If you have significant assets you want to protect in a way that allows you to specify how beneficiaries are treated, then a limited-term trust is an excellent choice. Limited-term trusts are not only for the very rich. Take this quiz to challenge your knowledge of this excellent financial tool.
What ancient civilization do most consider originated the legal concept of a trust fund?
Where did the idea for our version of a modern trust originate?
The idea behind a modern trust fund originated during the Spanish inquisition.
The idea behind a modern trust developed during the Crusades in the 12th and 13th centuries.
The idea behind a modern trust fund originated in 1492 as Columbus prepared to sail the ocean blue.
What do most people consider the real purpose for designating a trust fund?
Trusts funds are for spoiled children that do not know how to manage large amounts of money on their own.
Trust funds are only for very wealthy people that want to shelter their money from legitimate taxes.
Trust funds are simply a legal relationship, set up by a lawyer to serve a specific purpose
From a grantors perspective, what is the goal of a limited-term trust?
to protect assets from loss for a given period.
to shelter assets from capital gains or estate taxes.
to be a temporary transfer of assets to a third party during an extended illness.
What happens to assets that are placed in the care of a trustee via a limited-term trust?
The trustee of a limited-term trust must insure that all assets are liquidated during the trust term.
An appointed trustee will manage assets placed in a trust until the term expires.
At the end of the term established at trust creation, the assets are sold to investors.
What happens to the assets that were placed in a limited-term trust at the end of the specified term?
The trustee will transfer all remaining assets to the beneficiaries according to the grantors established formula.
The trustee will liquidate all assets at the end of the specified term and return proceeds to the grantor.
The trustee will return all remaining assets to the grantor minus amounts paid out to beneficiaries.
What is a common way that trustees earn income by managing a trust fund?
The trust agreement specifies a set monthly fee that is to be charged for the duration of the trust.
Trustees often receive a yearly percentage of the market value of the assets that are under their control.
Trustees bill the grantor of the trust a percentage of the disbursements they pay to beneficiaries each month.
What can limited-term trust do to help protect your interests if you are working in a high-risk profession?
A limited-term trust can protect your assets in the event that you are involved in a lawsuit.
A limited-term trust can protect your assets from capital gains or estate taxes.
A limited-term trust can protect your assets in the event that there is a stock market crash.
If a doctor designates her children as beneficiaries of a trust fund that she established prior to any lawsuit, what will happen to her specified payments to her children in the event of a lawsuit?
Beneficiaries designated in the trust will receive all payments as specified.
The court will block all payments to beneficiaries until the lawsuit is resolved in court.
The trustee is required by law to put all transactions associated with the trust fund on hold.
What is the maximum number of years that you can have assets in a limited-term trust fund?