STEP Documentation & Legal Requirements 4

Question 1

Under U.S. law, what is the maximum period for which a generation-skipping trust can hold assets before the rule against perpetuities terminates it in most traditional states?

Accepted Answer

A life or lives in being at the trust's creation plus 21 years

Answer

The traditional common law rule against perpetuities limits trust duration to lives in being at creation plus 21 years, though many states have modified or abolished this rule.

Question 2

Which federal reporting requirement applies when a trust holds a financial interest in or signature authority over foreign financial accounts exceeding $10,000 at any point during the year?

Accepted Answer

FinCEN Form 114 (FBAR)

Answer

The Foreign Bank Account Report (FBAR), filed on FinCEN Form 114, is required for trusts with foreign financial account interests or signature authority exceeding the $10,000 threshold.

Question 3

What does the Uniform Fiduciary Income and Principal Act (UFIPA) require trustees to document when exercising the power to convert a trust to a unitrust?

Accepted Answer

Notice to all current beneficiaries and reasonableness of the unitrust rate

Answer

UFIPA allows trustees to convert to a unitrust by providing notice to beneficiaries and selecting a unitrust rate between 3% and 5%, with documentation of the decision's reasonableness.

Question 4

In the context of trustee record-keeping obligations, which standard best describes the documentation a trustee must maintain under the Uniform Trust Code §813?

Accepted Answer

Complete records of trust property, liabilities, receipts, and disbursements

Answer

UTC §813 requires trustees to maintain complete and accurate records of all trust property, liabilities, receipts, disbursements, and other transactions affecting the trust estate.

Question 5

Which document formally evidences the transfer of real property into a revocable living trust and must typically be recorded in the county land records?

Accepted Answer

A deed from the individual grantor to himself or herself as trustee

Answer

To fund real property into a revocable trust, a deed conveying the property from the individual(s) to themselves as trustee(s) of the trust must be executed and recorded.

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

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

STEP Documentation & Legal Requirements 4