Estate Planning Test 3
Which of the following statements regarding a Crummey power is not correct?
A. A Crummey power permits a beneficiary to demand payment of existing trust corpus or income
How can split-dollar life insurance provide an incentive to reward key employees?
A. An employer can reward key individuals on a selective basis with substantial insurance coverage.
All of the following are tax ramification associated with the creation of a family limited partnership except
A. Gain or loss must be recognized when property is transferred into the partnership.
Which of the following is not a discount reducing the value of an interest in a family limited partnership?
A. Majority interest discount
Susan owns a rapidly appreciating asset she wants to remove from her estate.
A. No taxable gain on the sale since Susan and the trust are the same for income tax purposes
Ginger created an ILIT and transferred her life insurance policy and rental property to the trust.
A. Trust income is taxed to Genger because grantor trust rules apply
Edie died last month owning a whole life insurance policy on her husband Rob's life
A. the amount included in Edie's gross estate but not in her probate estate
In 2017, Junior sells the property for $2 M. What is Junior's gain on the sale of the real estate?
B. $1M
Meg is the holder of a power of appointment in an irrevocable trust
B. Meg has a limited power of appointment over the trust property
which of the following statements is not true with respect to her husband Steve's options
B. Steve may disclaim his interest in the retirement assets
which statement regarding an ILIT is incorrect
B. The trust cannot hold a survivorship policy when a husband and wife are co-insureds
All of the statements regarding the taxation of insurance policies are correct, except
B. When a single policy is gifted jointly to 2 children, the transfer qualifies for two annual exclusions
Which statement concerning a spouse as beneficiary of an ILIT is incorrect
B. a surviving spouse cannot be given an ascertainable standard over trust corpus
Henry is a single businessman with inadequate liquidity to cover estate administrative expenses
B. single premium whole life
When the GRAT was created, what was the value of the taxable gift
C. $750,000
Which statement regarding a business continuation agreement is not correct
C. A business continuation agreement applies only to an incorporated business, not to a partnership.
Which of the following is not a benefit associated with a family limited partnership
C. Greater IRS scrutiny
BJ owns a single-premium life insurance policy on his wife Cora's life.
C. Hoss is the new owner of the policy
Franklin established an irrevocable trust with $60,000.
C. Lucinda will not make a taxable gift if she lets her withdrawal right lapse
don names a trust as the beneficiary of his retirement benefits.
C. RMDs will be paid based on Milly's life expectancy, even after Milly has died
which type of life insurance policy permits the contract owner to choose the level of premium
C. Universal life
Joe dies in 2017 when the value of the trust is $1,200,000. What amount of the trust assets will be included in Joe's gross estate?
D. $1,200,000
The Grantor, age 70, is interested in removing an income-producing asset
D. 10 year GRUT
Which of the following statements regarding a Crummey lapse is not correct?
D. A Crummey beneficiary's unified credit cannot be used to offset a tax attributed to a Crummey lapse
A limited liability company, by its nature, is best suited for what types of ventures
D. All of the above because of the risk factors associated with each
which of the following distribution options will be available to the children if Steve predeceases Teresa
D. Distributions will be based on their oldest son Andrew's life expectancy
Ethan is the beneficiary of an irrevocable trus created by his uncle
D. Ethan has a general power of appointment
All of the following statements regarding liquidity planning for estates are correct, except
D. Insurance proceeds in an ILIT are included in the insured's probate estate if they are used to pay postmortem expenses
In 2017, a client creates a 10-year QRPT into which his primary residence is transferred.
D. The Grantor retains the right to live in the smaller residence...
Which of the following statements is true regarding a SCIN?
D. if John dies before Junior has paid off the note, Junior will not have to make any further payments.
Mackenzie, Holly, and Brooke are friends
D. the purchase of stock by the remaining shareholders is treated as dividends in Mackenzie's estate
From an estate planing perspective, the benefits of a family limited partnership include:
D: 1,2, and 3
Hank is 80 years old.
Grace can create a rollover IRA and can defer distributions based on her life expectancy
which of the following strategies will achieve the greatest income tax savings at a decedent's death
the decedent names his church as the beneficiary of his retirement plans
