Practice Test Geeks(CES) Certified Estate and Trust Specialist Practice Test
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Trust Administration & Fiduciary Duties Flashcards

7 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Trust Administration & Fiduciary Duties flashcards as text

  1. A trustee who invests all trust assets in the stock of a single company is most likely violating which fiduciary duty?

    Answer: Duty to diversify

    The Uniform Prudent Investor Act imposes a duty to diversify trust investments unless circumstances reasonably warrant otherwise.

  2. Under the Uniform Trust Code, a trustee must provide a trust accounting to beneficiaries at least:

    Answer: Annually

    The UTC generally requires trustees to provide an annual accounting to current beneficiaries and other qualified beneficiaries.

  3. Which of the following best describes the 'duty of impartiality' in trust administration?

    Answer: Balancing the interests of current income beneficiaries against remainder beneficiaries

    The duty of impartiality requires the trustee to balance the competing interests of income beneficiaries (who want yield) and remainder beneficiaries (who want growth).

  4. A trustee who uses trust funds to purchase property for personal benefit has committed:

    Answer: Self-dealing, which is a per se breach of fiduciary duty

    Self-dealing is a per se breach of the duty of loyalty, regardless of whether the trustee paid fair market value or the trust suffered a loss.

  5. When a trustee delegates investment management to an outside advisor, the trustee's primary ongoing obligation is to:

    Answer: Monitor the agent's performance and compliance with the delegation scope

    Even when investment management is delegated, the trustee retains a non-delegable duty to monitor the agent's performance and adherence to the scope of delegation.

  6. A discretionary trust provision that allows the trustee to distribute income 'for the health, education, maintenance, and support' of a beneficiary is known as:

    Answer: An ascertainable standard

    HEMS (health, education, maintenance, and support) is a recognized ascertainable standard that limits the trustee's discretion and has important estate tax implications.

  7. Which action would most likely constitute a breach of the trustee's duty to keep trust property separate?

    Answer: Depositing trust income into the trustee's personal checking account temporarily

    Commingling trust funds with the trustee's personal assets is a direct breach of the duty to keep trust property separate and identifiable.