Paralegal Advanced Competency Exam (PACE) Practice Exam

What does the term donee refer to in relation to trusts?

1. The person who establishes a trust

2. The beneficiary of a trust or the recipient of a power of attorney

3. The lawyer who manages the trust

4. The person who challenges the terms of a trust

The correct answer is: The beneficiary of a trust or the recipient of a power of attorney

The term donee in relation to trusts refers specifically to the beneficiary of a trust or the recipient of a power of attorney. In the context of trusts, a donee is the individual who receives benefits or assets from the trust established by the grantor (or trustor). This aligns with the role of a beneficiary, who is designated to receive distributions from the trust assets. In addition, the term also extends to those who receive powers of attorney, as they are granted authority to act on behalf of another person in specific matters. This role highlights the responsibility of managing the affairs of the principal effectively and in their best interest. Understanding this terminology is crucial, as it helps clarify the roles within a trust arrangement, particularly distinguishing the beneficiaries’ rights from those of other entities, like the grantor who creates the trust or the trustee who administers it. The other terms, such as the person who establishes a trust or the lawyer managing the trust, do not describe the recipient of benefits, which is why they fall outside the definition of a donee.