STEP Trust and Estate Law 1

Question 1

What is the primary role of a trustee in a trust arrangement?

Accepted Answer

To manage assets for beneficiaries

Answer

A trustee has a fiduciary duty to manage the trust assets in the best interest of the beneficiaries, according to the terms of the trust.

Question 2

Which document legally initiates the creation of a trust?

Accepted Answer

Trust deed

Answer

A trust deed, also known as a declaration of trust, is the formal legal document that sets out the terms and conditions of the trust.

Question 3

What happens to a revocable trust upon the death of the settlor?

Accepted Answer

It continues and becomes irrevocable

Answer

A revocable trust typically becomes irrevocable upon the settlor’s death, meaning its terms can no longer be changed.

Question 4

Which of the following best describes a testamentary trust?

Accepted Answer

A trust created by a will upon death

Answer

A testamentary trust is created through a will and only takes effect after the death of the person making the will (the testator).

Question 5

Which party holds legal title to trust property?

Accepted Answer

Trustee

Answer

In a trust, the trustee holds legal title to the property and is responsible for managing it in accordance with the trust's terms.

(STEP) Society of Trust and Estate Practitioners Certification Practice Test