CTFA Fiduciary Duties and Legal Compliance 2

Question 1

Under the Uniform Trust Code (UTC), what information must a trustee provide to qualified beneficiaries at least annually?

Accepted Answer

A report of trust property, liabilities, receipts, and disbursements

Answer

A copy of the complete trust instrument

Answer

A certified appraisal of all trust assets

Answer

The trustee's compensation schedule for the year

Question 2

What is the legal consequence of commingling trust assets with a trustee's personal funds?

Accepted Answer

It constitutes a breach of fiduciary duty and may result in trustee removal and surcharge

Answer

It is permissible if the trustee maintains accurate accounting records

Answer

It is allowed only if all current beneficiaries provide written consent

Answer

It reduces the trustee's liability for investment losses in the trust

Question 3

Which doctrine allows a court to reform a trust document to conform to the grantor's original intent when a drafting error occurred?

Accepted Answer

Equitable reformation

Answer

Cy-près doctrine

Answer

Merger doctrine

Answer

Resulting trust doctrine

Question 4

What is the cy-près doctrine in trust law?

Accepted Answer

A court's power to modify a charitable trust's purpose when the original purpose becomes impractical or impossible

Answer

A rule requiring trust assets to be distributed within a generation of the grantor's death

Answer

A doctrine that merges a trustee's legal title with a beneficiary's equitable title

Answer

A rule invalidating trusts that violate public policy

Question 5

A directed trust structure differs from a traditional trust in which key way?

Accepted Answer

Investment and distribution decisions are separated from administrative duties

Answer

The trust is governed by multiple jurisdictions simultaneously

Answer

The trustee has no accountability for any trust decisions

Answer

Beneficiaries serve as co-trustees with full investment authority

Question 6

Which statute governs the delegation of trustee investment functions to agents such as investment advisors?

Accepted Answer

Uniform Prudent Investor Act (UPIA)

Answer

Uniform Trust Code (UTC)

Answer

Employee Retirement Income Security Act (ERISA)

Answer

Uniform Principal and Income Act (UPIA)