Equity and Trusts Learning Quizzes: Master the Principles of Trusts and Equity

Question 1

Which of the following is **not** a legally recognized type of trust under English law?

Accepted Answer

Sham trusts

Answer

Express trusts

Answer

Resulting trusts

Answer

Constructive trusts

Question 2

How does the beneficiary principle influence the duties and responsibilities of trustees? Explain how it affects their decision-making and management of trust assets.

Accepted Answer

Trustees must prioritize the beneficiaries' interests over their own.

Answer

Trustees can make decisions without considering the beneficiaries' interests.

Answer

The beneficiary principle only applies to certain types of trusts.

Question 3

How does equity continue to shape trust law today? Explain its impact on the development and application of trust principles.

Accepted Answer

Equity ensures trustees prioritize the beneficiaries' interests.

Accepted Answer

Equity has enabled the creation of new trust types, such as charitable and discretionary trusts, expanding trust law's scope.

Answer

Equity's role in modern trust law has diminished as common law provides adequate remedies for trust breaches.

Question 4

How does intention play a role in distinguishing express trusts from implied trusts?

Accepted Answer

Express trusts require explicit intent, while implied trusts arise from conduct or circumstances suggesting an intent to create a trust.

Answer

Intention is irrelevant in trust creation, as trusts can arise without express or implied intent.

Question 5

Analyze the benefits and drawbacks of employing professional trustees in contemporary trust law.

Consider their expertise, potential conflicts of interest, and financial implications.

Accepted Answer

Professional trustees provide specialized knowledge and efficiency in trust management.

Accepted Answer

Using professional trustees typically results in higher costs for the trust.

Answer

Professional trustees are always impartial and act solely in the best interests of beneficiaries.

Question 6

How does trust law ensure the protection of vulnerable beneficiaries' interests?

Accepted Answer

Trustees are legally bound to act in the best interests of all beneficiaries, regardless of their vulnerability.

Answer

Trust law does not provide specific protections for vulnerable beneficiaries.

Answer

Trust law only safeguards vulnerable beneficiaries who are minors.

Answer

The court has no role in monitoring trusts and protecting vulnerable beneficiaries.

Question 7

How does the beneficiary principle influence the ability of trustees to delegate their responsibilities?

Accepted Answer

Trustees may delegate duties provided they retain ultimate accountability and supervision.

Answer

Trustees are prohibited from delegating any duties to third parties.

Answer

Trustees have absolute discretion to delegate duties to any individual or organization.

Answer

The beneficiary principle allows trustees to delegate duties only to qualified professionals.

Question 8

In a trust with multiple beneficiaries, which strategy is most effective in preventing or reducing conflicts of interest among them?

Accepted Answer

Appointing an impartial trustee to represent all beneficiaries

Answer

Granting beneficiaries complete control over trust asset management

Answer

Requiring beneficiaries to resolve disputes outside the trust structure

Answer

Having beneficiaries sign a binding agreement outlining their rights and obligations

Question 9

How do international law and cross-border issues impact the administration and enforcement of trusts?

Accepted Answer

Managing trusts with international aspects can be complex due to varying legal systems and regulations.

Answer

International law has no influence on trust administration or enforcement.

Answer

Cross-border issues only arise when the trust's creator and beneficiaries reside in different countries.

Question 10

What is the primary duty of a trustee?

Accepted Answer

To act in the best interests of the beneficiaries

Answer

To maximize the value of the trust property

Answer

To strictly follow the settlor's wishes

Answer

To avoid any conflict of interest and duty

Question 11

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

Accepted Answer

Implied trust

Answer

Fixed trust

Answer

Discretionary trust

Answer

Charitable trust

Question 12

Can a beneficiary enforce a trust?

Accepted Answer

Yes, if they have sufficient interest in the trust.

Answer

No, only the trustee can enforce a trust.

Answer

Yes, but only if the trust is for their benefit.

Answer

No, beneficiaries have no standing to enforce trusts.

Question 13

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

Accepted Answer

Consideration

Answer

Intention to create a trust

Answer

Subject matter

Answer

Beneficiary

Question 14

What is the primary duty of a trustee?

Accepted Answer

To act in the best interests of the beneficiaries

Answer

To maximize the value of the trust property

Answer

To avoid liability for breaches of trust

Answer

To follow the settlor's instructions

Question 15

Which of the following is a type of express trust?

Accepted Answer

Charitable trust

Answer

Resulting trust

Answer

Constructive trust

Answer

Implied trust

Question 16

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

Accepted Answer

It arises by operation of law

Answer

It is created by a written document

Answer

It requires a clear intention to create a trust

Answer

It is always express

Question 17

What is the purpose of the Trustee Act 2000?

Accepted Answer

To codify and reform the law relating to trusts

Answer

To establish a new system of trust registration

Answer

To create a new type of trust known as the 'statutory trust'

Answer

To abolish the doctrine of equitable conversion

Question 18

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

Accepted Answer

A fixed trust gives the trustees no discretion in distributing the trust property, while a discretionary trust gives them wide discretion.

Answer

A discretionary trust gives the trustees no discretion in distributing the trust property, while a fixed trust gives them wide discretion.

Answer

Fixed trusts are more common than discretionary trusts.

Answer

Discretionary trusts are more common than fixed trusts.

Question 19

Which of the following is **not** an essential requirement for the creation of a valid trust?

Accepted Answer

Consideration

Answer

Certainty of intention

Answer

Certainty of subject matter

Answer

Capacity to create a trust

Question 20

Which of the following is **not** a recognized maxim of equity?

Accepted Answer

Equity follows the law.

Answer

Equity will not suffer a wrong without a remedy.

Answer

He who comes to equity must come with clean hands.

Answer

Delay defeats equity.

Question 21

The doctrine of 'resulting trusts' is applicable when:

Accepted Answer

A settlor transfers property to a trustee without specifying beneficiaries

Answer

A trust fails for uncertainty

Answer

A trustee violates their duties

Answer

The trust fund is depleted

Question 22

Who is the person who creates a trust?

Accepted Answer

Settlor

Answer

Beneficiary

Answer

Trustee

Answer

Protector

Question 23

Which of the following is not a fiduciary duty of a trustee?

Accepted Answer

Duty to make a profit for the beneficiaries

Answer

Duty to act in utmost good faith

Answer

Duty of care and skill

Answer

Duty to preserve trust property

Question 24

The rule in Saunders v. Vautier establishes that:

Accepted Answer

A precatory trust will fail if the settlor does not use sufficiently strong language

Answer

A trust cannot be created for an uncertain period of time

Answer

A trustee cannot delegate their duties without the consent of the beneficiaries

Answer

A beneficiary cannot assign their interest in the trust without the consent of the trustee

Question 25

A resulting trust arises when:

Accepted Answer

The settlor transfers property to a trustee with no clear intention as to the beneficial interest

Answer

The trustee fails to distribute the trust property according to the settlor's instructions

Answer

The beneficiary dies before the trust is fully executed

Answer

The trust purpose becomes impossible to fulfil

Question 26

Which of the following is not a characteristic of a charitable trust?

Accepted Answer

It can benefit a limited class of people

Answer

It is created for a public benefit

Answer

It is exempt from income tax

Answer

It must be registered with the Charity Commission

Question 27

The cy-près doctrine allows a court to:

Accepted Answer

Modify the terms of a trust if the original purpose becomes impossible to fulfil

Answer

Appoint a new trustee if the original trustee becomes incapacitated

Answer

Terminate a trust if it is no longer beneficial to the intended beneficiaries

Answer

Award damages to a beneficiary who has suffered a loss due to a breach of trust

Question 28

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

Accepted Answer

Consideration

Answer

Certainty of intention

Answer

Subject matter

Answer

Capacity of settlor

Question 29

What is the primary legal obligation of a trustee?

Accepted Answer

To act in the best interests of the beneficiary

Answer

To maximize the value of the trust assets

Answer

To avoid conflicts of interest

Answer

To distribute the trust property equally among the beneficiaries

Question 30

Under which equitable principle can a beneficiary challenge the actions of a trustee who has breached their duties?

Accepted Answer

Breach of trust

Answer

Estoppel

Answer

Laches

Answer

Subrogation

Question 31

What is the legal effect of a resulting trust?

Accepted Answer

It transfers legal ownership to the beneficiaries

Answer

It prevents the trustee from selling the trust property

Answer

It imposes a duty of care on the trustee

Answer

It creates a fiduciary relationship between the trustee and the beneficiaries

Question 32

Which of the following is NOT a defining feature of equity and trusts?

Accepted Answer

Precision

Answer

Discretion

Answer

Flexibility

Answer

Confidentiality

Question 33

What is the primary remedy available in cases of breach of trust?

Accepted Answer

Restitution

Answer

Rescission

Answer

Damages

Answer

Injunction

Question 34

Which of the following is an instance of a resulting trust?

Accepted Answer

Property transferred without a clear declaration of trust

Answer

Property transferred subject to an express trust that subsequently fails

Answer

Property transferred to an individual who murders the settlor

Answer

Property transferred to an individual under the undue influence of the settlor

Question 35

Which of the following is an example of an express trust?

Accepted Answer

Trust created through a formal deed

Answer

Trust created through a will

Answer

Trust created by operation of law

Answer

Trust created by a court order

Question 36

Which of the following principles is NOT a key principle of equity?

Accepted Answer

Equity will assist a volunteer in certain circumstances.

Answer

Equity will not suffer a wrong without a remedy.

Answer

Equity follows the law, but not blindly.

Answer

Equity acts in personam, binding individuals rather than property.

Question 37

What is the essential feature that distinguishes a trust from other legal relationships?

Accepted Answer

The separation of legal and beneficial ownership, creating a three-way relationship.

Answer

The intention of the settlor, expressed through a declaration of trust or through conduct.

Answer

The duty of the trustee to act solely in the best interests of the beneficiaries.

Answer

The presence of a trustee, who holds legal title to the trust property.

Question 38

Which of the following is an example of an express trust?

Accepted Answer

A trust created by a written declaration or deed, explicitly stating the settlor's intentions and the terms of the trust.

Answer

A trust created by operation of law, arising from specific legal circumstances without an express declaration.

Answer

A trust created by a verbal agreement, where the settlor's intentions are communicated orally.

Answer

A trust created by implication, inferred from the settlor's conduct and presumed intentions.

Question 39

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

Accepted Answer

It must be for a public benefit, promoting purposes such as education, healthcare, or poverty relief.

Answer

It must be created by a written document, ensuring clarity and legal validity.

Answer

It must be for the benefit of a specific group of individuals, such as family members or employees.

Answer

It must be approved by the government, ensuring compliance with regulatory requirements.

Question 40

What is the role of the settlor in a trust?

Accepted Answer

The person who creates the trust and transfers the property to the trustee.

Answer

The person who is the legal owner of the trust property.

Answer

The person who is the beneficial owner of the trust property.

Answer

The person who administers the trust.

Question 41

Which characteristic defines a trust?

Accepted Answer

It involves a fiduciary relationship.

Answer

It consists of personal property.

Answer

It is a legal contract.

Answer

It is solely created for charitable causes.

Question 42

Who bears the primary responsibility of managing a trust?

Accepted Answer

The trustee

Answer

The founder

Answer

The recipient

Answer

The court

Question 43

Describe the main difference between a fixed trust and a discretionary trust.

Accepted Answer

A fixed trust provides the trustee with no discretion in distributing assets, unlike a discretionary trust.

Answer

A discretionary trust provides the trustee with no discretion in distributing assets, unlike a fixed trust.

Answer

There is no distinction between a fixed trust and a discretionary trust.

Answer

A fixed trust is created for a specific goal, while a discretionary trust has a broader purpose.

Question 44

In a fixed trust, the trustees have:

Accepted Answer

No discretion to vary the division of income and capital

Answer

Discretion to vary the beneficiaries

Question 45

The three certainties required for the creation of a valid trust are:

Accepted Answer

Certainty of intention, certainty of subject matter, certainty of objects

Answer

Certainty of intention, certainty of beneficiaries, certainty of purpose

Question 46

Which of the following statements about the fiduciary duties of trustees is TRUE?

Accepted Answer

Trustees have a duty to act in the best interests of the beneficiaries

Answer

Trustees have no duty to disclose conflicts of interest

Question 47

A resulting trust arises when:

Accepted Answer

The settlor transfers property to another person without specifying a purpose

Question 48

Which of the following is a characteristic of an express trust?

Accepted Answer

Created by a clear and unambiguous statement of intention

Answer

Created by operation of law

Question 49

The principle of tracing allows:

Accepted Answer

Beneficiaries to follow trust property even if it has been transferred to a third party

Answer

Settlors to recover trust property if the trust fails

Question 50

A constructive trust is imposed by law when:

Accepted Answer

A person has acquired property by fraud or undue influence

Answer

A trust has been created without the necessary formalities

Question 51

Which type of trust is created when a settlor transfers property to a trustee with instructions to hold it for a specific purpose?

Accepted Answer

Express trust

Answer

Implied trust

Answer

Resulting trust

Answer

Constructive trust

Question 52

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

Accepted Answer

Implied trust

Answer

Fixed trust

Answer

Discretionary trust

Answer

Accumulation and maintenance trust

Question 53

What does the rule against perpetuities state?

Accepted Answer

A trust cannot be used to benefit unborn generations

Answer

A trust cannot last for more than 21 years after the death of the settlor

Answer

A trust must be created for a charitable purpose

Answer

A trust cannot be established for an unborn person

Question 54

What is the legal principle that governs the interpretation of trusts?

Accepted Answer

Settlor's intent

Answer

Beneficiary's intent

Answer

Trustee's intent

Answer

Court's discretion

Question 55

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

Accepted Answer

Legal consideration

Answer

Certainty of intention

Answer

Certainty of subject matter

Answer

Certainty of beneficiaries

Question 56

Which type of trust arises when the settlor, or person creating the trust, retains a beneficial interest in the trust?

Accepted Answer

Reserved powers trust

Answer

Bare trust

Answer

Discretionary trust

Answer

Fixed trust

Question 57

What is the main purpose of the Trustee Act 2000?

Accepted Answer

To codify the common law principles governing trusts

Answer

To create entirely new duties for trustees

Answer

To eliminate the concept of resulting trusts

Answer

To introduce a new statutory will trust

Question 58

Which of the following is a defining characteristic of a constructive trust?

Accepted Answer

It arises by operation of law, rather than by the express intention of the settlor

Answer

It is created solely by the express intention of the settlor

Answer

It can only be created over real property, such as land or buildings

Answer

It is always revocable by the settlor

Question 59

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

Accepted Answer

A fixed trust specifies the beneficiaries and their shares of the trust fund, while a discretionary trust gives the trustee discretion in distributing the trust fund

Answer

A fixed trust is irrevocable, while a discretionary trust can be revoked by the settlor

Answer

A fixed trust is always created by deed, while a discretionary trust can be created orally

Answer

There is no real difference between a fixed trust and a discretionary trust

Question 60

What is the typical effect of a resulting trust?

Accepted Answer

It transfers the legal ownership of the property back to the settlor

Answer

It creates a new trust with different beneficiaries

Answer

It extinguishes the original trust

Answer

It has no effect on the original trust

Question 61

How does tracing assist beneficiaries in obtaining a remedy for breach of trust?

Accepted Answer

It enables the recovery of trust assets unlawfully transferred by the trustee.

Answer

It is only applicable when the trustee acted with malicious intent.

Answer

It is ineffective due to the difficulty in tracking asset movements.

Answer

It is only available to beneficiaries of express trusts.

Question 62

In what ways does technology influence the management of trusts?

Accepted Answer

Increased efficiency

Accepted Answer

Enhanced transparency

Accepted Answer

Potential risks

Answer

Reduced personalization

Question 63

What is a key characteristic that distinguishes private trusts from other types of trusts?

Accepted Answer

Possess specific and identifiable beneficiaries

Answer

Established for the benefit of the general public

Answer

Subject to regulation by the Charity Commission

Answer

Prohibited from engaging in commercial activities

Question 64

Which of the following is a legal remedy, as opposed to an equitable one, for breach of trust?

Accepted Answer

Damages

Answer

Rescission

Answer

Injunction

Answer

Specific performance