Review questions

KEY TERMS alter ego trust, 109 joint partner trust, 109 alternate beneficiary, 104 qualifying spousal trust, 108 beneficiary, 103 rule against perpetuities, 106 charitable trust, 108 secret trust, 110 contingent, 105 settlor, 103 contingent beneficiary, 103 spendthrift trust, 108 gift over, 104 trustee, 103 Henson trust, 108 unascertained beneficiary, 104 inter vivos trust, 102 vested, 105 REVIEW QUESTIONS 1. Define the following terms or concepts: 11. Explain the differences between a testamentary trust a. inter vivos and an inter vivos trust. b. settlor 12. Describe the purpose of the following types of trusts: c. fiduciary a. spendthrift trust d. cestui que trust b. Henson trust e. vested c. qualifying spousal trust f. contingent beneficiary d. alter ego trust g. unascertained beneficiary e. charitable trust 2. When it comes to income tax law, why is a trust f. secret trust usually, but incorrectly, characterized as a legal 13. What "certainty" may be relaxed in the case of a entity? charitable trust? 3. Who is the legal owner of the trust property? 14. If assets are to remain in trust form for a beneficiary 4. Who is the beneficial owner of the trust property? past the age of 18 years, what will prevent the trust 5. Identify two types of trust documents. from being broken after the beneficiary reaches 18? 6. A trustee is said to have a fiduciary duty to a 15. How is an inter vivos trust activated? beneficiary. Explain. 16. When does a testamentary trust become activated? 7. Describe the three "certainties" of a trust. 17. Why is the existence of a "secret" trust difficult to 8. What, stated very generally, is the purpose of the "rule prove? against perpetuities"? 18. Identify four requirements under the Income Tax Act 9. What is meant by the term "life in being"? for a tax-deferred transfer of assets to a joint partner trust. 10. What, stated very generally, is the purpose of the "rule 19. When is the rule in Saunders v Vautier most often against accumulations"? applied