Paralegal Advanced Competency Exam (PACE) Practice Exam

What is required for the effects of an inurement?

1. A signed document

2. Legal counsel

3. A specific action or decision

4. A court order

The correct answer is: A specific action or decision

The correct answer focuses on the notion that inurement, which refers to an improper benefit or advantage received by individuals connected to a nonprofit organization or similar entity, necessitates a specific action or decision to occur. Inurement typically implies that an individual is receiving benefits that exceed what would be considered reasonable compensation for services performed or what is permissible under the law governing nonprofit entities. For inurement to be investigated or established, there must be an action or decision that demonstrates the transfer of benefits to individuals in a position of authority or control within the organization. This can include actions such as excessive salaries, the provision of lavish perks, or other benefits that are not in line with the organization’s charitable purpose. The other choices do not accurately reflect what is inherently necessary to demonstrate inurement. A signed document might be part of the process, but it is not required as a precursor for inurement itself. Legal counsel may be beneficial when assessing potential inurement issues or addressing legal ramifications, but their presence is not a prerequisite for establishing inurement occurrences. Lastly, a court order may arise from disputes regarding inurement but does not serve as a foundation for it to take place. In essence, specific actions or decisions elucidate the occurrence of inurement.