arrears
Correct answer: A creditor of the beneficiary seeking to attach the interest
Spendthrift provisions protect beneficiaries' interests from voluntary assignment or creditor attachment before distribution.
Question 2: In a pour-over will, the residue of the probate estate is transferred to:
- The state as escheated property
- A previously established inter vivos trust (Correct answer)
- The surviving spouse outright
- A court-supervised guardianship account
Correct answer: A previously established inter vivos trust
A pour-over will directs that probate assets flow into a revocable living trust created before or simultaneously with the will.
Question 3: A successor trustee's first duty upon assuming administration is typically to:
- Immediately invest assets in money market funds
- Prepare and file a federal estate tax return
- Take inventory and secure trust assets (Correct answer)
- Notify all remainder beneficiaries in writing
Correct answer: Take inventory and secure trust assets
A successor trustee must first locate, inventory, and safeguard trust assets to fulfill the duty of prudent administration.
Question 4: Under the Uniform Trust Code, a non-charitable irrevocable trust without ascertainable beneficiaries is generally valid for a maximum of:
- 10 years
- 21 years
- 90 years (Correct answer)
- Perpetually if the grantor specifies
Correct answer: 90 years
The UTC allows honorary or purpose trusts to last up to 21 years, but the Rule Against Perpetuities period under many modern statutes is 90 years.
Question 5: Which probate document formally identifies heirs and their respective shares when a decedent dies intestate?
- Letters Testamentary
- Petition to Determine Succession
- Affidavit of Heirship (Correct answer)
- Decree of Distribution
Correct answer: Affidavit of Heirship
An Affidavit of Heirship is used to establish who the legal heirs are and their fractional interests when no will exists.
Question 6: A trustee who self-deals by purchasing trust property at fair market value without beneficiary consent has:
- Committed no breach if the price is fair
- Breached the duty of loyalty regardless of the price (Correct answer)
- Satisfied the prudent investor standard
- Only breached if a remainder beneficiary objects
Correct answer: Breached the duty of loyalty regardless of the price
The duty of loyalty prohibits self-dealing transactions even at fair market value unless all beneficiaries consent or a court authorizes the transaction.
Question 7: When calculating the elective share under the Uniform Probate Code, the augmented estate generally includes:
- Only assets that pass through probate
- Probate assets plus the decedent's non-probate transfers to others (Correct answer)
- The surviving spouse's separate property
- Only jointly titled marital property
Correct answer: Probate assets plus the decedent's non-probate transfers to others
The UPC augmented estate captures probate assets plus certain non-probate transfers made during the marriage to prevent disinheritance of a surviving spouse.
ACP Trust Administration & Probate Filing 2
When a trustee distributes trust assets to a beneficiary with a spendthrift provision, which third party claim is MOST likely to be barred?