Master the Duties of Trustees: A Comprehensive Guide for LLM Students

Question 1

In trusts, define 'beneficiaries' and explain how their role influences trustees' duties.

Accepted Answer

Beneficiaries are those entitled to trust benefits and income.

Answer

Beneficiaries have no legal rights or interests in trust property.

Answer

Trustees are not legally obligated to consider beneficiaries' interests in trust decisions.

Answer

Only individuals can be beneficiaries in a trust, excluding organizations or entities.

Question 2

In the context of trusts law, the duty of care refers to:

Accepted Answer

A trustee's obligation to exercise reasonable prudence and skill in managing the trust

Answer

A trustee's duty to remain impartial and avoid conflicts of interest

Answer

A trustee's obligation to keep accurate accounts and provide information to the beneficiaries

Answer

A trustee's duty to act in accordance with the terms of the trust instrument

Question 3

Which of the following is NOT a breach of the duty of loyalty?

Accepted Answer

Investing trust assets solely in low-risk, income-generating investments

Answer

Self-dealing

Answer

Investing trust assets in the trustee's own business

Answer

Receiving secret commissions from third parties

Question 4

The duty of care requires trustees to act with what level of care?

Accepted Answer

The same level of care as a prudent investor

Answer

In accordance with the trust instrument

Answer

In the best interests of the beneficiaries

Answer

To avoid all risk

Question 5

Which of the following is a breach of the duty of loyalty?

Accepted Answer

Using trust property for personal benefit

Answer

Investing trust assets in a risky venture

Answer

Failing to collect rent from a tenant

Answer

Delegating investment decisions to a third party

Question 6

In Trusts Law, the duty of care entails specific principles that guide trustees' responsibilities. Which principles are these and how do they shape trustees' obligations?

Accepted Answer

Prudence, Diligence, Obedience to the Trust Instrument

Answer

Loyalty, Good Faith, Disclosure

Answer

Accountability, Transparency, Risk Management

Question 7

Which of the following is NOT a general duty of a trustee?

Accepted Answer

Duty to delegate

Answer

Duty of care

Answer

Duty of loyalty

Answer

Duty to account

Question 8

Which of the following is NOT a general duty owed by trustees to beneficiaries?

Accepted Answer

Duty to maximize profits

Answer

Duty of care

Answer

Duty of loyalty

Answer

Duty to account

Question 9

Which of these is NOT a recognized defense against a claim of breach of trust?

Accepted Answer

Unawareness of the trust's existence

Answer

Mistake of law

Answer

Beneficiary consent

Answer

Changed circumstances

Question 10

Which duty is NOT a responsibility of a trustee?

Accepted Answer

Duty to act with impartiality

Answer

Duty to fulfill the terms of the trust

Answer

Duty to invest prudently

Question 11

Which of the following is NOT a general duty of trustees?

Accepted Answer

Maximize investment profits

Answer

Act in the best interests of the beneficiaries

Answer

Avoid conflicts of interest

Answer

Exercise reasonable care and diligence

Question 12

The duty of care requires trustees to:

Accepted Answer

Take reasonable steps to preserve and manage the trust's assets

Answer

Guarantee the safety of beneficiaries

Answer

Invest solely in high-yield assets

Answer

Delegate all investment decisions to financial advisors

Question 13

The primary purpose of the duty of loyalty is to:

Accepted Answer

Prohibit trustees from using their position for personal gain or self-dealing

Answer

Prevent trustees from entering into transactions with the trust on behalf of third parties

Answer

Encourage trustees to seek professional advice on investments

Answer

Ensure that trustees invest in assets recommended by beneficiaries

Question 14

The rule in Keech v Sandford prevents trustees from:

Accepted Answer

Purchasing trust property for their own benefit

Answer

Selling trust property to beneficiaries

Answer

Delegating trust management to third parties

Answer

Investing in assets related to the trust

Question 15

The equitable doctrine of tracing allows beneficiaries to:

Accepted Answer

Follow and recover trust property that has been wrongfully transferred or misappropriated

Answer

Set aside all transactions involving trust property

Answer

Sue trustees for damages

Question 16

The principle of majority rule, as it applies to trustees, allows:

Accepted Answer

Decisions to be made by a majority vote of the trustees, unless otherwise specified in the trust instrument

Answer

Dissenting minority trustees to be ignored

Answer

Trustees to delegate decision-making authority to a single trustee

Question 17

The paramount objective of the court in exercising its jurisdiction over trusts is to:

Accepted Answer

Uphold the settlor's intentions while safeguarding the interests of the beneficiaries

Answer

Support the wishes of the settlor without regard to the beneficiaries' interests

Answer

Ensure the efficient administration of the trust to the exclusion of other considerations

Answer

Maximize the financial performance of the trust, regardless of the beneficiaries' needs

Question 18

Which of the following is NOT a general duty of a trustee?

Accepted Answer

To act in their own best interests

Answer

To exercise care and diligence in administering the trust

Answer

To act in the best interests of the beneficiaries

Answer

To account for their actions and decisions to the beneficiaries

Question 19

The duty of loyalty prohibits trustees from:

Accepted Answer

Putting their own interests above the interests of the beneficiaries

Answer

Seeking professional advice on matters related to the trust

Answer

Delegating their responsibilities to others

Question 20

The equitable principle known as 'tracing' allows beneficiaries to:

Accepted Answer

Follow and recover trust property that has been wrongfully disposed of

Answer

Sue third parties who have assisted the trustee in breaching the trust

Answer

Hold the trustee personally liable for any losses incurred

Question 21

The 'rule in Re Hastings-Bass' provides that:

Accepted Answer

Trustees are not liable for losses incurred as a result of honest mistakes

Answer

Beneficiaries must prove that the trustee acted in bad faith in order to recover losses

Answer

Trustees are always liable for losses incurred, regardless of their conduct