Fiduciary Duties and Legal Compliance Flashcards
6 cards from real CTFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Fiduciary Duties and Legal Compliance flashcards as text
Under the Uniform Trust Code (UTC), what information must a trustee provide to qualified beneficiaries at least annually?
Answer: A report of trust property, liabilities, receipts, and disbursements
The UTC requires trustees to provide qualified beneficiaries with an annual report of trust assets, liabilities, income, and expenses so they can monitor trust administration.
What is the legal consequence of commingling trust assets with a trustee's personal funds?
Answer: It constitutes a breach of fiduciary duty and may result in trustee removal and surcharge
Commingling is a serious breach of fiduciary duty that can expose the trustee to personal liability for losses and may result in court-ordered removal.
Which doctrine allows a court to reform a trust document to conform to the grantor's original intent when a drafting error occurred?
Answer: Equitable reformation
Equitable reformation allows courts to correct drafting mistakes in trust documents to reflect the grantor's true intent at the time of execution.
What is the cy-près doctrine in trust law?
Answer: A court's power to modify a charitable trust's purpose when the original purpose becomes impractical or impossible
The cy-près doctrine allows courts to redirect a charitable trust's purpose to one as close as possible to the original when the stated purpose fails.
A directed trust structure differs from a traditional trust in which key way?
Answer: Investment and distribution decisions are separated from administrative duties
In a directed trust, an investment advisor or distribution committee holds decision-making authority while the administrative trustee carries out instructions, limiting its liability.
Which statute governs the delegation of trustee investment functions to agents such as investment advisors?
Answer: Uniform Prudent Investor Act (UPIA)
The UPIA expressly permits trustees to delegate investment functions to qualified agents and defines the standard of care trustees must apply when selecting, monitoring, and instructing agents.