Trusts Quiz 6/7

Question 1

1. Trustee on an irrevocable inter vivos trust sold a trust asset to himself for fair market value. Which of the following is the best defense to an action by the beneficiary alleging breach of fiduciary duty?

Answer 1

c. The trustee was authorized to self-deal in the trust instrument.

Question 2

2. The trustee’s duty of loyalty usually prohibits which of the following?

Answer 2

c. Self-dealing.

Question 3

3. A, B, and C are the co-trustees of a testamentary trust. The trust instrument is silent with respect to how decisions regarding the trust should be made. The co-trustees can only act if they all agree on the course of action. True or False?

Answer 3

False

Question 4

4. In administering the trust, the trustee is bound to act as a ______.

Answer 4

prudent man

Question 5

5. A trustee with special skills is obligated to use those special skills. True or false

Answer 5

true

Question 6

6. T is the trustee of an irrevocable trust. Absent some provision to the contrary in the trust instrument, T should act as a ___ in the investment of trust assets.

Answer 6

prudent investor

Question 7

7. T is the trustee of an irrevocable inter vivos trust established by S for the benefit of B. An item of trust property was recently damaged by the tortious conduct of a third party. Who should sue the third party to recover damages?

Answer 7

T

Question 8

8. T is the trustee of a testamentary trust. The trust instrument is silent with respect to his accounting duties. How often should T render accountings to the beneficiaries?

Answer 8

Annually

Question 9

9. T is the trustee of an irrevocable trust. The trust instrument is silent with respect to T’s ability to delegate his duties and powers as trustee. T is prohibited from delegating any part of his duties or powers. True or false?

Answer 9

False

Question 10

10. D established a testamentary trust naming his children as beneficiaries and T as trustee. The trust includes the following exculpatory provision:
    “T, in acting as trustee, shall face no liability for any breach of trust or breach of the duty of loyalty.”
    Is the provision enforceable?

Answer 10

No

Question 11

11. T is the trustee of an irrevocable inter vivos trust. The trust instrument is silent with respect to his accounting duty. To whom should he send his annual accounts?

Answer 11

The beneficiaries