Bethany, Who Was Terminally Ill, Wanted to Provide for Her

question 7

Multiple Choice

Bethany, who was terminally ill, wanted to provide for her lover, Paul, after her death. Her husband and family were unaware that Bethany had been having an affair with Paul. Bethany's best friend, Miranda, agreed to do 'all she could' to help Bethany carry out her wishes secretly. Bethany has now died, leaving half of her property to her family, and the other half to Miranda. A letter, addressed to Miranda and found with Bethany's will, stipulates that Miranda should hold the property on trust for Paul. Miranda:

• A) Need not hold the property on trust, because Miranda did not accept the role of trustee.
• B) Need not hold the property for Paul, as the terms of the trust have not been communicated during Bethany's lifetime.
• C) Must hold the property on trust for Paul, as the terms of the trust have been effectively communicated during Bethany's lifetime.
• D) Must hold the property for Paul, as equity will give effect to Bethany's clear intentions to create a secret trust.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range or period.

Break-even Point

The production level or sales volume at which total revenues equal total expenses, leading to no profit or loss.

Unit Variable Cost

The cost that varies with each unit produced, including direct materials and labor, but does not include fixed costs.

Property Tax Rates

The percentage of a property's assessed value that is charged as tax by local governments to fund public expenses.