CES Study Guide 2026

Dual relationships that could impair professional judgment represent boundary violations, potentially compromising the quality and objectivity of professional services.

A unitrust pays a fixed percentage of total trust assets, allowing the income beneficiary to share in asset appreciation and reducing conflict with the remainder beneficiary.

A trust protector is an independent third party appointed to oversee the trustee and ensure the trust is administered in accordance with the settlor's original intentions, especially in long-term or complex trusts. They often have powers to remove and replace trustees, amend the trust, or veto certain trustee decisions. This role adds an extra layer of security and flexibility to the trust structure.

The key difference lies in who bears the tax burden. Estate tax is a federal tax (and some states have it) levied on the deceased person's entire estate before it is distributed to heirs. In contrast, inheritance tax is a state-level tax paid by the beneficiaries on the assets they receive from the estate.

Trustees can ensure transparency by maintaining open and regular communication with beneficiaries, providing timely updates on trust administration, and fully disclosing all relevant information. Crucially, they must also proactively disclose any potential conflicts of interest to maintain trust and avoid impropriety.

Maintaining legal compliance is paramount for a trustee to ensure the trust is administered correctly and legally. This protects the trustee from personal liability, prevents disputes among beneficiaries, and ensures the trust's assets are managed and distributed according to the grantor's wishes and statutory requirements.