Quiz 7 Vocab - Test 2

Question 1

revocable trust

Answer 1

The Trustor has the right to change, amend or terminate the trust at any time during their lifetime.

Question 2

irrevocable trust

Answer 2

A trust which cannot be revoked or recalled by the Trustor.

Question 3

spendthrift trust

Answer 3

A trust created to provide a fund for the maintenance of a beneficiary and that places the trust beyond the reach of the beneficiary’s creditors.

Question 4

discretionary trust (sprinkling trust)

Answer 4

A Trust that gives the trustee sole discretion to make the determination as to how the trust assets are distributed.

Question 5

marital deduction

Answer 5

A deduction which allows a deceased spouse to pass all of his or her property to his or her surviving spouse with no federal tax consequences whatsoever.

Question 6

marital deduction trust (A/B trust)

Answer 6

Two trusts, the ‘A’ trust receives all assets left directly to the surviving spouse, the ‘B’ trust is funded with the deceased souses exemption amount.

Question 7

qualified terminable interest trust (QTIP)

Answer 7

used by couples who have children from previous marriages. Trust provides income for surviving spouse then testator’s children receive assets from trust.

Question 8

irrevocable life insurance trust (ILIT)

Answer 8

An irrevocable trust funded by life insurance proceeds. The Trustor is the insured, the trustee is the beneficiary.

Question 9

crummy trust/crummy powers

Answer 9

money that is put in trust that is equal to the amount of the gift tax exclusion, to which the beneficiary has the right to withdraw for 30 days.

Question 10

charitable trusts

Answer 10

A trust set up to benefit the public at large rather than individuals.

Question 11

charitable remainder trust

Answer 11

A trust set up to benefit the Trustor, or beneficiaries, but upon the death of the Trustor or the beneficiaries, the principal of the trust is distributed to a named charity.

Question 12

Cy Pres Doctrine

Answer 12

Means “as near as possible”. If a person leaves property in trust for a charity but at the time of transfer the charity no longer exists, it will go to the charity with the same or similar purpose.

Question 13

Special needs trust

Answer 13

A trust established for the benefit of a beneficiary who is a person with mental or physical disabilities.

Question 14

honorary trust

Answer 14

non-charitable trusts with no beneficiaries. An example of thee would be trusts for the maintenance of cemetery plots.

Question 15

pet trust

Answer 15

A trust wherein an amount of money is left in trust for the benefit and care of a pet.

Question 16

usufruct

Answer 16

The use and enjoyment of property which is vested another.