Trusts: A Comprehensive Guide to the Nature of Trusts

Question 1

Who is responsible for administering the trust and managing the trust property?

Accepted Answer

Trustee

Answer

Settlor

Answer

Beneficiary

Answer

Protector

Question 2

Which type of trust is created by a written document?

Accepted Answer

Express trust

Answer

Implied trust

Answer

Resulting trust

Answer

Constructive trust

Question 3

What is the key difference between a fixed trust and a discretionary trust?

Accepted Answer

Fixed trusts give beneficiaries fixed entitlements, while discretionary trusts give trustees discretion in distributing income and capital

Answer

Discretionary trusts give beneficiaries fixed entitlements, while fixed trusts give trustees discretion in distributing income and capital

Answer

Fixed trusts can only be created by a will, while discretionary trusts can be created by any means

Answer

There is no difference between fixed and discretionary trusts

Question 4

What is the principle of tracing in the context of trusts?

Accepted Answer

The ability to follow trust property if it has been transferred into different forms

Answer

The ability to identify the beneficiaries of a trust

Answer

The ability to ensure that the trustee has acted in accordance with their fiduciary duties

Answer

The ability to create a new trust

Question 5

Who is NOT under a duty to the beneficiary of a trust?

Accepted Answer

Beneficiary

Answer

Settlor

Answer

Trustee

Answer

Protector

Question 6

Which of the following is NOT an essential element for the creation of a valid trust?

Accepted Answer

Contract

Answer

Settlor

Answer

Beneficiary

Question 7

Which element is NOT essential for creating a valid trust?

Accepted Answer

A consideration or payment to establish the trust

Answer

A settlor who creates the trust

Answer

A trustee who holds and manages the trust property

Answer

A beneficiary who receives the benefit of the trust

Question 8

Who is legally obligated to hold and manage the trust property?

Accepted Answer

Trustee

Answer

Settlor

Answer

Beneficiary

Answer

Protector

Question 9

True or False: Oral agreements are sufficient to establish a valid trust.

Accepted Answer

False

Answer

True

Question 10

What is the legal concept that allows a beneficiary to follow trust property into the hands of third parties?

Accepted Answer

Tracing

Answer

Subrogation

Answer

Constructive trust

Answer

Resulting trust

Question 11

Which of the following is NOT a potential obligation of a trustee?

Accepted Answer

Intentionally violating the terms of the trust

Answer

Exercising reasonable care and diligence in managing the trust

Answer

Acting solely in the best interests of the beneficiaries

Answer

Providing regular accounting and financial reports

Question 12

What is the primary function of a protector in a trust?

Accepted Answer

Monitoring the trustee's actions and decisions

Answer

Providing investment advice to the trustee

Answer

Enforcing the terms of the trust

Answer

Distributing trust assets to beneficiaries

Question 13

Which element is not essential for the creation of a valid trust?

Accepted Answer

Consideration

Answer

Settlor

Answer

Trustee

Answer

Beneficiary

Question 14

Who has the primary responsibility for managing and administering the trust property?

Accepted Answer

Trustee

Answer

Settlor

Answer

Beneficiary

Answer

Solicitor

Question 15

Which characteristic is unique to an express trust?

Accepted Answer

Created intentionally by the settlor

Answer

Arises by operation of law

Answer

Requires a written declaration

Answer

Cannot be modified or terminated

Question 16

What principle requires trustees to act solely in the best interests of the beneficiaries?

Accepted Answer

Principle of loyalty

Answer

Principle of prudence

Answer

Principle of impartiality

Answer

Principle of confidentiality

Question 17

Which rule allows the settlor to retain some control over the trust property?

Accepted Answer

Power of revocation

Answer

Rule against perpetuities

Answer

Rule of remoteness

Answer

Cy-près doctrine

Question 18

Which characteristic is unique to a resulting trust?

Accepted Answer

Arises by operation of law

Answer

Created intentionally by the settlor

Answer

Requires a written declaration

Answer

Cannot be rebutted by evidence

Question 19

What was the main purpose of the Trustee Act 2000?

Accepted Answer

To codify and modernize the law of trusts in the UK

Answer

To abolish the requirement of writing for the creation of trusts

Answer

To extend the powers of trustees

Answer

To establish a new system for the registration of trusts

Question 20

Which of these is NOT a right a beneficiary typically has under a trust?

Accepted Answer

The right to sue the trustee personally

Answer

The right to receive information about the trust

Answer

The right to ensure the trust's terms are followed

Question 21

Which fiduciary duty obligates trustees to prioritize the beneficiaries' interests above their own, avoiding conflicts of interest?

Accepted Answer

Duty of loyalty

Answer

Duty of care

Answer

Duty of impartiality

Answer

Duty of prudence

Question 22

What is the purpose of the rule against perpetuities in English trust law, and how does it affect the validity of trusts?

Accepted Answer

To ensure trusts do not extend beyond the lifetime of beneficiaries and a further 21 years.

Answer

To guarantee all trusts benefit future generations

Answer

To protect the interests of beneficiaries from irresponsible trustees

Answer

To simplify the administration of trusts and reduce legal disputes

Question 23

Assess the role of fiduciary duties in shaping the ethical responsibilities of trustees.

Accepted Answer

Fiduciary duties guide trustees' conduct, influencing both legal compliance and ethical decision-making.

Answer

Fiduciary duties solely focus on legal compliance, with no bearing on ethical responsibilities.

Answer

Ethical responsibilities of trustees are independent of fiduciary duties.

Answer

Fiduciary duties are enforced through criminal sanctions, while ethical responsibilities are governed by professional codes of conduct.

Question 24

Which of the following is NOT an essential element of a valid express trust?

Accepted Answer

Consideration

Answer

Certainty of intention

Answer

Certainty of subject matter

Answer

Capacity of the settlor

Question 25

Who is responsible for administering the trust and carrying out the settlor's wishes?

Accepted Answer

Trustee

Answer

Settlor

Answer

Beneficiary

Answer

Protector

Question 26

What is the legal concept that recognizes the settlor's incompletely expressed intention to create a trust?

Accepted Answer

Precatory trust

Answer

Presumption of advancement

Answer

Honorary trust

Answer

Secret trust

Question 27

What is the equitable principle that allows the court to adjust the beneficial interests in a trust to ensure fairness?

Accepted Answer

Variation of trusts

Answer

Cy-près doctrine

Answer

Constructive trust

Answer

Resulting trust

Question 28

Which of the following is NOT a type of charitable trust?

Accepted Answer

Pension trust

Answer

Public charitable trust

Answer

Private charitable trust

Answer

Accumulation and maintenance trust

Question 29

What is the legal concept that protects trust property from the personal creditors of the trustee?

Accepted Answer

Spendthrift trust

Answer

Fraudulent conveyance

Answer

Tenancy in common

Answer

Cy-près doctrine

Question 30

What is a key characteristic of a trust?

Accepted Answer

The trustee holds legal ownership of the trust property.

Answer

It involves three or more parties.

Answer

It must be created in writing.

Question 31

Which of the following is NOT an essential element of a valid trust?

Accepted Answer

Beneficiary's consent

Answer

Trustee

Answer

Settlor

Answer

Trust property

Question 32

Who holds the legal title to the trust property?

Accepted Answer

Trustee

Answer

Court

Answer

Beneficiary

Answer

Settlor

Question 33

Which of the following is a key characteristic of a fixed trust?

Accepted Answer

Beneficiaries are specifically identified and have fixed entitlements

Answer

Trust can be revoked by the settlor at any time

Answer

Trust property can be used for any purpose

Answer

Trustees have broad discretion in distributing benefits

Question 34

What is the primary duty owed by a trustee to the beneficiaries?

Accepted Answer

To act in their best interests and exercise reasonable care and skill

Answer

To follow the settlor's instructions strictly

Answer

To distribute the trust property equally among all beneficiaries

Answer

To maximize the value of the trust property

Question 35

What is the distinction between an express trust and an implied trust?

Accepted Answer

Express trust is intentionally created through a written or oral declaration, while implied trust arises by operation of law from the conduct or circumstances of the parties

Answer

Express trust is irrevocable, while implied trust is revocable

Question 36

What is the primary role of the court in relation to trusts?

Accepted Answer

To supervise and enforce trusts, ensuring compliance with their terms and protecting beneficiaries' interests

Answer

To revoke trusts

Answer

To create trusts

Answer

To amend trusts

Question 37

What is the purpose of the doctrine of tracing in trusts?

Accepted Answer

To allow beneficiaries to follow and recover trust property that has been misappropriated or wrongfully transferred

Answer

To require trustees to invest the trust property in certain types of assets

Answer

To prevent the settlor from revoking the trust

Question 38

Which of the following is NOT an essential element of a valid trust?

Accepted Answer

Consideration

Answer

Settlor

Answer

Trustee

Answer

Beneficiary

Question 39

Who is the person who creates a trust?

Accepted Answer

Settlor

Answer

Trustee

Answer

Protector

Answer

Beneficiary

Question 40

What is the principle that governs the interpretation of trusts?

Accepted Answer

The settlor's intention

Answer

The doctrine of equity

Answer

The rule of law

Answer

Public policy

Question 41

Which of the following is a characteristic of a charitable trust?

Accepted Answer

It is created for a public benefit

Answer

It is irrevocable

Answer

It is subject to the rule against perpetuities

Answer

It has a definite duration

Question 42

What is the role of the Attorney-General in relation to trusts?

Accepted Answer

To represent the public interest in charitable trusts

Answer

To enforce trusts on behalf of beneficiaries

Answer

To approve the creation of all trusts

Question 43

What is the fundamental purpose of a trust?

Accepted Answer

To hold and manage property for the benefit of others

Answer

To avoid taxation

Answer

To protect assets from creditors