HW 6 - Fiduciary Relationships and Trusts (Chap. 8).DOCX

1. Explain whether each of the following is a valid trust agreement ? why or why not?
   1. A trust created for the benefit of the settlor?s son. The settlor is the sole trustee.
   2. A trust created in which the settlor is the sole trustee. The settlor and his son are the beneficiaries during the settlor?s lifetime, and the son is the sole beneficiary after the settlor?s death.
   3. A trust created for the sole benefit of the settlor. The settlor is also the sole trustee.
   4. A trust that meets the requirements of a charitable trust. The trust document says the trust is intended to operate in perpetuity.
   5. A revocable living trust, which the settlor transferred all of his small business property operated as a sole proprietorship. What nontax advantage(s) could be gained by the settlor by transferring business assets into the trust?
2. Which of the following statements concerning a revocable trust is correct?
   1. It avoids probate and becomes irrevocable at the grantor?s death.
   2. It enables the grantor to save on income taxes.
3. Which of the following statements concerning guardians for minors is correct?
   1. A guardian has legal title to the property they administer for the minor.
   2. A special guardian can be appointed by the court to protect a minor?s rights in a legal proceeding.
   3. A guardian named in a deceased parent?s will is binding on the court.
   4. A guardian receives the legal authority to act from the deceased parent?s will.
4. Which of the following statements concerning a fiduciary relationship is correct?
   1. A trustee holds legal title to trust property.
   2. An executor named in the will has a fiduciary relationship with the testator.
   3. A trustee is generally given authority to act by the court.
   4. A trustee may ignore trust terms since his/her loyalty is to the trust?s beneficiaries.

Fiduciary Relationships and Trusts s.DOCX Name:

1. Which of the following statements concerning a testamentary trust is correct?
   1. It is an inter vivos trust.
   2. It is created by a will.
   3. It is revocable until the death or permanent legal incapacity of the testator.
   4. At its termination the trust property must revert to the grantor.
2. Which of the following statements concerning an irrevocable living trust is correct?
   1. A transfer of property to the trust will be ineffective at removing the property from the grantor?s gross estate.
   2. A transfer of property to an irrevocable living trust is treated as a completed gift for gift tax purposes at the time of the transfer.
3. All of the following are principles common to fiduciary relationships except:
   1. The fiduciary is subject to a duty to act for the benefit of the other party to the fiduciary relationship with respect to matters within the scope of the relationship.
   2. The fiduciary is subject to a duty not to delegate his/her fiduciary duties.
   3. The fiduciary is subject to a duty not to profit at the expense of the other party to the fiduciary relationship.
   4. Once a person has been nominated to be a fiduciary that person must act in the fiduciary capacity until discharged by the court.
4. All of the following statements concerning estates and trusts are correct except:
   1. The personal representative for an estate and a trustee have similar fiduciary responsibilities.
   2. Both estates and trusts come into being by operation of law.
   3. A corporate entity may act as either a personal representative for an estate or a trustee.

Fiduciary Relationships and Trusts s.DOCX Name: Ziqi Xie Homework 6: Chapter 8: Fiduciary Relationships and Trusts Due at the beginning of class on Friday, November 11th 1. Explain whether each of the following is a valid trust agreement - why or why not? a. A trust created for the benefit of the settlor's son. The settlor is the sole trustee. b. A trust created in which the settlor is the sole trustee. The settlor and his son are the beneficiaries during the settlor's lifetime, and the son is the sole beneficiary after the settlor's death. c. A trust created for the sole benefit of the settlor. The settlor is also the sole trustee. d. A trust that meets the requirements of a charitable trust. The trust document says the trust is intended to operate in perpetuity. e. A revocable living trust, which the settlor transferred all of his small business property operated as a sole proprietorship. What nontax advantage(s) could be gained by the settlor by transferring business assets into the trust? 2. Which of the following statements concerning a revocable trust is correct? a. It avoids probate and becomes irrevocable at the grantor's death. b. It enables the grantor to save on income taxes. 3. Which of the following statements concerning guardians for minors is correct? a. A guardian has legal title to the property they administer for the minor. b. A special guardian can be appointed by the court to protect a minor's rights in a legal proceeding. c. A guardian named in a deceased parent's will is binding on the court. d. A guardian receives the legal authority to act from the deceased parent's will. 4. Which of the following statements concerning a fiduciary relationship is correct? a. A trustee holds legal title to trust property. b. An executor named in the will has a fiduciary relationship with the testator. c. A trustee is generally given authority to act by the court. d. A trustee may ignore trust terms since his/her loyalty is to the trust's beneficiaries. Fiduciary Relationships and Trusts s.DOCX Name: 5. Which of the following statements concerning a testamentary trust is correct? a. It is an inter vivos trust. b. It is created by a will. c. It is revocable until the death or permanent legal incapacity of the testator. d. At its termination the trust property must revert to the grantor. 6. Which of the following statements concerning an irrevocable living trust is correct? a. A transfer of property to the trust will be ineffective at removing the property from the grantor's gross estate. b. A transfer of property to an irrevocable living trust is treated as a completed gift for gift tax purposes at the time of the transfer. 7. All of the following are principles common to fiduciary relationships except: a. The fiduciary is subject to a duty to act for the benefit of the other party to the fiduciary relationship with respect to matters within the scope of the relationship. b. The fiduciary is subject to a duty not to delegate his/her fiduciary duties. c. The fiduciary is subject to a duty not to profit at the expense of the other party to the fiduciary relationship. d. Once a person has been nominated to be a fiduciary that person must act in the fiduciary capacity until discharged by the court. b 8. All of the following statements concerning estates and trusts are correct except: a. The personal representative for an estate and a trustee have similar fiduciary responsibilities. b. Both estates and trusts come into being by operation of law. c. A corporate entity may act as either a personal representative for an estate or a trustee