Trusts & Probate Administration Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Trusts & Probate Administration flashcards as text
What is the 'prudent investor rule' as it applies to trustees?
Answer: Trustees must invest trust assets with reasonable care, skill, and caution considering the overall portfolio
The prudent investor rule requires trustees to make investment decisions that a prudent person would make considering risk, return, diversification, and the trust's purposes.
In probate, what is a 'creditor's claim period'?
Answer: The statutory deadline by which creditors must file claims against the estate
State law sets a creditor's claim period — typically 3 to 6 months after notice — after which untimely claims are generally barred.
A testamentary trust differs from a living trust because it:
Answer: Is created by a will and only takes effect at death
A testamentary trust is established within a will and does not come into existence until the testator dies and the will is admitted to probate.
Which trust provision prevents a beneficiary's creditors from attaching trust distributions before the beneficiary receives them?
Answer: Spendthrift clause
A spendthrift clause restricts beneficiaries from assigning their interest and prevents creditors from reaching trust assets before distribution.
What is 'ancillary probate'?
Answer: A secondary probate proceeding in a state where the decedent owned real property but was not domiciled
Ancillary probate is required in each state where a decedent owned real property, in addition to the primary (domiciliary) probate in the home state.
Under the Uniform Trust Code, what is the trustee's duty of loyalty?
Answer: To administer the trust solely in the interest of the beneficiaries, avoiding self-dealing
The duty of loyalty requires trustees to act exclusively in the beneficiaries' best interests and prohibits transactions that benefit the trustee personally.
What is a 'decanting' power in trust administration?
Answer: The trustee's authority to transfer assets from an existing trust into a new trust with different terms
Trust decanting allows a trustee to pour assets from one trust into a new trust, often to update terms, fix errors, or improve tax efficiency, where state law permits.