CES Trust Administration & Fiduciary Duties 2

Question 1

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

Accepted Answer

Duty to diversify

Answer

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

Question 2

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

Accepted Answer

Annually

Answer

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

Question 3

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

Accepted Answer

Balancing the interests of current income beneficiaries against remainder beneficiaries

Answer

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

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

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

Accepted Answer

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

Answer

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.

(CES) Certified Estate and Trust Specialist Practice Test

(CES) Certified Estate and Trust Specialist Practice Test

CES Trust Administration & Fiduciary Duties 2