CES Trust Administration & Fiduciary Duties 3

Question 1

Under the Uniform Prudent Investor Act, which factor is NOT explicitly listed as relevant to the trustee's investment decisions?

Accepted Answer

The trustee's personal investment philosophy

Answer

The UPIA requires trustees to consider economic conditions, beneficiary resources, tax consequences, and other objective factors — not the trustee's personal investment preferences.

Question 2

A trust document is silent on trustee compensation. In most states, the trustee is entitled to:

Accepted Answer

Reasonable compensation based on services rendered

Answer

When a trust is silent on compensation, most state statutes and the Uniform Trust Code allow the trustee to receive reasonable compensation for services.

Question 3

A trustee fails to file required tax returns for a trust, resulting in penalties. This is most likely a breach of:

Accepted Answer

Duty to administer the trust prudently

Answer

The duty to administer the trust prudently encompasses compliance with all legal and tax filing obligations on behalf of the trust.

Question 4

When a co-trustee disagrees with the majority on a trust decision, which action is most appropriate under the Uniform Trust Code?

Accepted Answer

The dissenting trustee should document the objection to avoid personal liability

Answer

A dissenting co-trustee who records their objection is generally protected from liability for the majority's improper decision under the UTC.

Question 5

Which type of trust provision protects a beneficiary's interest from claims of the beneficiary's creditors?

Accepted Answer

Spendthrift clause

Answer

A spendthrift clause prevents beneficiaries from voluntarily transferring their trust interests and shields those interests from creditor attachment.

(CES) Certified Estate and Trust Specialist Practice Test

(CES) Certified Estate and Trust Specialist Practice Test

CES Trust Administration & Fiduciary Duties 3