Question 1
Answering the following case study requires reading the information in this link:
What type of testamentary trust has Walter created for Judy in his will?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A charitable remainder unitrust |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A charitable remainder annuity trust |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A grantor retained annuity trust |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A charitable lead unitrust(A) |
2 points
Question 2
Answering the following case study requires reading the information in this link:
The Dumonts would like to help the Nature Conservancy this year by contributing some of Walter’s company stock. Walter would also like to maintain Judy’s life style by providing her with income for life. In addition, Walter would like to minimize taxes and transfer costs to accomplish these objectives. Given these objectives and constraints, which of the following lifetime gifts would be most appropriate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A bargain sale of stock to the Nature Conservancy. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A gift of stock to a charitable pooled income fund for the Nature Conservancy. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A gift of stock to a charitable remainder unitrust trust for the Nature Conservancy. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A gift of stock to a charitable lead trust for the Nature Conservancy.(B) |
2 points
Question 3
Answering the following case study requires reading the information in this link:
Judy’s will establishes a trust that distributes all income from the motel to Lee annually. Judy was concerned that this income could be subject to Lee’s creditors, so she included a spendthrift clause in the trust. All of the following statements about trusts with spendthrift provisions are correct, except:
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A beneficiary may not assign, pledge or promise to give distributions from the trust to others. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A beneficiary should not be given a general power of appointment over trust corpus. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Spendthrift provisions apply only to self-settled trusts. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Trustees can make distributions to beneficiaries solely on a discretionary basis.(C) |
2 points
Question 4
Answering the following case study requires reading the information in this link:
Assume that Walter dies today. What statement concerning the universal life insurance policy he owns on Judy’s life is correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | The cash value will be included in his gross estate. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | If Walter had transferred ownership of the policy to Lee four months ago, the policy would not be included in Walter’s gross estate. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | The policy will not be included in Walter’s probate estate. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | The full death benefit amount will be included in Walter’s estate.(A) |
2 points
Question 5
Answering the following case study requires reading the information in this link:
Which of the following statements regarding property held as tenancy in common, the form under which Jim and Todd own their fishing boat, are correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | There is no right of survivorship between Jim and Todd. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | All of the property is included in the probate estate of the first co-owner to die. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | The entire value of the fishing boat will be includible in Jim’s gross estate because Todd did not contribute anything to the purchase price. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Jim can change his will and leave his interest in the fishing boat to Jonathan.(A) |
2 points
Question 6
Answering the following case study requires reading the information in this link:
How will per stirpes affect Jim and Nancy’s wills?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | “After Jim and Nancy have both died, the estate of the second to die will go to Todd only, since he is their only living child. “ |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | “After Jim and Nancy have both died, the estate of the second to die will go in equal shares to Todd and Allison. “ |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | “After Jim and Nancy have both died, the estate of the second to die will go 50% to Todd and 50% to Jonathan, who takes Carol’s place in family lineage. “ |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | “After Jim’s death, Nancy will be prevented from changing her will and leaving the estate entirely to her second husband. “© |
2 points
Question 7
Answering the following case study requires reading the information in this link:
When Jim changed the title of his fishing boat to a tenancy in common with Todd last year, the boat was valued at $200,000. What amount is included on Jim’s IRS Form 706 as an adjusted taxable gift?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | $0 |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | $200,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | $86,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | $100,000 |
| (A) |
2 points
Question 8
Answering the following case study requires reading the information in this link:
Which of the following statements concerning the marital deduction in Jim’s estate is correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | It is not available for the $200,000 whole life insurance policy owned by Jim |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | It does not apply to the term life policy proceeds, since Jim’s estate, not Nancy, is the beneficiary |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | It does apply to the fishing boat, since it passes through Jim’s will. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | It does apply to the replacement cost of the whole life insurance policy, since Jim is the insured(D) |
2 points
Question 9
Which of the following should be considered when determining which property interest to transfer?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Whether it is difficult to value the property |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Whether the property is appreciating in value |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Whether the property is depreciating in value |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Whether the property is easily divisible |
| PRIVATE “” MACROBUTTON HTMLDirect | e. | All of the above(D) |
2 points
Question 10
Which statement is correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | With a non-grantor CLUT, the grantor can take an income tax deduction for the PV of the income distributed to charity. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | With a pooled income fund, the donor cannot increase his contributions to the fund to produce a greater stream of income. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | With a CRAT, invasion of the trust principal is allowed but not required. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | With a CRUT, the grantor’s income is a fixed percentage of the trust’s assets, revalued annually.(B) |
2 points
Question 11
Gary made a loan to his daughter Jill. Jill borrowed $50,000. What is the minimum interest rate Gary can apply on the loan to Jill in order for it to qualify for an intra-family loan?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Inflation rate |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Current market rate for the loan |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Applicable federal interest rate |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | No interest rate interest free loan |
| (B) |
2 points
Question 12
Bob and Sally were recently married. They are currently working on their estate plan. As their Financial Planner, they tell you that Sally is not a citizen of the United States. She is originally from Japan. When you are looking at their estate plan, what type of trust should you include?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | QTIP |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Marital Trust |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | QDOT |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | None of the above |
| (B) |
2 points
Question 13
Which of the following is a legitimate reason why an individual should not gift to a charity?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Reduce the taxable estate |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Reduce income tax liability |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Donor cannot afford the donation |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Satisfaction for the donor(B) |
2 points
Question 14
There are 3 types of Powers of Attorney. If an agent has no authority to act on behalf of the principal until the principal becomes incompetent as certified by a physician, which type of power of attorney does he/she hold?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Non-durable POA |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Springing Durable POA |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Durable POA |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | None of the above(D) |
2 points
Question 15
Which of the following assets do not go through probate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Property held Tenant-in-common |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Life insurance payable to the individual s estate |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Individual’s Revocable trust |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Assets passing through the will(B) |
2 points
Question 16
Which property avoids probate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Property held as Tenants in common |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Property titled Tenancy by the Entirety |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Life insurance policy owned by the decedent who is not the insured |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Community property passing to the surviving spouse(C) |
2 points
Question 17
Marty has an estate of $16 million and all assets are titled in Marty’s name. Marty will pass all of his estate to his wife Clarissa by will at his death. Which statement regarding planning options is not correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | If Marty equalizes his estate by transferring one-half of his assets to Clarissa and funds a Bypass trust, he will avoid paying an estate tax if the remaining assets pass to Clarissa. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | If Marty transfers an exemption equivalent amount to a Bypass trust at his death, and transfers the remainder to a Power of Appointment trust for Clarissa, his estate will be subject to an estate tax. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Clarissa can disclaim a portion of Marty s estate to fund a Bypass trust if a disclaimer trust is established by Marty’s will. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | If Marty’s executor files an election to utilize the DSUEA, then Clarissa may use portability to reduce her estate tax, assuming she does not remarry.(A) |
2 points
Question 18
Bobby made the following transfers this year. Which of the following is an incomplete gift?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A gift of the remainder interest in her beach house that she gave to her daughter Lilly |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | $75,000 that Bobby transferred to her revocable trust |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A distribution of $20,000 made from Bobby’s revocable trust to her daughter Lilly |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A portfolio of bonds Bobby transferred to an irrevocable trust she established for her father |
| (D) |
2 points
Question 19
Which of the following is not a form of leveraging?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | GRAT |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | GRUT |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | QTIP |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | QPRT |
| (B) |
2 points
Question 20
Which of the following allows for an unlimited amount to be given, gift tax free?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A religious organization |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A scientific organization |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A veteran’s organization |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A local government for public use |
| PRIVATE “” MACROBUTTON HTMLDirect | e. | A fraternal society |
| (A) |
2 points
Question 21
Joe and Lindsay are married. Joe is a U.S. citizen. Lindsay is from Germany and does not have her citizenship. If Lindsay were to die first, which type of trust should she set up for the benefit of Joe?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Marital Trust |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | QDOT |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | QTIP |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Family Trust |
| (A) |
2 points
Question 22
Which of the following is considered community property?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Property received as a gift and placed in a joint checking account |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Wages earned by one of the spouses |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Property received as an inheritance and placed in a separate account |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | 401(k) deferrals from earned income of one of the spouses(Cs) |
2 points
Question 23
What are the factors when determining competency?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Legally competent |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Mentally competent |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Financially competent |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | All of the above |
| PRIVATE “” MACROBUTTON HTMLDirect | e. | None of the above |
| (B) |
2 points
Question 24
Which of the following is appropriate use of an inter vivos trust?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | To avoid probate |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | To ensure the orderly distribution of assets at death |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | To minimize or avoid estate taxes |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | All of the above |
| PRIVATE “” MACROBUTTON HTMLDirect | e. | Both A and B(A) |
2 points
Question 25
Ann has a gross estate of $13 million. Her husband David has an estate of $3 million. Ann would like David to receive the right to some income from a trust, and take distributions from the corpus for his maintenance and support. Ann would like to exclude a portion of the trust assets from David’s estate and maximize the use of her unified credit. She also wants David to have total control over the assets in a trust and choose the trust beneficiary at his death. Ann and David wish to minimize the total estate tax liability for their combined gross estate. What marital transfer techniques will meet their objectives?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Power of appointment trust |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | By-pass trust with an ascertainable standard |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Estate equalization(C) |
2 points
Question 26
Which of the following titling procedures can be used by only married couples?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Joint tenancy with the right of survivorship |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Tenancy in common |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Tenancy by the entirety |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Both A and B(A) |
2 points
Question 27
Joe and Barry are in a committed relationship but not married. Joe wants to make sure that his house will pass to Barry automatically if Joe should pass away. How should the house be titled?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Joint Tenants with right of survivorship |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Tenants in common |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Tenants by the entirety |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Held in Joe’s name solely(B) |
2 points
Question 28
Gloria transfers $2 million into a trust for her grandchildren. She allocated $2 million of her GST exemption to the trust. At her death, the trust is valued at $3 million. What is the inclusion ratio and GST tax due at her death?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Zero |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | One |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | 0.33 |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | 0.5 |
| (A) |
2 points
Question 29
Which statement is not correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A decedent spouse receives a marital deduction for terminable interest property transferred into a By-Pass Trust. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A marital deduction delays the estate tax until the surviving spouse’s death. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A By-pass trust eliminates the estate tax in both spouse’s estate |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Estate equalization combined with By-pass trusts may reduce the couple’s combined taxable estate since they may be taxed in a lower tax bracket.© |
2 points
Question 30
How much is the annual exclusion amount and the lifetime exemption for an individual in 2017?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | $14,000 and $2,141,800 |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | $28,000 and $5,490,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | $14,000 and $5,490,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | $28,000 and $2,141,800 |
| (Cs) |
2 points
Question 31
Which of the following statements is not correct in regards to a complex trust?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A complex trust is any trust that is not a simple trust. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A complex trust is one in which the trustee must or may accumulate income. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A complex trust is a separate taxable entity |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A complex trust is allowed a personal deduction limited to $300.(D) |
2 points
Question 32
What is Ancillary Probate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Probate for assets held in a trust |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Probate for personal property |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Probate for real estate held in another state |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Probate for deciding guardianship(C) |
2 points
Question 33
Which of the following is not a main result of DNI?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | To ensure that the trust or estate receives a deduction for amounts distributed and provides a limit for that deduction. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | To ensure that the trust pays the associated tax on distributions that are made to the beneficiaries and/or retained in the trust for reinvestment. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | To limit the portion of distributions that is taxable to beneficiaries. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | To ensure that the character of the distributions to a beneficiary remains the same as in the hands of the trust or estate.(D) |
2 points
Question 34
Which of the following is not a fiduciary?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Trustee |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Executor |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Guardian |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Beneficiary |
| (C) |
2 points
Question 35
All of the following is an advantage of probate except:
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Court supervision over the executor’s activities |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Inventory of the estate |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Privacy of decedent’s will |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Validation of decedent’s will(C) |
2 points
Question 36
Which of the following is an advantage of making a charitable gift of appreciated securities that have been held for more than one year?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | The capital gains tax liability is transferred to the charity |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | The donor’s income tax deduction is based on the fair market value of the security |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | The appreciated security is removed from the donor’s gross estate only if the transfer was made more than three years before death. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A and C(D) |
2 points
Question 37
Jane is named as Bob’s executor. Which of the following is not a step that Jane will have to take with respect to settling Bob s estate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Valuation of the estate |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Providing notice to Bob’s creditors |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Making Bob’s funeral arrangements |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Distributing Bob’s assets per the terms of the will |
| © |
2 points
Question 38
Which of the following is not an allowable deduction from the gross estate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Credit card debt |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A bequest to charity |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Executor’s commission |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | The cost of the grave marker |
| (D) |
2 points
Question 39
Mike is active with his alma mater. In 2017, Mike contributed $11,000 of highly appreciated stock and $20,000 cash to an endowment appeal. He also contributed 100 hours of his time normally billed at $200 an hour. If no further charitable contributions were made in 2017, what is the total value of Mike’s charitable contributions for 2017?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | $20,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | $31,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | $51,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Cannot determine without Mike’s AGI |
| (As) |
2 points
Question 40
Which power is a general power of appointment?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | You create a trust for your husband and sister and retain the power to invade the corpus for your husband’s health care expenses. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | You have the power to direct in your will who will receive assets from your mother’s trust. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | You have the right to exercise a power only with the beneficiary’s consent. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | You have a power to make distributions to your children from a trust created by your father.(D) |
2 points
Question 41
Which of the following is not correct in regards to the GSTT?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | At the transferor’s death, the beneficiary is responsible for paying the GST tax in the case of a direct skip. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | An indirect skip occurs when a transferor gives a child a life estate in real property and gifts the remainder interest to a grandchild. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | If a grantor allocates his GST exemption to a trust, there will be no GST tax due when a non-skip beneficiary dies. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A skip person must pay the tax in a taxable distribution.(A) |
2 points
Question 42
Which of the following gifts can be split?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Bill transferred $60,000 to an irrevocable trust for this wife in which she is the sole beneficiary. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Jill and her brother made a gift of $20,000 to their sister. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Dan and Julie are married and jointly gave their son $40,000. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Frank and his wife gifted $75,000 to a revocable trust for Frank’s father who is the sole beneficiary. |
| (D) |
2 points
Question 43
Which of the following is not a type of account you can use to gift assets to a minor?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | UGMA |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | 2503© |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | 529 accounts |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Annual Exclusion |
| (D) |
2 points
Question 44
Jennifer is the sole beneficiary of an irrevocable trust created by her father. Income and principal may be distributed to her at the trustee’s discretion. Jennifer has a 5-and-5 power of appointment over the trust. Jennifer died last month at which time the trust was valued at $2,500,000. How much of the trust was included in her estate at death?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | $125,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | $50,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | $5,000 |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | $100,000 |
| (B) |
2 points
Question 45
Which of the following accounts does not avoid probate?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | Mrs. A’s checking account payable on death to her daughter |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Mrs. A’s savings account transfer on death to her son |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | Joint checking account between Mrs. A and her two children |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | Checking account in Mrs. A’s name passing through her will |
| (D) |
2 points
Question 46
In which of the following situations can a marital deduction not be taken?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | A husband established a testamentary trust by will that gave his wife the income interest for life. His executor made a QTIP election on IRS form 706 |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | A wife bequeathed her husband $10 million in cash |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | A husband gave his non-citizen wife $2 million |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A wife established a testamentary trust that gave her son the income interest for 2 years and her husband the remainder interest(D) |
2 points
Question 47
What is a Codicil?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | An amendment to a trust |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | An amendment to a will |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | An amendment to guardianship |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | An amendment to a health care proxy |
| (B) |
2 points
Question 48
Which of the following statements is correct about a trustee?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | The trustee manages trust assets according to the trust instrument |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | An institutional trustee serving with a co-trustee who is a family member can make distributions of trust assets to a beneficiary |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | The trustee must collect a decedent’s assets at death to pay debts, taxes and expenses attributable to the decedent’s estate |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A trustee typically specializes in estate administration |
| PRIVATE “” MACROBUTTON HTMLDirect | e. | Both A and B(A) |
2 points
Question 49
Lou set up an ILIT and transferred his life insurance policy with a death benefit of $2 million to the trust. The premiums are $20,000 each year. Lou named his wife Carol and his two children as trust beneficiaries and gave them the right to withdraw the greater of $5,000 or 5% each year. Which statement is NOT correct?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | If Lou dies within the next 3 years, the $2 million death benefit will be included in his gross estate. |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | Lou can split the premium payments transferred to the trust with Carol to reduce the value of the taxable gifts. |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | When Lou transfers premium payments to the trust, his taxable gift will be $5,000 each year. |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | When the beneficiaries let their Crummey powers lapse, they are not making taxable gifts to each other.(B) |
2 points
Question 50
Which of the following statements is/are correct in regard to the taxation of installment payments under an installment note?
| PRIVATE “” MACROBUTTON HTMLDirect | a. | The basis recovery portion is subject to ordinary income tax |
| PRIVATE “” MACROBUTTON HTMLDirect | b. | The interest portion of the payment may be subject to capital gains tax |
| PRIVATE “” MACROBUTTON HTMLDirect | c. | The gain portion of the payment may be subject to capital gains tax |
| PRIVATE “” MACROBUTTON HTMLDirect | d. | A and C(Ass) |
2 points
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