CANNON TRUST FUNDAMENTALS EXAM
STUDY GUIDE 2026/2027 COMPLETE
QUESTIONS WITH VERIFIED CORRECT
ANSWERS || 100% GUARANTEED PASS
<NEWEST VERSION>
1. Sole Ownership - ANSWER ✔ Fee Simple; Full and complete ctrl by a
single party; No survivorship; Subject to probate
2. Joint Tenancy WROS - ANSWER ✔ Ownership by two, or more with equal
ctrl; Ownership to the survivor or survivors equally
3. Tenancy by the Entirety - ANSWER ✔ Joint holding between spouses only;
Decisions required by both; Ownership to survivor
4. Tenants in Common - ANSWER ✔ No survivorship rights; Multiple owners
with differentiated shares; Sole ownership of a partial amount; Subject to
Probate
5. Community Property - ANSWER ✔ All property obtained during marriage;
Property owned at time of marriage is considered separate
,6. Income Beneficiaries - ANSWER ✔ Present Beneficiaries; May have access
to income or principal
7. Remainder Beneficiaries - ANSWER ✔ Future Beneficiaries; Receive
remaining principal and undistributed income
8. Tuition and Medical Expense Exclusion - ANSWER ✔ Qualified Transfers;
Must be paid directly to service provider; Unlimited in amount; Over and
above AEA
9. Crummey Power - ANSWER ✔ Clifford D. Crummey v. Commissioner
(1968); concept of giving withdrawal rights to beneficiaries of trusts;
considered present interest; 30 day period
10.Portability - ANSWER ✔ Allows use of first spouse's DSUE
11.Powers of Appointment - ANSWER ✔ Powers of withdrawal or direction of
distribution of funds held in a trust
12.Marital Deductions - ANSWER ✔ spouse must be a US citizen, spouse has
both present use of the funds and so that upon the later transfer of that
property, and the funds will be taxed; unlimited
13.Three Elements of Marital Deduction - ANSWER ✔ 1. All income or use of
the property
2. Power of appointment over the property that will cause it to be taxed upon
later transfer from the SS
, 3. No person other than the surviving spouse has a power to appoint the
property to anyone other than the SS
14.A to B. Which of the following is true following this transfer? - ANSWER ✔
B has a fee simple interest
15.A to B for life and then to C. Which of the following is true following this
transfer? - ANSWER ✔ B has a life estate, C has a remainder interest
16.A to B for 10 years and then to C. Which of the following is true following
this transfer? - ANSWER ✔ B has an estate for years, C has a remainder
interest
17.A to B as long as B is found drug-free in annual tests. Which of the
following is true following this transfer? - ANSWER ✔ B has a
determinable interest subject to a condition
18.Risk and reward can be best controlled in a trust by:
1. asset allocation
2. correctly guessing the direction of interest rates constantly
3. purchasing covered call options
4. using only tax free bonds - ANSWER ✔ 1. asset allocation
19.The Uniform Prudent Investor Act incorporates which of th1 following?
1. Modern Portfolio Theory
, 2. Random Waltz Theory
3. Odd 1st Ratio
4. Efficient Market Hypothesis - ANSWER ✔ 1. Modern Portfolio Theory
20.The Uniform Prudent Investor Act states that delegation in:
1. Allowable
2. Prohibited
3. Required
4. Imprudent - ANSWER ✔ 1. Allowable
21.If the posting of a transaction which satisfies the Principal and Income Law
but conflicts with tax law, the trustee must do which of the following?
A) Satisfy both principal and income law and tax law
B) Ignore the tax law
C) Ignore the principal & income law
D) Request OCC direction - ANSWER ✔ A) Satisfy both principal and
income law and tax law
22.Income earned and not distributed during a period of probate belongs to
which of the following?
A) Estate
B) Recipient of the pecuniary bequest
C) Income beneficiary of the trust to whom the estate assets, or share
thereof, is being allocated
D) Surviving spouse - ANSWER ✔ A) Estate
STUDY GUIDE 2026/2027 COMPLETE
QUESTIONS WITH VERIFIED CORRECT
ANSWERS || 100% GUARANTEED PASS
<NEWEST VERSION>
1. Sole Ownership - ANSWER ✔ Fee Simple; Full and complete ctrl by a
single party; No survivorship; Subject to probate
2. Joint Tenancy WROS - ANSWER ✔ Ownership by two, or more with equal
ctrl; Ownership to the survivor or survivors equally
3. Tenancy by the Entirety - ANSWER ✔ Joint holding between spouses only;
Decisions required by both; Ownership to survivor
4. Tenants in Common - ANSWER ✔ No survivorship rights; Multiple owners
with differentiated shares; Sole ownership of a partial amount; Subject to
Probate
5. Community Property - ANSWER ✔ All property obtained during marriage;
Property owned at time of marriage is considered separate
,6. Income Beneficiaries - ANSWER ✔ Present Beneficiaries; May have access
to income or principal
7. Remainder Beneficiaries - ANSWER ✔ Future Beneficiaries; Receive
remaining principal and undistributed income
8. Tuition and Medical Expense Exclusion - ANSWER ✔ Qualified Transfers;
Must be paid directly to service provider; Unlimited in amount; Over and
above AEA
9. Crummey Power - ANSWER ✔ Clifford D. Crummey v. Commissioner
(1968); concept of giving withdrawal rights to beneficiaries of trusts;
considered present interest; 30 day period
10.Portability - ANSWER ✔ Allows use of first spouse's DSUE
11.Powers of Appointment - ANSWER ✔ Powers of withdrawal or direction of
distribution of funds held in a trust
12.Marital Deductions - ANSWER ✔ spouse must be a US citizen, spouse has
both present use of the funds and so that upon the later transfer of that
property, and the funds will be taxed; unlimited
13.Three Elements of Marital Deduction - ANSWER ✔ 1. All income or use of
the property
2. Power of appointment over the property that will cause it to be taxed upon
later transfer from the SS
, 3. No person other than the surviving spouse has a power to appoint the
property to anyone other than the SS
14.A to B. Which of the following is true following this transfer? - ANSWER ✔
B has a fee simple interest
15.A to B for life and then to C. Which of the following is true following this
transfer? - ANSWER ✔ B has a life estate, C has a remainder interest
16.A to B for 10 years and then to C. Which of the following is true following
this transfer? - ANSWER ✔ B has an estate for years, C has a remainder
interest
17.A to B as long as B is found drug-free in annual tests. Which of the
following is true following this transfer? - ANSWER ✔ B has a
determinable interest subject to a condition
18.Risk and reward can be best controlled in a trust by:
1. asset allocation
2. correctly guessing the direction of interest rates constantly
3. purchasing covered call options
4. using only tax free bonds - ANSWER ✔ 1. asset allocation
19.The Uniform Prudent Investor Act incorporates which of th1 following?
1. Modern Portfolio Theory
, 2. Random Waltz Theory
3. Odd 1st Ratio
4. Efficient Market Hypothesis - ANSWER ✔ 1. Modern Portfolio Theory
20.The Uniform Prudent Investor Act states that delegation in:
1. Allowable
2. Prohibited
3. Required
4. Imprudent - ANSWER ✔ 1. Allowable
21.If the posting of a transaction which satisfies the Principal and Income Law
but conflicts with tax law, the trustee must do which of the following?
A) Satisfy both principal and income law and tax law
B) Ignore the tax law
C) Ignore the principal & income law
D) Request OCC direction - ANSWER ✔ A) Satisfy both principal and
income law and tax law
22.Income earned and not distributed during a period of probate belongs to
which of the following?
A) Estate
B) Recipient of the pecuniary bequest
C) Income beneficiary of the trust to whom the estate assets, or share
thereof, is being allocated
D) Surviving spouse - ANSWER ✔ A) Estate
