HSH 330

A donor contributed $2,000 to a fundraiser that provided all donors with the option to buy season tickets to an NFL game. The tickets are worth $1,000. How much is her deductible charitable contribution for the year? A) $0 B) $2,000 C) $1,000 D) $500

A) $0

Carl is the sole grantor of an irrevocable trust and did not retain any right to the trust's assets. As a lifelong bachelor, the income beneficiary of the irrevocable trust is Carl's sister, Nancy, and the remainder beneficiary of the irrevocable trust is Carl's niece, Maya. At the time of the transfer, Carl paid a gift tax of $35,000. Carl died four years later, when the value of the irrevocable trust was $1,000,000. With regard to the irrevocable trust, how much is included in Carl's gross estate? A) $0 B) $35,000 C) $345,800 D) $1,000,000

A) $0

Gene contributed $500,000 to an irrevocable trust and did not retain any right to the trust's assets. The income beneficiary of the irrevocable trust was Gene's sister, and the remainder beneficiary of the irrevocable trust was Gene's niece. At the time of the transfer, Gene paid gift tax of $35,000. Gene died four years later, when the value of the irrevocable trust was $1,200,000. With regard to the irrevocable trust, how much is included in Gene's gross estate? A) $0 B) $35,000 C) $500,000 D) $1,200,000

A) $0

Jenson died this year. His will specifically bequeaths $1 million to his son, Ned, and bequeaths the residual of his estate to his wife, Nancy. At the time Jenson wrote his will, his net worth was in excess of $4 million, but at his death, his net worth had plummeted to $1,050,000. Because Nancy would only receive $50,000 (or $1,050,000 − $1,000,000) of Jenson's assets, Ned fully disclaimed his bequest 3 months after his father's death so that his mother would receive more assets. How much will Ned have to report as a taxable gift because of this disclaimer? A) $0 B) $38,000 C) $50,000 D) $1 million

A) $0

Bernard made a gift of $500,000 to his brother ten years ago. At the time of the gift, Bernard paid $200,000 of gift tax. When Bernard died in this year, the applicable gift tax credit had increased to $4,500,000. At Bernard's death, what amount related to the $500,000 gift to his brother is included in his gross estate? A) $0. B) $153,000. C) $200,000. D) $500,000.

A) $0.

Sharon wants to make sure that she makes full use of the applicable estate tax credit upon her death, but also wants to make sure that her husband, Oswald, has access to her property. Which of the following would you recommend? A) A Bypass Trust with Oswald as the beneficiary B) An Irrevocable Life Insurance Trust with Oswald as the beneficiary C) A Revocable Living Trust that authorizes the trustee to distribute to Oswald only under specific circumstances D) A Section 2503(b) Trust with Oswald as the beneficiary

A) A Bypass Trust with Oswald as the beneficiary

Which one of the following transfers made this year by 85-year-old Jennifer will not be subject to the Generation Skipping Transfer Tax? A) A gift of a remainder interest in a trust just established that is paying an income interest to Jennifer. The remainderman is a grandson whose parents died in an auto accident earlier this year and before the inception of the trust. B) A transfer by Jennifer of $20,000 to a UTMA account established by her son for Jennifer's granddaughter. C) An irrevocable trust that pays income to Jennifer for 10 years and then pays the remainder to her grandniece who is 65 years old. D) An irrevocable trust that pays income to Jennifer's daughter for life, then distributes the remainder to the grandchild of a friend who is 31 years old.

A) A gift of a remainder interest in a trust just established that is paying an income interest to Jennifer. The remainderman is a grandson whose parents died in an auto accident earlier this year and before the inception of the trust.

Harold, a non-attorney, prepares his own will. Harold handwrites all of the provisions of the will and signs and dates it but fails to have it witnessed by anyone. What type of will does Harold have, if any? A) A holographic will B) A nuncupative will C) A statutory will D) Harold does not have a will.

A) A holographic will

Elizabeth has drafted her own will using the "EZ Wills" software that she purchased on the internet. She sends it to you for a review. In your first review of the will, you look for which of the following common provisions? A) A statement of the domicile of the testator B) A secondary clause C) A specific bequest of property owned in tenancy by the entirety D) A disclosure clause

A) A statement of the domicile of the testator

Josephine, who is single, drafted her own will using the "Zoom Wills" software that she purchased on the internet. She sends it to you for a review. Which of the following is a critical provision to look for? A) A statement of the domicile of the testator B) A simultaneous death clause C) A specific bequest of property owned JTWROS D) A self-proving clause

A) A statement of the domicile of the testator

Which of the following statements accurately reflects the nature of buy-sell agreements? A) A stock redemption plan must have a corporation as a party to the contractual arrangement. B) A stock redemption plan increases the cost basis of surviving shareholders. C) Under a cross-purchase plan funded with life insurance, premiums paid are tax deductible to the payor. D) Proceeds of a life insurance policy owned by a surviving shareholder must be included in the gross estate of the decedent.

A) A stock redemption plan must have a corporation as a party to the contractual arrangement.

Chad and Ryan have been partners for the past 25 years. They are not married. Chad's family is quite wealthy, and and is also very conservative. They do not approve of Chad's relationship with Ryan. Chad was diagnosed with cancer last year and was given only 12-15 months to live. Chad plans to leave his substantial wealth to Ryan. Over the holidays, Chad and his family argued about his estate plan. Chad has come to you, an estate planning attorney, and asks you to recommend ways he can ensure that Ryan will receive his assets. Which of the following would you be least likely to recommend to Chad to meet his objectives? A) A well-drafted will leaving everything to Ryan with a no-contest clause. B) A revocable living trust created and funded now with Ryan as the beneficiary at Chad's death. C) An irrevocable trust created and funded with Chad as the income beneficiary and Ryan as the remainder beneficiary. D) Retitling all assets as JTWROS with Ryan.

A) A well-drafted will leaving everything to Ryan with a no-contest clause.

Which of the following statements is incorrect regarding probate property? A) An LLC passed to a key employee when the business owner retires will be considered probate property when the business owner dies. B) Assets through a testamentary trust are probate property. C) Property held as tenants in common is probate property. D) Property passed through a revocable trust is not probate property.

A) An LLC passed to a key employee when the business owner retires will be considered probate property when the business owner dies.

Which of the following is NOT a terminable interest? A) An ownership interest in a life insurance policy. B) A life estate in a home. C) An interest in a patent. D) A term interest in property for 10 years.

A) An ownership interest in a life insurance policy.

Anne recently died. Anne is survived by her husband, Edward, and daughter, Catherine. Which of the following would be a qualifying property transfer for the purposes of the unlimited marital deduction? A) Anne leaves ownership of certain copyrights to Edward. B) Property transferred to a credit shelter trust for the benefit of Catherine, with Edward as the trustee. C) Anne leaves her beach house to Edward, subject to the condition that if Edward does not survive Anne's sister, Anne's sister will get the property. D) The $1,000,000 life insurance policy on Anne's life that is owned by Edward.

A) Anne leaves ownership of certain copyrights to Edward.

Which of the following applies to the income tax or estate tax treatment of life insurance policy proceeds? A) Benefits received under a periodic settlement option are partially subject to income tax. B) Death proceeds are includible in the gross estate of the decedent if the decedent was the insured, regardless of ownership. C) Payments under a cashout settlement option are partially subject to income tax. D) For a personally owned life insurance policy, premiums are deductible if made as part of a court-ordered child or spousal support plan (QDRO).

A) Benefits received under a periodic settlement option are partially subject to income tax.

Trey decides to set up a trust for the benefit of his two sons, Ronnie and Chad. Trey makes an annual contribution to the trust in the amount of $30,000 and gives each son the right to withdraw up to $15,000. In the current year, when the total trust assets are $52,000, Ronnie decides to withdraw $15,000, but Chad does not withdraw anything. What is the result of Chad's decision not to withdraw? A) Chad has made a taxable gift to Ronnie of $5,000. B) Ronnie has made a taxable gift to Chad of $15,000. C) Trey has made a taxable gift to Ronnie of $15,000. D) No taxable gifts are made by Chad.

A) Chad has made a taxable gift to Ronnie of $5,000.

A bypass trust is also known as a: A) Credit shelter trust. B) Marital trust. C) Charitable remainder trust. D) QTIP trust.

A) Credit shelter trust.

You are opening a new financial planning practice and you would like to put together a team of experts to help your clients with estate planning. Which of the following groups represents the best team to help your clients? A) Financial planner, CPA, and attorney. B) CPA, psychiatrist, and insurance salesman. C) Financial planner, attorney, and real estate agent. D) Attorney, insurance salesman, and IRS agent.

A) Financial planner, CPA, and attorney.

Which of the following retained interests of a grantor to an irrevocable trust will cause inclusion to the grantor's gross estate? A) Having the ability to direct the amount that a remainder beneficiary will receive by retaining the right to the amend the trust document. B) The ability to assist a corporate trustee in an investing the trust assets to achieve the trust's objective. C) The ability to add to the trust to help the trustee purchase a new life insurance policy on the grantor and her husband, where the trust is the applicant, owner and beneficiary. D) Having given up the ability to receive an annuity payment from the trust 5 years prior to their death.

A) Having the ability to direct the amount that a remainder beneficiary will receive by retaining the right to the amend the trust document.

Which type of will is handwritten and does not generally require a witness? A) Holographic B) Oral C) Nuncupative D) Statutory

A) Holographic

On January 15, Linus transfers property to a trust over which he retains a right to revoke one-fourth of the trust. The trust is to pay Patti 5 percent of the trust assets valued annually for her life with the remainder to be paid to a qualified charity. On September 1, Linus dies and the trust becomes irrevocable. Which of the following statements is (are) correct? I. The trust is created on January 15. II. The trust is created when it becomes irrevocable on September 1. III. Linus receives a charitable deduction equal to the present value of 25 percent of the remainder interest. IV. Linus receives a charitable deduction equal to the present value of 100 percent of the property transferred into the trust. A) I only B) I and II C) III only D) III and IV

A) I only

Tracey is a financial planner who recently received his CFP® designation. Tracey does not have any other designations or licenses. Although Tracey's expertise is investment planning, he is anxious to expand his client base and is willing to assist clients with any area of financial planning. Over the last month, Tracey engaged in the following activities with Troy, a new client. I. During the initial meeting, Tracey collected personal data about Troy, including the estate planning documents Troy had previously executed. II. During the second meeting, Tracey recommended the use of a trust to fulfill some of Troy's estate planning goals. III. Troy called Tracey one afternoon and asked if Tracey could explain the probate process to him, which Tracey promptly did. IV. Tracey downloaded a copy of a generic will from the internet, filled in Troy's information and gave the document to Troy to be executed. Of the activities above, which would be considered the unauthorized practice of law? A) IV only B) II and III C) III and IV D) II, III, and IV

A) IV only

Which of the following is true regarding GRATs? A) If the grantor dies during the trust term, the assets will be included in her estate. B) The grantor may revoke the assets in a GRAT at any time. C) The transfer of assets into a GRAT is an incomplete gift until the end of the trust term. D) GRATs are testamentary trusts.

A) If the grantor dies during the trust term, the assets will be included in her estate.

Jonathan worked with an estate planner for several years prior to his death. Accordingly, Jonathan made many transfers during his life in an attempt to reduce his potential estate tax burden. Jonathan's executor, Timothy, is thoroughly confused. Timothy comes to you for clarification on which assets to include in Jonathan's gross estate. All the following transactions will be included in Jonathan's gross estate EXCEPT: A) Jonathan gave $40,000 to each of his three grandchildren 2 years ago. No gift tax was due on the gifts. B) Jonathan purchased a life insurance policy on his life. The policy has a face value of $300,000. Jonathan transferred the policy to his son 2 years ago. C) Jonathan and his wife owned their personal residence valued at $250,000 as tenants by the entirety. D) After inheriting a mountain vacation home from his mother, Jonathan gifted the vacation home to his daughter to remove it from his gross estate. Jonathan continued to use the property as a weekend getaway and continued all maintenance on the property.

A) Jonathan gave $40,000 to each of his three grandchildren 2 years ago. No gift tax was due on the gifts.

Which of the following individuals died testate? A) Manuel met with his attorney and prepared a will, leaving all of his assets to charity shortly before his death from a heart attack. B) Paula wrote an email to her children before her death, designating which children would receive specific property when she died. C) Frank notified his attorney before his death in writing that he was satisfied with all of his property going to his wife and children, so he had no need for a will. D) Kayla, a stay at home mother, did not prepare a will before she died because she owned no assets in her name.

A) Manuel met with his attorney and prepared a will, leaving all of his assets to charity shortly before his death from a heart attack.

Who among the following would be skip persons for purposes of the GSTT? Phil is the transferor and is 82 years old. 1. Phil's grandson John, whose mother, Donna, is living but whose father, Fred, is deceased (Fred is Phil's son). 2. Mary is the great-grandchild of Phil. Both Mary's parents and grandparents are living. 3. Paige is the 21-year-old wife of Phil's second son, Mike, age 65. A) Mary only. B) John and Mary. C) Mary and Paige. D) John, Mary, and Paige.

A) Mary only.

Which of the following is not an estate-planning goal? A) Maximizing the gross estate B) Minimizing transfer taxes C) Providing for liquidity at death D) Fulfilling client's healthcare decisions

A) Maximizing the gross estate

Which of the following is not a common estate planning goal? A) Maximizing transfer costs. B) Minimizing transfer taxes. C) Providing for liquidity at death. D) Fulfilling client's healthcare decisions.

A) Maximizing transfer costs.

Dale and Tomi have been in a long-term, non-married, non-traditional relationship. Dale wants to make sure that if he dies first, Tomi will be provided for. Which of the following would you recommend to fulfill Dale's goal of transferring assets to Tomi at Dale's death? A) Name Tomi as the beneficiary of Dale's retirement plan. B) Transfer the ownership of Dale's real estate investments into a tenancy by the entirety arrangement. C) Advise Dale against writing a will that specifically bequeaths assets to Tomi. D) Recommend that Dale and Tomi move to a community property state.

A) Name Tomi as the beneficiary of Dale's retirement plan.

Marcelle, aged 48, wants to provide for the financial security of her friend Jamie and other unrelated friends. She establishes a trust. Jamie, aged 70, will receive income from the trust for her life. Upon Jamie's death, Darren, another friend who is currently 50, will receive income for his lifetime. Upon his death, the remainder interest will be divided equally between Marcelle's nephews, 8-year-old Carl and 6-year-old Joseph. How many times will this trust be subject to a GSTT? A) None. No GSTT will be assessed. B) One. C) Two. D) Three.

A) None. No GSTT will be assessed.

Albert wants to gift a free college education to each of his 3 grandchildren. He estimates the total cost will be $300,000, and his net worth is $3,000,000. What is the most tax-efficient and cost-efficient way for him to make this gift? A) Pay each child's tuition directly to the university B) Send checks to each grandchild for the purpose of paying tuition C) Establish an irrevocable trust naming the grandchildren as beneficiaries D) Leave funds for each grandchild to pay their tuition in his will

A) Pay each child's tuition directly to the university

Which of the following is the most effective way to revoke a will? A) Physically destroy all copies of the current will. B) Send an email notifying the attorney and beneficiaries that the will is revoked. C) Notify the attorney that the will is revoked and a new will is needed. D) Write a letter to the executor instructing them to ignore the old will and to follow the instructions in the letter instead.

A) Physically destroy all copies of the current will.

Which of the following is included in the gross estate? A) Proceeds from a life insurance policy owned by the insured decedent that were assigned to an ILIT two years before death of the insured. B) A secular trust where the only income beneficiary was the decedent's spouse. C) Property where the decedent had a reversionary interest of less than 1% of the value. D) Gift taxes paid two years prior to the decedent's date of death for gifts made four years earlier.

A) Proceeds from a life insurance policy owned by the insured decedent that were assigned to an ILIT two years before death of the insured.

Which of the following is an appropriate means of valuing an asset in an estate? A) Real estate valued by an appraiser. B) Closely held business interests can be valued per the public stock exchange. C) Life insurance policies owned by the decedent on the life of another are valued at zero if the insured has not yet passed. D) Discounts can be applied to closely held business interests for majority ownership and preferential voting rights.

A) Real estate valued by an appraiser.

Robert has a falling out with his adult children and wants to "write them out of his will." Which of the following is an effective means of fulfilling Robert's wishes? A) Robert throws his old will into a fire and writes a new will leaving everything to charity. B) Robert sends his children a certified letter telling them they have been disinherited. C) Robert directs his attorney to call each of his children to tell them they have been disinherited. D) Robert calls his attorney and tells her that he wants to disinherit his children.

A) Robert throws his old will into a fire and writes a new will leaving everything to charity.

Your client, Samantha, is 65 years old and she is interested in establishing a trust with a value of $10,000,000 for her family. She is aware of the Generation Skipping Transfer (GST) Tax, and has asked you for your advice as to which of the following would not be considered a skip person. Who would not be considered a skip person for GST Tax purposes? A) Samantha's son, Sean, who is 35. B) Samantha's granddaughter, Mia, who is 10 C) Samantha's grandson, Max, who is 12 D) A trust that Samantha had established 2 years ago for her favorite employee, Jill, who just turned 25.

A) Samantha's son, Sean, who is 35.

Which of the following is an appropriate transfer strategy for rapidly appreciating property with a low basis? A) Sell the property via a SCIN to a family member. B) Bequeath the property via a will. C) Sell the property via GRAT. D) Gift the property to a family member who wants to sell it.

A) Sell the property via a SCIN to a family member.

Chris and Jenn gave their son, Evan, a car worth $4,000. The car was originally owned by Chris and Jenn as community property. Evan is married to Michelle and lives in a community property state. After the gift, how is Evan's ownership of the car classified? A) Sole Ownership B) Joint tenants with Chris and Jenn C) Tenancy in Common with Michelle D) Community Property with Michelle

A) Sole Ownership

Reina and her husband William gave Reina's nephew, Burt, a car worth $7,000 that they owned as community property. After the gift, how is the nephew's ownership of the car classified? A) Sole Ownership B) Community Property with Burt's wife C) Tenancy in Common with Reina and William D) Joint Tenancy with Right of Survivorship

A) Sole Ownership

A tenancy by the entirety is a property-titling regime that exists between whom? A) Spouses only B) Spouses or between parents and adult children C) Any members of the same family D) Any two individuals

A) Spouses only

Alton would like to transfer the ownership of his Picasso painting to his son Edgar, but Alton would like to continue to have the painting hang in his house for the next five years. Which of the following would you recommend to Alton? A) TPPT B) CRAT C) QPRT D) FLP

A) TPPT

Which of the following statements is true regarding the estate planning team? A) The advisor should consult with the CPA regarding basis calculations and tax issues. B) The advisor should perform all tax calculations and only refer to a CPA if there is a problem. C) The CPA should draw up the estate planning documents. D) An attorney is only necessary if the client needs a power of attorney.

A) The advisor should consult with the CPA regarding basis calculations and tax issues.

All of the following statements concerning the 5/5 Lapse Rule are true EXCEPT: A) The amount lapsed by the beneficiaries is a taxable gift to the other beneficiaries. B) The amount lapsed by the beneficiaries in excess of the 5% or $5,000 threshold is a taxable gift to the other beneficiaries. C) A hanging power allows the lapsed amount in excess of the 5% or $5,000 threshold to carry into future years, so that a taxable gift is not made to the other beneficiaries. D) The 5 and 5 Rule only applies to trusts with multiple beneficiaries.

A) The amount lapsed by the beneficiaries is a taxable gift to the other beneficiaries.

Which decedent died intestate? A) The decedent handwrote a will that was signed but was not dated or witnessed. B) The decedent was of "sound mind" when he signed his statutory will. C) The decedent prepared a last will and testament with an attorney. D) The decedent made an oral "dying declaration."

A) The decedent handwrote a will that was signed but was not dated or witnessed.

Justin is the grantor of an ILIT. When he dies, his estate will need cash for funeral costs, final medical expenses, death taxes, and so on. How can the proceeds of the life insurance policy in the ILIT be made available to the executor without inclusion in Justin's gross estate? A) The trust terms may authorize both the purchase of assets from the estate or authorize loans to the estate at the trustee's discretion. B) The trust terms direct the executor to the purchase of assets from the estate upon request from the executor. C) The trust terms authorize loans to the estate at the discretion of the executor. D) The trust terms may require that all proceeds be paid to the estate.

A) The trust terms may authorize both the purchase of assets from the estate or authorize loans to the estate at the trustee's discretion.

Only property that passes from the deceased spouse to the surviving spouse is eligible for the marital deduction. Which of the following will not qualify for the estate tax marital deduction? A) Trust property in which the surviving spouse has a right to lifetime income B) Property passed to the spouse through the state's intestacy laws C) Life insurance proceeds paid to the spouse as the named beneficiary D) Property passed by will to the spouse

A) Trust property in which the surviving spouse has a right to lifetime income

The practice of gift splitting is available only between A) spouses. B) a parent and a natural child. C) a parent and an adopted child. D) siblings.

A) spouses.

Nate owns the following property: • A personal residence titled as fee simple valued at $500,000. • A $500,000 life insurance policy on his own life. The only named beneficiary is Nate's brother Jaime, who died 6 months ago. • A car valued at $15,000 titled as JTWROS with Nate's mother. • An IRA valued at $400,000 with Nate's mother as the named beneficiary. What is the current value of Nate's probate estate? A) $500,000. B) $1,000,000. C) $1,400,000. D) $1,415,000.

B) $1,000,000.

Perry's father sold the family business to him using a private annuity. The private annuity was structured such that Perry would pay his father $40,000 per year plus interest, for the remainder of his father's life. At the date of the sale, Perry's father's life expectancy was 20 years and Perry's father is in great health. After six years, Perry's father died of a heart attack and Perry sold the business for $2,000,000 six months after his father's death. What is Perry's capital gain/loss on the transaction? A) $240,000 B) $1,760,000 C) $1,200,000 D) $2,000,000

B) $1,760,000

Kathi and Darrin, who are married, live in a community property state. They purchased the home 17 years ago for $100,000 using joint funds. After many improvements and a surge in the market, the home is now worth $200,000. If Darrin died today and left his share of the home to his daughter Elizabeth, what is Kathi's basis in the home? A) $50,000. B) $100,000. C) $150,000. D) $200,000.

B) $100,000.

A donor transfers property valued at $25,000 to a charitable organization in return for a single life annuity based on her life valued at $13,000. Her adjusted basis in the transferred property was $9,5000. She died 2 years after the transaction, and at the time of her death, the property had a fair market value of $32,000. At the time of the initial transfer, what was her charitable income tax deduction (ignoring any adjusted gross income limitations)? A) $32,000 B) $12,000 C) $15,500 D) $25,000

B) $12,000

Bernard made a gift of $500,000 cash to his brother last year. At the time of the gift, he paid $200,000 of gift tax. At Bernard's death this year, what is included in his gross estate? A) $0 B) $200,000 C) $250,000 D) $500,000

B) $200,000

Mimi and John are married and have always lived in a community property state. They purchased the home 25 years ago for $140,000. After many improvements and a surge in the market, the home is now worth $500,000. John and Mimi both have wills leaving their entire estates to their daughter, Bette. What would Mimi's basis in the home be if John died today? A) $500,000. B) $250,000. C) $70,000. D) $320,000.

B) $250,000.

Wendy is a very generous single woman. She has given $30 million in taxable gifts over the years. This year, she gave her daughter Rachel $51,000, added her boyfriend Bernie as a joint owner on her home worth $502,000, and added him as a beneficiary to her life insurance policy with a death benefit of $1,000,000. Assume the annual exclusion is $16,000. What are Wendy's taxable gifts for the year? A) $570,000 B) $270,000 C) $50,000 D) $1,235,000

B) $270,000

Jane and John recently sold some land they owned for $500,000 this year. They received the land as a wedding gift from Brody's Aunt Jeanette. Aunt Jeanette purchased the land many years ago when the property was worth $200,000. At the date of the gift, the property was worth $300,000 and Aunt Jeanette paid $65,000 in gift tax. What is the long-term capital gain on the sale of the property? A) $200,000 B) $278,333 C) $300,000 D) $500,000

B) $278,333

Drake was a majority owner in a closely held business. He had an adjusted basis in his interest of $600,000, and at his death this year, the fair market value reported on his estate tax return was $5,000,000. Like most majority owners in closely held businesses, Drake did not have much liquidity in his estate and his executor was forced to redeem some of his interest in the business via a Section 303 redemption. If Drake's executor redeemed 30 percent of Drake's interest for $1,800,000 to pay the estate tax and administration fees, how much is subject to capital gains tax? A) $0. B) $300,000. C) $1,200,000. D) $1,800,000.

B) $300,000.

Grant inherited an art collection valued at $450,000 from his aunt Beatrix. She acquired the collection 20 years ago for $130,000. Within 1 month of inheriting the property, Grant sold the collection for $455,000. What is Grant's taxable gain for income tax purposes? A) $5,000 short-term capital gain. B) $5,000 long-term capital gain. C) $320,000 short-term capital gain. D) $320,000 long-term capital gain.

B) $5,000 long-term capital gain.

Watson owns the following property: -A solely owned home worth $500,000. His basis in the home is $380,000. -A $200,000 life insurance policy on his own life. His sister, who died last year, is the only named beneficiary. -A boat valued at $25,000 titled as JTRWROS with his son. What is the current value of Watson's probate estate? A) $500,000. B) $700,000. C) $725,000. D) $525,000.

B) $700,000.

Donna and Daniel have lived in Louisiana their entire marriage. Currently, their combined net worth is $4,000,000 and all of their assets are community property. After meeting with their financial advisor, Donna and Daniel begin a plan of lifetime gifting to reduce their gross estates. This year, they made the following cash gifts (assume the annual exclusion is $16,000): -Son $82,000 -Daughter $162,000 -Republican National Committee $75,000 -Granddaughter $16,000 What is the amount of the taxable gifts to be reported by Donna? A) $35,000. B) $90,000. C) $127,500. D) $255,000.

B) $90,000.

Cara owns the following property: -A personal residence titled as sole ownership fee simple valued at $400,000. -A $500,000 life insurance policy on her own life. The named beneficiary is Cara's brother James, who died 6 months ago leaving two children, Michael and Carol. There is no contingent beneficiary listed. -A car valued at $20,000 titled JTWROS with Cara's mother. -An IRA valued at $200,000 with Cara's mother as the named beneficiary. What is the current value of Cara's probate estate? A) $400,000 B) $900,000 C) $920,000 D) $1,320,000

B) $900,000

Holden is the executor of his mother's estate. Holden determines that his mother's gross estate contains the following assets and debts: $450,000 of real estate $300,000 in cash and cash equivalents $670,000 in qualified retirement plans $370,000 outstanding debt Prior to her death, his mother's home caught fire and the damage totaled $26,000. Administrative fees to manage the estate total $136,000. What is the adjusted gross estate? A) $1,420,000 B) $914,000 C) $888,000 D) $244,000

B) $914,000

A trust that is set up to benefit a child under the age of 21 that must terminate and distribute all assets to the child at the age of majority describes which type of trust? A) 2503(b) Trust. B) 2503(c) Trust. C) UGMA Account. D) UTMA Account.

B) 2503(c) Trust.

Which of the following is correct regarding a power of attorney? A) The principal is the individual that is granted decision-making power. B) A guardian ad litem is an agent of the principal. C) The agent is the person granting the power. D) The attorney who prepares the document is the power of attorney.

B) A guardian ad litem is an agent of the principal.

A minority interest discount may be available when all of the following conditions apply to the holder of a limited partnership interest EXCEPT: A) No voting control. B) A minor management role in the limited partnership. C) The ability to dissolve the FLP. D) The ability to require a return of his or her capital contributions.

B) A minor management role in the limited partnership.

Which of the following statements is incorrect regarding wills? A) A holographic will is a handwritten will. B) A nuncupative will is a will that has no witnesses. C) A statutory will is a will created according to the state's laws. D) A joint will is one will for two testators who leave their property to each other.

B) A nuncupative will is a will that has no witnesses.

Which of the following statements relating to qualified transfers for gift tax purposes is not correct? A) The relationship between the donor and the donee is irrelevant with a qualified transfer. B) A payment made directly to an individual for the purpose of paying medical expenses is a qualified transfer. C) The exclusion for a qualified transfer may exceed the annual exclusion. D) A payment made to a qualified education institution for tuition costs is a qualified transfer.

B) A payment made directly to an individual for the purpose of paying medical expenses is a qualified transfer.

When Ron died, he held a power of appointment over a piece of property under which he could only appoint the property to someone other than himself, his creditors, his estate or its creditors. What type of power is this? A) A general power of appointment B) A special power of appointment C) A power of property appointment D) An ascertainable standard

B) A special power of appointment

Which of the following accurately describes a life estate? A) An interest in property for a specified number of years. B) An interest in property that ceases upon the death of an individual. C) An undivided interest in property held by two or more related or unrelated persons. D) A complete interest in property with all the rights associated with outright ownership.

B) An interest in property that ceases upon the death of an individual.

Maria owns a rental property. She would like to jointly own the property with her husband, Miguel and leave the property to her daughter, Sophia. Which of the following ways could she title the property? A) As joint tenants with right of survivorship with Miguel. B) As tenants in common with Miguel. C) As community property, regardless of which state they live in. D) As tenants by the entirety so she can sell the property without Miguel's consent if she needs to.

B) As tenants in common with Miguel.

Which of the following is an advantage of a revocable living trust? A) Reduction in federal estate taxes B) Avoidance of probate C) Removal of asset appreciation from the grantor's gross estate D) Distribution of the trust assets according to the grantor's will's terms

B) Avoidance of probate

Hazel, a widow, died. She had made no previous lifetime taxable gifts and she died with a gross estate of $11,200,000, consisting solely of a diversified portfolio of publicly traded, income-producing stocks. Her debts were $75,000 and estate administrative expenses that amounted to $50,000. Which of the following post-mortem techniques should Hazel's executor consider electing? A) Elect the alternative valuation date. B) Deduct estate administrative expenses on the estate's fiduciary income tax return. C) Pay estate taxes under IRC Section 6166. D) Use a Section 303 stock redemption.

B) Deduct estate administrative expenses on the estate's fiduciary income tax return.

Harriet and Wendy transfer $90,000 to an irrevocable trust, naming their three children, Renaldo, Francisco and Bartolo as the beneficiaries. The trust provisions include a right to withdraw an amount equal to 1/3rd of any contribution for 30 days for each beneficiary up to the annual exclusion limit for the 2 spouses (assume the annual exclusion is $15,000 for the current year). After 30 days, all the brothers have lapsed the power to withdraw the $30,000 available to them. Which statement is true regarding the brother's lapsing of their powers? A) Each has made a taxable gift to the others Renaldo and Bartolo in the amount of $5,000. B) Each has made a taxable gift to the others of $8,333. C) Each has made a taxable gift to the others of $15,000. D) All of the above.

B) Each has made a taxable gift to the others of $8,333.

Which form is used to report a testamentary transfer subject to GSTT? A) Form 1040 B) Form 706 C) Form 1041 D) Form 709

B) Form 706

Mary Jane's husband died this year. Mary Jane has a one-year-old dependent child and has not remarried. Which filing status will Mary Jane use on her income tax return 3 years from now? A) Married filing separately B) Head of household C) Married filing jointly D) Qualifying widow

B) Head of household

Of the following, who should generally be a member of the estate planning team? I. Investment Advisor II. Trustee III. Insurance agent IV. Attorney A) I and II B) I, III, and IV C) I, II, and III D) I, II, III, and IV

B) I, III, and IV

Bob and Charles own a townhouse together and are not married. Charles contributed 30 percent of the purchase price and Bob contributed 70 percent of the purchase price. Each of them has an equal interest in the property. Which of the following are permissible ways they could title the property? I. Sole ownership II. Tenancy in common III. Joint tenancy with rights of survivorship IV. Tenancy by the entirety A) I only B) II and III C) I, III and IV D) II, III and IV

B) II and III

Assume the decedent did not have a will. Which of the following property would be included in the decedent's probate estate? I. A Pay on Death checking account owned by the decedent that will be transferred to the decedent's grandchild. II. Community interest property owned with the decedent's wife III. Retirement plan proceeds made payable to the decedent's daughter IV. A mountain vacation home the decedent owns jointly (JTWROS) with his siblings A) I and II B) II only C) I, II and IV D) None of the above

B) II only

Jack and his wife, Carol, were in an auto accident. Carol died immediately, and Jack died of complications three weeks later. His gross estate was $12.4 million. One of the major assets in his estate was closely held stock in a rapidly appreciating business. His estate had unsecured debts of $400,000 and administrative expenses of $75,000. His will allocates his estate to his children in equal shares. Which post-mortem planning techniques might benefit Jack's estate? I. The alternative valuation date II. A Section 303 stock redemption III. The QTIP election IV. Special use valuation V. Installment payment of estate taxes A) III only B) II, IV, and V C) IV and V D) I, III, and IV

B) II, IV, and V

Three siblings want to start a bed and breakfast. The two older siblings have stable incomes and minimal debt. The youngest sibling has not been consistently employed and she has significant debt from her credit cards and student loans. The two older siblings can contribute most of the purchase price, while the youngest will contribute less but will take on most of the management of the property. Which of the following is correct regarding titling of the property? A) If they title the property as tenants in common, each sibling will have a survivorship right to a deceased sibling's ownership interest. B) If they title the property jointly with right of survivorship, creditors of the third sibling can potentially claim the property of the other two siblings to satisfy the third siblings' debt. C) If they title the property jointly with right of survivorship, they can allocate ownership percentages according to the amounts they contribute. D) If they title the property as tenants in common, creditors of the third sibling can potentially claim the property of the other two siblings to satisfy the third siblings' debt.

B) If they title the property jointly with right of survivorship, creditors of the third sibling can potentially claim the property of the other two siblings to satisfy the third siblings' debt.

Which of the following is true regarding SCINs and private annuities? A) Collateral may be taken against assets in both a private annuity and a SCIN. B) In both types of agreements, no payments after the date of death are included in the seller's gross estate. C) In both types of agreements, the payment is determined by an IRS calculation. D) In both types of agreements, the buyer's basis is the sum of the payments made.

B) In both types of agreements, no payments after the date of death are included in the seller's gross estate.

Why is a springing durable power of attorney useful? A) In the event that the principal becomes disabled, the power of attorney will automatically become ineffective. B) It allows the principal to choose an agent to make decisions on her behalf if she becomes unable to do so. C) It ensures the decedent's property will be distributed according to her wishes. D) It provides medical professionals with detailed instructions on the disabled individual's wishes for medical care.

B) It allows the principal to choose an agent to make decisions on her behalf if she becomes unable to do so.

Which of the following transfers would not be considered a qualified transfer? A) Kelsey pays $45,000 to Boston University for her niece's tuition. B) Kelsey pays $54,000 to her friend Emma, who uses the money to pay for her medical expenses. C) Kelsey pays $12,000 to Municipal Hospital for her granddaughter's medical expenses. D) Kelsey pays $14,000 to Elite Preparatory School for her nephew's tuition.

B) Kelsey pays $54,000 to her friend Emma, who uses the money to pay for her medical expenses.

Margie has come to you and said that she is considering executing a power of attorney for health care or an advance medical directive (also known as a living will). Although her state utilizes both documents, she believes that she only needs one of these documents. Which of the following statements is true regarding the two documents? A) Margie is correct in believing that an individual does not need both documents, she only needs to execute one document because they both accomplish the same goals. B) Margie should execute both documents as they cover different aspects of medical care. C) Margie only needs to execute the power of attorney for health care, because it covers everything the advance medical directive covers and more. D) Margie does not need to execute either document; she can solve her medical concerns by executing a DNR.

B) Margie should execute both documents as they cover different aspects of medical care.

Harry owns a life insurance policy on his own life with a face value of $1,200,000. Annual premiums of $3,000 are paid on July 1 each year. He gifts the policy to his friend Megan on January 1 of this year. The balance of the interpolated terminal reserve was $12,000 on July 1 of the previous year and $14,000 on July 1 of this year. Which of the following is correct? A) Upon Harry's death, he made a gift of $14,500 to Megan. B) On January 1, Harry made a gift of $14,500 to Megan. C) On July 1, Harry made a gift of $1,200,000 to Megan. D) If Harry dies next year, the death benefit will be excluded from his gross estate.

B) On January 1, Harry made a gift of $14,500 to Megan.

Harold (age 63) established a trust and named his wife, Betty (age 40) as income beneficiary for 20 years. After 20 years, Harold's son, Nelson (age 30) and nephew, Ben (age 22) are to receive lifetime income interests. After the death of both Nelson and Ben, the remainder passes equally to Harold's granddaughter Amy (age 20) and great-grandson, Mason (age 1). How many times is the generation-skipping transfer tax levied? A) Never. B) Once. C) Twice. D) Three times.

B) Once.

Which of the following apply to Section 303 redemptions? A) The estate qualifies for a 303 redemption if it can show reasonable cause. B) Qualifying redemption amounts are limited by the payment of death taxes and estate administration taxes and costs. C) A publicly traded stock will usually qualify for a 303 redemption if the interest is a minority interest. D) The stock redeemed must be common stock.

B) Qualifying redemption amounts are limited by the payment of death taxes and estate administration taxes and costs.

Dennis died recently leaving all his assets in a trust for his wife, Sandy. Dennis placed the assets into a spendthrift trust and gave Sandy the right to receive a certain amount of income each year. Dennis appointed his good friend Richard to be the trustee of the trust. How is Richard's ownership classified? A) Richard holds a life estate over the property. B) Richard holds the legal title to the property. C) Richard holds the equitable title to the property. D) Richard does not hold an interest in the property.

B) Richard holds the legal title to the property.

Which of the following transfers would not be considered a qualified transfer? A) Sarah pays $55,000 to XYZ University for her niece's tuition. B) Sarah pays $50,000 to her friend Satchel to pay for his medical expenses. C) Sarah pays $10,000 to ABC Hospital for her granddaughter's medical expenses. D) Sarah pays $16,000 to Prestigious Preparatory School for her grandchild's tuition.

B) Sarah pays $50,000 to her friend Satchel to pay for his medical expenses.

A transfer to which of the following organizations would NOT qualify for the gift and estate unlimited charitable deduction? A) The Free Library Organization B) The Los Angeles Homeowner's Association C) Mothers Against Drunk Driving D) The Society for the Protection of Wild Birds

B) The Los Angeles Homeowner's Association

Which of the following is true regarding taxable gain on the sale of inherited property for income tax purposes? A) The gain on the sale of inherited property is classified as long- or short-term capital gain depending on how long the beneficiary held the property before the sale. B) The beneficiary inherits the property at step-up basis. C) The beneficiary inherits the property at carryover basis. D) The beneficiary must pay estate tax on the property inherited.

B) The beneficiary inherits the property at step-up basis.

Which of the following statements is true regarding tenancy in common? A) The creditors of one tenant can seize 100% of the property. B) The creditors of one tenant can seize the portion of the property owned by the tenant that is liable to the creditor. C) The creditors of one tenant may force the sale of the property. D) The creditors of one tenant can convert the property into a joint tenancy with survivorship.

B) The creditors of one tenant can seize the portion of the property owned by the tenant that is liable to the creditor.

Which of the following property interests qualifies for the unlimited marital deduction? A) John dies and leaves his vacation home to his wife as trustee of a testamentary trust that is created for the sole benefit of his two children. B) The executor of John's estate made the QTIP election for the bequest of a life estate interest in his personal residence to Deborah, John's wife. C) John bequeaths his interest in community property to his wife and subject to his wife surviving him by more than eight months. D) At John's death, his will created a trust for the benefit of his wife. The trust document gives his wife the authority to appoint assets to herself, her creditors, and her heirs with the approval of John's brother, Colin.

B) The executor of John's estate made the QTIP election for the bequest of a life estate interest in his personal residence to Deborah, John's wife.

At the time of her death, Kathy owned an annuity with payments that will continue after her death to her beneficiary. What amount of the annuity, if any, will be included in Kathy's gross estate? A) None. B) The present value of any future payments. C) The full initial value of the annuity. D) It depends on whether the annuity is from an IRA, a tax-sheltered annuity, or a qualified plan.

B) The present value of any future payments.

Which of the following statements concerning the use of Crummey powers with an irrevocable life insurance trust is correct? A) Crummey powers are used to make trust contributions a future-interest gift. B) The right to exercise the Crummey powers must exist for a reasonable period of time each year. C) If there are several beneficiaries, Crummey powers should be given to only one beneficiary. D) A danger with the Crummey power is that the beneficiary can request an amount greater than the grantor's annual addition to the corpus.

B) The right to exercise the Crummey powers must exist for a reasonable period of time each year.

Which of the following is correct in an Irrevocable Life Insurance Trust (ILIT)? A) The grantor has the ability to reclaim the trust assets. B) The trust is the beneficiary of a life insurance policy. C) The grantor should be the trustee of the ILIT. D) The beneficiary of the ILIT should be the grantor's estate.

B) The trust is the beneficiary of a life insurance policy.

Which of the following statements is correct about the estate tax return? A) The unlimited marital deduction is deducted directly from the gross estate. B) The unlimited marital deduction must include assets in the decedent's gross estate. C) An estate tax return is not required if all of the decedent's property is passed to the surviving spouse. D) Expenses related to the decedent's final illness are deductible on the estate tax return if they exceed 10% of the adjusted gross estate.

B) The unlimited marital deduction must include assets in the decedent's gross estate.

Leila is the sole owner of an LLC worth $15,000,000. Her children are ready to take over her business and she would like to retire within the next two years. She comes to you for advice on how to transfer the business with as little transfer taxes as possible. She has already used her federal exemption on past gifts. Which of the following is an appropriate suggestion? A) Transfer the property via a 5-year GRAT. B) Transfer the property via a SCIN. C) Transfer the property via a CLT. D) Retire from her position as the CEO but retain her ownership interests until death.

B) Transfer the property via a SCIN.

Which of the following statements is true regarding taxation of trust income? A) Trusts are taxed on all income earned by the trust. B) Trusts are taxed on income that is not distributed to the beneficiaries. C) Beneficiaries are liable for income tax on all trust income. D) The grantor is always liable for income tax on trust income.

B) Trusts are taxed on income that is not distributed to the beneficiaries.

All of the following are reasons why trusts are popular asset management tools EXCEPT: A) Trusts can facilitate professional management of trust assets to include the disbursing of those assets. B) Trusts have more favorable income tax rates than individual taxpayers. C) Irrevocable trust can help provide needed liquidity when settling a grantor's estate. D) Revocable trusts can help ease the burden on an executor by retitling assets in the name of the trust while the grantor is alive.

B) Trusts have more favorable income tax rates than individual taxpayers.

A QTIP trust must A) be in the form of a testamentary trust. B) give the surviving spouse the right to require only income producing assets be in the trust. C) permit the trustee to use any amount of the trust principal for any purpose for the spouse. D) give the surviving spouse a general power of appointment over the assets.

B) give the surviving spouse the right to require only income producing assets be in the trust.

All the following are factors that impact whether a taxpayer should deduct the adjusted basis or the fair market value of property contributed to a charitable organization EXCEPT: A) the current market rate of interest B) the capital-gains rate in effect at the time of the transfer C) the donor's current and projected adjusted gross income for the 5 years after the contribution D) the fair market value of the donated property

B) the capital-gains rate in effect at the time of the transfer

George made the following transfers during the year: -$3,000 donation to the local high school. The school then allowed him to utilize the school's pool for a party. -$500 to the children's library during the annual fund drive, for which George received a t-shirt worth $10 and a bumper sticker worth $5. -100 shares of PixieCo. stock to the United Way. At the date of the contribution, the stock had a fair market value of $6 per share. George's adjusted taxable basis in the stock was $10 per share and he held the stock long-term. Ignoring any AGI limitations, what is George's maximum charitable income tax deduction for this year? A) $4,000 B) $3,985 C) $1,100 D) $4,100

C) $1,100

Rita transfers $250,000 of stock to a charitable organization in return for a life annuity on his life valued at $118,000. With regards to this transfer, how much is Rita's charitable deduction? A) $0 B) $118,000 C) $132,000 D) $250,000

C) $132,000

Anthony's grandfather sold the family business, valued at $1,600,000, to him using a private annuity. The private annuity was structured such that Anthony would pay his grandfather $80,000 per year plus interest, for the remainder of his grandfather's life. At the date of the sale, Anthony's grandfather's life expectancy was 20 years and his grandfather was in great health. After eight years, Anthony's grandfather died of a heart attack and Anthony sold the business for $3,000,000 six months after his grandfather's death. What is Anthony's capital gain/loss on the transaction? A) $ 0 B) $1,600,000 C) $2,360,000 D) $3,000,000

C) $2,360,000

Cathy and Mark paid $400 for two tickets to the United Church's annual gala ball. The church determined that the fair market value of each ticket was $100. How much can Cathy and Mark deduct on their income tax return? A) $0 B) $100 C) $200 D) $400

C) $200

A decedent dies this year with a taxable estate of $40,000,000 and has never used any of his applicable estate tax credit. Assume the federal exemption is $10,000,000 and the applicable credit is $4,000,000. What amount of the decedent's estate tax will be offset by the applicable estate tax credit? A) $345,800 B) $1,345,800 C) $4,000,000 D) $10,000,000

C) $4,000,000

Jack and Jill are not married and own farmland titled as joint tenants with rights of survivorship (JTWROS). Jack originally contributed $90,000 and Jill contributed $60,000 toward the purchase price. The land is currently valued at $800,000 and each of them has a 50 percent interest in the property. If Jack died today, what amount of the value of the farmland would be included in his gross estate? A) $90,000 B) $400,000 C) $480,000 D) $800,000

C) $480,000

Avi and Chaim are siblings that own a rental property as Joint Tenants with Rights of Survivorship. Avi contributed $75,000 and Chaim contributed $25,000. The land is currently valued at $200,000 and each of them has a 50% interest in the property. If Chaim died today, what amount of the value of the property would be included in his gross estate? A) $25,000. B) $100,000. C) $50,000. D) $200,000.

C) $50,000.

Steve made the following transfers during the year: • $10,000 to Louisiana State University. The $10,000 contribution allows him to purchase football season tickets. Steve also bought the football season tickets at a cost of $5,000. • $400 to the local public broadcast television station during the annual fund drive. In return for the $400 contribution, Steve received a mug and pen with the station's logo, valued at $8. • 1,000 shares of ABC stock to the United Way. At the date of the contribution, the stock had a fair market value of $50 per share. Steve's adjusted taxable basis in the stock was $10 per share and he held the stock long term. Ignoring any AGI limitations, what is Steve's maximum charitable income tax deduction for this year? A) $18,400 B) $20,392 C) $50,400 D) $58,400

C) $50,400

Michael transfers $100,000 of stock to a charitable organization in return for a life annuity on his life valued at $43,000. With regards to this transfer, how much is Michael's charitable deduction? A) $0 B) $43,000 C) $57,000 D) $100,000

C) $57,000

Natalie and Ashley own farm land as Joint Tenants with Rights of Survivorship. Natalie contributed $60,000 and Ashley contributed $40,000. The land is currently valued at $1,000,000. If Natalie died today, what amount of the value of the farm land would be included in her gross estate? A) $60,000. B) $500,000. C) $600,000. D) $1,000,000.

C) $600,000.

James bought the family business using a private annuity that would require payments of $30,000 per year plus interest for the remainder of his father's life, which is expected to be 20 years. His father died 10 years later. James immediately sold the business for $1,000,000. What is James' capital gain/loss on the transaction? A) $300,000 B) $1,000,000 C) $700,000 D) $400,000

C) $700,000

Brody and Tanya recently sold some land they owned for $150,000. They received the land as a wedding gift from Brody's Aunt Jeanette. Aunt Jeanette purchased the land when the property was worth $20,000. One the wedding day, the property was worth $100,000 and Aunt Jeanette paid $47,000 in gift tax ($37,600 of the gift tax is attributable to the gain in the property's value). What is the long-term capital gain on the sale of the property? A) $42,400. B) $50,000. C) $92,400. D) $130,000.

C) $92,400.

Which of the following types of transfers are subject to GSTT? 1. Qualified gifts. 2. Terminations of trusts with skipped and non skipped persons leaving only skipped persons. 3. Distributions to skipped persons. A) 1 only. B) 1 and 2. C) 2 and 3. D) 1, 2, and 3.

C) 2 and 3.

Which of the following statements regarding SCINs is correct? A) If the seller outlives the SCIN term, the buyer continues to pay the SCIN payment until the seller's death. B) The payments received by the seller under a SCIN are treated as interest income. C) A SCIN can give the seller a collateral interest in the property sold. D) If the seller dies before the end of the SCIN term, the seller is deemed to have made a taxable gift to the buyer equal to the difference between the payments made and the total principal payments due on the SCIN.

C) A SCIN can give the seller a collateral interest in the property sold.

Ralphie, a real estate mogul, dies owning a great deal of real property. Which of the following would be included in Ralphie's probate estate? A) A building owned in sole ownership by Ralphie's wife. Ralphie and his wife do not live in a community property state. B) A vacant lot owned joint tenancy with rights of survivorship by Ralphie and his brother. C) A beach house owned tenancy in common by Ralphie and his mother. D) An office building owned tenancy by the entirety by Ralphie and his wife.

C) A beach house owned tenancy in common by Ralphie and his mother.

What can a grantor use to fund a QPRT? A) Assets that are expected to increase in value faster than the 7520 rate. B) An interest in a closely held business. C) A home or vacation home. D) A home or vacation home and furnishings.

C) A home or vacation home.

A FLP offers all of the following advantages EXCEPT: A) Significant discounts in valuing transfers of partnership interests. B) A convenient way to gift assets that are generally difficult to break into easily giftable pieces. C) A method of keeping appreciation of the FLP assets taxable to the older generation rather than heirs. D) A means of giving away property while still maintaining control.

C) A method of keeping appreciation of the FLP assets taxable to the older generation rather than heirs.

Which of the following statements is not true regarding the need for an estate plan? A) A wealthy, successful business owner who wants to pass his business to his children would have complex estate planning needs. B) The sole breadwinner in a family would need an estate plan with significant life and disability insurance coverage. C) A single individual with no family who does not own any assets and lives paycheck to paycheck would not need an estate plan. D) An 80-year old with 5 adult children and 4 grandchildren who just married his third wife would require estate planning for blended families.

C) A single individual with no family who does not own any assets and lives paycheck to paycheck would not need an estate plan.

What do Dynasty trusts accomplish? A) An effective mechanism for transferring real estate between generations. B) A vehicle to avoid income taxation. C) A vehicle to avoid transfer taxes at the passing of each family generation. D) Allowing family members to participate in the family business.

C) A vehicle to avoid transfer taxes at the passing of each family generation.

All of the following are characteristics of family limited partnerships (FLPs) and why they make excellent transfer tax vehicles EXCEPT: A) Senior family members can retain control of the FLP while they transfer the underlying value of the asset to the younger family members. B) Family values and business/financial lessons gained can be transferred to the recipient family members in the running of the FLP. C) Although they are effective transfer vehicles of family wealth, the structure of FLPs do not offer the general partners (GP) any tools by which they can dissuade the creditors of limited partners (LP) from attaching to the income stream generated by the LP shares. D) FLPs are required to have a valid business purpose to ensure compliance with IRS guidelines.

C) Although they are effective transfer vehicles of family wealth, the structure of FLPs do not offer the general partners (GP) any tools by which they can dissuade the creditors of limited partners (LP) from attaching to the income stream generated by the LP shares.

Which of the following statements regarding selling an estate's assets to generate cash is not correct? A) The estate may have income tax consequences. B) The assets may not be sold at full, realizable fair market value. C) Any losses on the sale of the assets are deductible as losses on the estate tax return. D) Any selling expenses are deductible on the estate tax return.

C) Any losses on the sale of the assets are deductible as losses on the estate tax return.

Which of the following is not true concerning split gifts? A) An executor can consent to split gifts on behalf of the decedent. B) The split gift applies to all gifts made during the year. C) Any two members of the same family can consent to split gifts. D) Gift splitting treats the gift as if each individual made half of the gift, regardless of who actually contributed the gifted funds.

C) Any two members of the same family can consent to split gifts.

Of the following statements regarding a Qualified Personal Residence Trust (QPRT), which is true? A) At the end of the QPRT term, the residence reverts to the grantor. B) The taxable gift to the remainder beneficiary is eligible for the annual exclusion. C) At the end of the QPRT term, the grantor must begin paying rent to the remainder beneficiaries of the QPRT if he continues to live in the residence. D) A QPRT is ideal for a personal residence that is expected to appreciate at a lower rate than the Section 7520 rate.

C) At the end of the QPRT term, the grantor must begin paying rent to the remainder beneficiaries of the QPRT if he continues to live in the residence.

Bill has a general power of appointment over all of his father's assets. Which of the following statements regarding his power of appointment is not true? A) Bill can appoint his father's money to pay for the needs of his father. B) Bill can appoint money to his own creditors. C) Bill must only appoint money using an ascertainable standard. D) If Bill predeceases his father, Bill's gross estate would include his father's assets even though they had not been appointed previously to Bill.

C) Bill must only appoint money using an ascertainable standard.

Six months ago, Jeanette transferred a piece of real estate to her son, Charles, valued at $125,000. Jeanette purchased the real estate for $90,000 6 years ago. All the following statements are true EXCEPT: A) If Charles were to sell the property for $80,000 today, the loss would be a long-term capital loss. B) Charles's basis will be $90,000. C) Charles will have a dual basis for income tax purposes. D) If Charles sold the property for $220,000 after holding it for 5 years, his gain would be $130,000.

C) Charles will have a dual basis for income tax purposes.

Which of the following is a post-mortem planning technique available to an executor? A) Elect to split gifts with the surviving spouse as long as the estate is open B) Use the annual exclusion against the testamentary transfers C) Disclaim assets that were meant to go to the decedent D) Demand dividends be paid to the estate from a corporation where the decedent owned 23% of the shares

C) Disclaim assets that were meant to go to the decedent

What is an advantage of a revocable living trust? A) Reducing the grantor's gross estate B) The trusts allow the grantor to avoid income tax C) Faster distribution of assets to beneficiaries when the grantor dies, compared to probate D) Minimizing estate taxes

C) Faster distribution of assets to beneficiaries when the grantor dies, compared to probate

Which of the following is not a deduction from the gross estate? A) Estate tax marital deduction. B) Estate tax charitable deduction. C) Gift tax deduction. D) State death tax deduction.

C) Gift tax deduction.

Which of the following charitable trusts allow both term certain up to 20 years and life annuities? I. CRATs II. CRUTs III. Pooled income funds A) I only B) II only C) I and II D) I, II, and III

C) I and II

Which of the following statements regarding a Qualified Personal Residence Trust (QPRT) is/are true? I. The grantor must survive the trust term to realize any estate tax savings. II. After the trust term, the house will revert back to the grantor. III. The grantor will have a taxable gift upon the creation of the QPRT. IV. A QPRT is generally inappropriate for vacation homes. A) I only B) I and II C) I and III D) II and IV

C) I and III

Which of the following describes second-to-die life insurance? I. It is generally not includible in any insured's gross estate if it is owned in an ILIT. II. It can provide liquidity to pay estate taxes at the death of the second insured. III. It pays a partial benefit at the death of the first to die (administrative and estate taxes), with the remainder paid in full at the second death. IV. Premiums are usually less expensive than for individual policies on each of the two insureds for the same face amount. A) I and II B) III and IV C) I, II and IV D) I, II, III and IV

C) I, II and IV

Making arrangements to deal with the possibility of physical or mental incapacity is an important area of estate planning. Which of the following arrangements may be used to deal with such an unexpected incapacity? I. Springing durable power of attorney II. Revocable living trust III. QTIP IV. A living will A) I only B) II and IV C) I, II, and IV D) I, II, III, and IV

C) I, II, and IV

Which of the following arrangements may be used to deal with unexpected incapacity? I. A DNR II. A revocable living trust III. Joint tenancy with right of survivorship IV. A living will A) I and IV B) III and IV C) I, II, and IV D) I, II, III, and IV

C) I, II, and IV

Which of the following is/are considered a disadvantage(s) of probate? I. The process can result in delays. II. The process may be expensive. III. The process does not provide clear title to heirs and legatees. IV. The process is open to public scrutiny. A) I only B) I and II C) I, II, and IV D) I, II, III, and IV

C) I, II, and IV

Which of the following techniques can be used to lower the value of an individual's gross estate? I. A Totten Trust II. A Qualified Personal Residence Trust III. A Family Limited Partnership IV. An Irrevocable Life Insurance Trust A) I only B) I and II C) II, III, and IV D) I, III, and IV

C) II, III, and IV

Which of the following is/are considered real property? I. Bonds. II. Patents. III. Hot water tank inside of a residential home. IV. Land held for investment. A) III only B) I and II C) III and IV D) I, II, and III

C) III and IV

Which of the following statements regarding a Grantor Retained Annuity Trust (GRAT) is/are true? I. At the end of the GRAT term, a taxable gift will occur when trust assets are transferred to the beneficiary. II. If the grantor dies during the trust term, a pro rata share of the trust assets will be included in the grantor's estate. III. Interest and dividends earned by assets in a GRAT are taxed to the grantor. IV. If the grantor survives the trust term, none of the trust assets are included in the grantor's gross estate. A) I and IV B) II and III C) III and IV D) I, II, and IV

C) III and IV

Which of the following statements is correct regarding buy-sell agreements? A) The agreement must be funded with insurance. B) With an entity-redemption buy-sell agreement, life insurance premiums paid by the entity are deductible by the corporation. C) If the corporation is designated as the owner and irrevocable beneficiary of any life insurance policy used to fund the buy-sell agreement, the death benefit from the policy is not includible in the decedent-shareholder's gross estate. D) In a cross-purchase buy-sell agreement funded with life insurance, the corporation purchases life insurance on the lives of each owner.

C) If the corporation is designated as the owner and irrevocable beneficiary of any life insurance policy used to fund the buy-sell agreement, the death benefit from the policy is not includible in the decedent-shareholder's gross estate.

Which of the following is NOT true regarding a general power of appointment? A) The powerholder can use the principal's money to pay for their own bills. B) The powerholder can use the principal's money for the principal's bills. C) If the powerholder is limited to an ascertainable standard, they have a limited power of appointment. D) A general power of appointment may extend beyond the death of the principal.

C) If the powerholder is limited to an ascertainable standard, they have a limited power of appointment.

Laurie and Chance are considering purchasing a piece of land on which they plan to build a vacation home. Laurie and Chance are engaged to be married, and are unsure of how they should title the property. Which of the following statements is correct regarding their ownership and titling of the land? A) Laurie and Chance cannot own the property as joint tenants because joint tenancies may only be established between married parties. B) If Laurie and Chance were married and owned the property in tenancy by the entirety, one-half of the value of the property will be included in the probate estate of the first spouse to die without regard to the actual contribution of each spouse. C) If the property is held as a joint tenancy with right of survivorship then Laurie and Chance will each own the same fractional share in the property regardless of how much they contribute. D) If the property is held as a joint tenancy with right of survivorship and Chance dies first, the property will pass to Laurie unless Chance's will directs a different disposition.

C) If the property is held as a joint tenancy with right of survivorship then Laurie and Chance will each own the same fractional share in the property regardless of how much they contribute.

Hannah, a wealthy business owner, wants to sell her business to her neighbor Dylan. Which of the following statements is not true regarding potential sale strategies? A) If the sale is structured as a private annuity, Hannah cannot secure the sale with the business collateral and she will owe capital gains on the sale immediately. B) If the sale is structured as an installment sale, Dylan and Hannah can negotiate the installment term, payment amount, and interest rate. C) If the sale is structured as a SCIN, Dylan will make payments to Hannah for the rest of her life. D) If the sale is structured as an installment sale, Hannah will recognize capital gains on each installment payment made.

C) If the sale is structured as a SCIN, Dylan will make payments to Hannah for the rest of her life.

Tom loans $5,000 to his daughter Tina. Which of the following is true regarding the loan? A) Interest would not be imputed because the loan is less than the amount of the annual exclusion. B) Interest would not be imputed because loans of $100,000 or less are exempt from both income tax and gift tax consequences. C) Interest would not be imputed because the loan is less than $10,000. D) If Tom forgives the loan, the outstanding loan amount is taxable income to Tina.

C) Interest would not be imputed because the loan is less than $10,000.

Which of the following empowers an executor to act as the agent of a probate court? A) Surety Bond B) Letters of Administration C) Letters Testamentary D) Intestacy Laws

C) Letters Testamentary

Bill loans $99,000 to his daughter Maura. She has no investment income. Why is there no imputed interest on this loan? A) The loan is less than the amount of the annual exclusion. B) Loans of $100,000 or less are exempt from both income tax and gift tax consequences. C) Maura has investment income of less than $1,000. D) Maura's earned income is less than $1,000.

C) Maura has investment income of less than $1,000.

Which of the following is an advantage of dying intestate? A) Liquidity can be easily generated by selling small business ownership interests. B) Estate property can be designated to charity and friends. C) Minor children and surviving spouses will get priority with distributing estate assets. D) Only the very wealthy need estate planning services, so money can be saved by avoiding the creation of a will.

C) Minor children and surviving spouses will get priority with distributing estate assets.

Nellie recently executed a power of attorney giving Jessie the power to perform certain tasks. Which of the following powers given to Jessie would cause the power to be deemed a general power of appointment? A) Nellie gave Jessie the power to use Nellie's money to pay Nellie's creditors. B) Nellie gave Jessie the power to sell and buy property on Nellie's behalf. C) Nellie gave Jessie the power to use Nellie's money to pay Jessie's creditors. D) Nellie gave Jessie the power to make gifts to Nellie's heirs and charities.

C) Nellie gave Jessie the power to use Nellie's money to pay Jessie's creditors.

You are a CFP® professional and although you never went to law school, you consider yourself to be very good at reviewing wills. Your client, Catherine, asks you to prepare a will for her. Should you prepare a will for Catherine? A) Yes, Catherine is your best client and you might lose her if you do not prepare the will. B) Yes, it is permissible for a CFP® professional to prepare a legal document. C) No, preparing Catherine's will would be considered the unauthorized practice of law. D) No, you should only prepare Catherine's will if you are going to be a beneficiary under the will.

C) No, preparing Catherine's will would be considered the unauthorized practice of law.

Which of the following is not a correct statement with respect to the unlimited marital deduction? A) The recipient spouse must be a US citizen at the time the transfer occurs through gift or at death. B) To get the estate tax marital deduction for assets passing at death, the property must have been included in the gross estate of the deceased spouse. C) Property passing to an ex-spouse upon the death of a former spouse will qualify for the deduction assuming all other requirements are met and the decedent and the recipient were married at some point during the year of death. D) The deduction may be taken only for assets which the surviving spouse actually receives.

C) Property passing to an ex-spouse upon the death of a former spouse will qualify for the deduction assuming all other requirements are met and the decedent and the recipient were married at some point during the year of death.

Which of the following is true regarding the gift tax return? A) The due date for the gift tax return is 9 months after the gift is made. B) During the year, James gifts his son $10,000. James must file a gift tax return. C) Renata gifts her granddaughter a $36,000 tuition payment, made directly to her university. Renata does not need to file a gift tax return. D) Frankie gifts his wife a surprise trip to the Bahamas, worth $17,000. He must file a gift tax return.

C) Renata gifts her granddaughter a $36,000 tuition payment, made directly to her university. Renata does not need to file a gift tax return.

Which of the following is a feature of a testamentary trust? A) Created and funded by the grantor while they are still alive. B) Shifts the income tax burden to a lower-bracket taxpayer. C) Results in the inclusion of assets in the gross estate. D) Avoids probate.

C) Results in the inclusion of assets in the gross estate.

Although he has a vast fortune, Ricky has decided not to prepare an estate plan because he believes that his surviving family members will divide up his assets appropriately. Which of the following is not a risk associated with failing to plan for an estate? A) Ricky's estate could incur excessive transfer taxes. B) Ricky's favorite Corvette may not be transferred to his ex-wife, Carla. C) Ricky's insurance policy on his own life may not be paid out to the named beneficiary. D) Ricky's current wife, Lucille, may not provide for Ricky's children from a previous marriage.

C) Ricky's insurance policy on his own life may not be paid out to the named beneficiary.

All of the following statements regarding powers of attorney are correct EXCEPT? A) A general power of attorney may or may not be durable. B) A springing power of attorney is a useful tool to deal with the contingency of the principal's potential incapacity. C) Special powers of attorney give the agent unlimited power to deal with the principal's affairs. D) Estate tax inclusion for the agent is a potential disadvantage to the agent of holding such a power.

C) Special powers of attorney give the agent unlimited power to deal with the principal's affairs.

Teresa and her brother Michael decide to purchase a condo together. They both want to use the condo for family vacations. The price of the condo is $620,000. Michael expects to use the condo 60 percent of the time and Teresa 40 percent of the time. Michael contributed $372,000 and Teresa contributed the balance. Their ownership percentage equals their contribution percentage. Which type of property titling must the condo be to reflect their ownership interest? A) Community property B) JTWROS C) Tenancy in common D) Tenancy by the entirety

C) Tenancy in common

Cassie wishes to leave a sum of money to each of her minor grandchildren upon her death. She wants the investment income to be used to support them until they finish their education, and she wants the investment income from the funds to be taxed at as low a rate as possible. She does not want the grandchildren to have access to the capital until the age of 45. Cassie should leave the money to: A) Each of her children to be invested for the benefit of the grandchildren. B) Each of her grandchildren directly. C) Testamentary trusts established for each of her grandchildren as beneficiaries. D) Inter vivos trusts established for each of her grandchildren as beneficiaries.

C) Testamentary trusts established for each of her grandchildren as beneficiaries.

In a FLP, there may be special valuation discounts available to enable wealth to pass to younger generations at a significantly lower tax cost than would otherwise be possible. One of these is the "lack of marketability" discount. What is the other? A) The "general partner" discount. B) The "majority interest" discount. C) The "minority interest" discount. D) The "management" discount.

C) The "minority interest" discount.

Which of the following statements regarding private annuities is correct? A) The buyer continues to make payments seller's estate if the seller dies. B) The seller must pay a risk premium. C) The annuity payments are determined by the IRS. D) The term of the annuity is the buyer's life.

C) The annuity payments are determined by the IRS.

Of the following purported benefits of using a bypass trust in conjunction with the use of the unlimited marital deduction, which is not a correct statement? A) A bypass trust allows any appreciation in an asset that occurs after the transfer to the bypass trust to escape estate taxation at the death of the second spouse to die. B) A surviving spouse can be a beneficiary of the bypass trust although often any distributions would be based on the HEMS standard. C) The bypass trust qualifies for the marital deduction as asset from the bypass trust are included in the estate of the surviving spouse at their death. D) Creditor protection for beneficiaries is potentially available in a bypass trust whereas creditors of the surviving spouse may have access to assets passing directly to a surviving spouse.

C) The bypass trust qualifies for the marital deduction as asset from the bypass trust are included in the estate of the surviving spouse at their death.

Last year, a woman transferred a life insurance policy on her life into an irrevocable life insurance trust for the benefit of her grandchildren. She died earlier this year. The policy's death benefit was $5,000,000. Which of the following statements regarding this transfer is true? A) The death benefit will be excluded from the decedent's gross estate. B) If the trust has a Crummey provision, the death benefit would have been excluded from her estate. C) The death benefit of $5,000,000 is included in her estate. D) Her estate will owe federal income tax on the death benefit.

C) The death benefit of $5,000,000 is included in her estate.

Which of the following statements is true regarding the marital deduction? A) The availability of the unlimited marital deduction eliminates the estate tax due for both the decedent spouse to die and the surviving spouse. B) Marital deduction property can consist of estate property as well as property that is not within the gross estate of the decedent spouse. C) The death benefit of a life insurance policy included in a decedent's gross estate is eligible for the unlimited marital deduction if the surviving spouse is the listed beneficiary and receives the proceeds. D) The decedent spouse must be a US Citizen in order to utilize the marital deduction.

C) The death benefit of a life insurance policy included in a decedent's gross estate is eligible for the unlimited marital deduction if the surviving spouse is the listed beneficiary and receives the proceeds.

Which of the following is a risk of dying without a valid will? A) The decedent's children will not inherit any property in the estate. B) The decedent's property will immediately be seized by the state. C) The decedent will lose the chance to name an executor his or her estate. D) The decedent's family will be required to move out of the decedent's home.

C) The decedent will lose the chance to name an executor his or her estate.

Which of the following statements concerning trust formation is correct? A) The trustee of the trust will receive the trust corpus after paying the income to the income beneficiary. B) The remainder beneficiary of a trust receives an annuity payment each year. C) The grantor of a trust contributes property to a trust, which will be managed by the trustee. D) The income beneficiary of a trust always receives the trust property at the termination of the trust.

C) The grantor of a trust contributes property to a trust, which will be managed by the trustee.

An aunt and her nephew own a rental property as tenants in common valued at $200,000. The aunt owns an 80% interest and her nephew owns a 20% interest. The aunt is elderly and in failing health. She wants to sell the property to get cash to pay off her medical bills. What impact will her sale have on her nephew? A) The nephew will have to agree to the sale. B) The aunt can sell 100% of the property and reimburse the nephew for his loss. C) The nephew will become co-tenants with the person the aunt sells to. D) The nephew will lose his right of survivorship.

C) The nephew will become co-tenants with the person the aunt sells to.

Zuri gives Omani a power of appointment. Which of the following powers would be deemed a general power of appointment? A) The power to use Zuri's money to pay Zuris' creditors B) The power to sell and buy property on Zuri's behalf C) The power to use Zuri's money to pay Omani's creditors D) The power to make gifts to Zuri's heirs and charities

C) The power to use Zuri's money to pay Omani's creditors

Which of the following statements is true regarding dynasty trusts? A) Real estate is a good choice to be held within dynasty trusts. B) Dynasty trusts are commonly used to avoid income taxation. C) The structure of dynasty trusts allows the family to avoid transfer taxes at the passing of each family generation. D) The trustee's discretion should be restricted in a dynasty trust.

C) The structure of dynasty trusts allows the family to avoid transfer taxes at the passing of each family generation.

Which of the following is not a requirement for a general power of appointment trust to be eligible for the unlimited marital deduction? A) No person, other than the surviving spouse, may appoint any part of the trust property to anyone other than the surviving spouse. B) The general power of appointment granted to the surviving spouse must be exercisable by the surviving spouse alone. C) The surviving spouse's right to the trust property must be limited to an ascertainable standard, such as health, education, maintenance, and support. D) The surviving spouse must be entitled to receive all of the income from the trust, at least annually.

C) The surviving spouse's right to the trust property must be limited to an ascertainable standard, such as health, education, maintenance, and support.

Which of the following accurately describes a QTIP Trust? A) A QTIP is sometimes called a "B" or "Q" Trust. B) Trust income must be paid to the spouse or other designated beneficiary at least annually. C) The trust assets will be included in the gross estate of the surviving spouse. D) The surviving spouse designates the remainder beneficiaries of the QTIP.

C) The trust assets will be included in the gross estate of the surviving spouse.

Which of the following is a benefit of the unlimited marital deduction? A) The use of the unlimited marital deduction can eliminate taxation for the married couple. B) The estate tax on property can be deferred until the death of the second-to-die spouse as long as the spouse does not remarry. C) The unlimited marital deduction can preserve more of the applicable estate tax credit for use by the surviving spouse at the second death. D) The unlimited marital deduction can ensure the decedent's children will receive the assets at the death of the second spouse.

C) The unlimited marital deduction can preserve more of the applicable estate tax credit for use by the surviving spouse at the second death.

Which of the following transactions will be included in the decedent's gross estate? A) Gifts of $50,000 cash to each of the decedent's neices and nephews last year. B) A value of a life insurance policy the decedent owned on his own life that he gifted to his sister four years ago. C) The value of a life insurance policy the decedent owned on his sister's life that he owned at death. D) Property owned by the decedent's daughter that the decedent was allowed to use whenever he wanted.

C) The value of a life insurance policy the decedent owned on his sister's life that he owned at death.

Which of the following transactions will be included in the decedent's gross estate? A) Gifts of $50,000 cash to the decedent's son last year. B) A value of a life insurance policy on the decedent's life owned by the decedent's sister. C) The value of a life insurance policy the decedent owned on his sister's life that he owned at death. D) Property transferred by the decedent to his brother five years ago.

C) The value of a life insurance policy the decedent owned on his sister's life that he owned at death.

At the request of her financial advisor, Heba is making a list of her estate planning goals. She is a 68-year old widow with a net worth is $24 million. She has 3 adult children and 5 grandchildren. Which of the following goals would be the least important in developing her estate plan? A) To minimize estate and transfer taxes B) To avoid unnecessary fees and costs C) To provide financial support for her children D) To plan for her incapacity

C) To provide financial support for her children

Although he has a vast fortune, Tricky has decided not to prepare an estate plan because he believes that his surviving family members will divide his assets appropriately. Which of the following is not a risk associated with failing to plan an estate? A) Tricky's estate could incur excessive transfer taxes. B) Tricky's favorite car may not be transferred to his ex-wife, Carla. C) Tricky's insurance policy on his own life may not be paid out to the named beneficiary. D) Tricky's current wife, Dixie, may not provide for his children from a previous marriage.

C) Tricky's insurance policy on his own life may not be paid out to the named beneficiary.

The generation-skipping transfer tax is imposed A) as an alternative to the estate tax. B) and is deductible from any gift tax. C) in addition to gift and estate taxes. D) as a progressive tax like the estate tax.

C) in addition to gift and estate taxes.

Ordinary and necessary administration expenses paid by the fiduciary of an estate are deductible A) only on Form 706. B) only on the fiduciary tax return Form 1041. C) on the fiduciary tax return Form 1041 or on Form 706. D) on both the fiduciary tax return and the estate tax return.

C) on the fiduciary tax return Form 1041 or on Form 706.

Which of the following is a factor that impacts whether a taxpayer should deduct the adjusted basis or the fair market value of property contributed to a charitable organization? A) the Section 7520 IRS imputed interest rate B) the capital-gains rate in effect at the time of the transfer C) the donor's current and projected adjusted gross income for the 5 years after the contribution D) the financial health of the non-profit organization

C) the donor's current and projected adjusted gross income for the 5 years after the contribution

Which of the following are methods is the best method for transferring property outside of probate? A) verbally agreeing to keep separate finances, even though the couple lives in a community property state. B) transfer of estate property through a testamentary trust C) titling property as joint tenants with right of survivorship D) relying on the state's intestacy statutes for distribution of the estate property

C) titling property as joint tenants with right of survivorship

Death benefit proceeds from a life insurance policy are included in a decedent's gross estate in which of the following circumstances: I. The decedent gave the policy to his father four years ago, but retained the right to change the name of the beneficiary. II. The policy beneficiary is a grantor trust of the decedent, but the policy is owned by a closely held corporation. III. The decedent gave the policy to a charity seven years ago. IV. The decedent transferred the policy to an irrevocable life insurance trust five years ago with no retained incidents of ownership. A) I and IV B) II and III C) III and IV D I and II

D I and II

Last year, Lori assigned a paid-up whole life insurance policy to an Irrevocable Life Insurance Trust (ILIT) for the benefit of her three children. The ILIT contained a Crummey provision for the benefit of each child. At the time of the transfer, the whole life insurance policy was valued at $200,000, and since Lori had not made any other taxable gifts during her lifetime, she did not owe any gift tax. Lori died this year, and the face value of the whole life insurance policy of $2,000,000 was paid to the ILIT. Regarding this transfer, how much is included in Lori's gross estate at her death? A) $0 B) $164,000 C) $964,000 D) $2,000,000

D) $2,000,000

Which of the following gifts made by Tristan, age 49, is subject to the generation-skipping transfer tax? A) $16,000 to his grandson. B) $20,000 to his niece, age 6. C) Payment of medical school tuition of $50,000 for the granddaughter of Joe, Tristan's best friend. D) $20,000 to the daughter (age 6) of Tristan's former college roommate.

D) $20,000 to the daughter (age 6) of Tristan's former college roommate.

A niece and uncle agreed to transfer ownership of the uncle's convenience store to the niece via a self-cancelling installment note (SCIN). Under the terms of the SCIN, she pays $20,000 per year plus interest for 10 years. If the uncle died four years later, what is the niece's adjusted basis in the home? A) $0 B) $80,000 C) $120,000 D) $200,000

D) $200,000

Cody and Chelsi, who are married to each other, own their home together titled as community property. They purchased the home three years ago for $200,000. After improvements and a surge in the market, the home is now worth $400,000. If Cody died today and left his share of the home to his daughter Alyssa, what is Alyssa's federal income tax basis in the home? A) $50,000 B) $100,000 C) $150,000 D) $200,000

D) $200,000

A grantor transferred assets worth $1,000,000 into an irrevocable trust and did not retain any rights in the property. The grantor died 2 years later, and the value of the irrevocable trust was $1,300,000. What value of the trust assets is included in the grantor's gross estate, if any? A) $0 B) $1,000,000 C) $1,300,000 D) $300,000

D) $300,000

In 2020, Grace assigned a paid-up whole life insurance policy to an Irrevocable Life Insurance Trust (ILIT) for the benefit of her four children. The ILIT contained a Crummey provision for the benefit of each child. At the time of the transfer, the whole life insurance policy was valued at $350,000, and since Grace had not made any other taxable gifts during her lifetime, she did not owe any gift tax. Grace died this year, and the face value of the whole life insurance policy of $4,000,000 was paid to the ILIT. Regarding this transfer, how much is included in Grace's gross estate at her death? A) $0 B) $290,000 C) $350,000 D) $4,000,000

D) $4,000,000

Sherri purchased a home many years ago for $100,000. She married Gary five years ago when the house was worth $200,000. Sherri and Gary live in a community property state. Assume Sherri died today and left her entire interest in the property to her son Brody. The property is currently valued at $400,000. What is Brody's basis in the home after Sherri's death? A) $0 B) $100,000 C) $200,000 D) $400,000

D) $400,000

Which of the following statements is/are correct regarding the GSTT? 1. The annual exclusion is allowed. 2. Gift splitting is permitted. 3. Qualified transfers are excluded from GSTT. 4. Each person is allowed a lifetime exemption against all skips. A) 1 and 4. B) 1, 2, and 3. C) 1, 2, and 4. D) 1, 2, 3, and 4.

D) 1, 2, 3, and 4.

The Generation Skipping Transfer Tax (GSTT) has all the following characteristics, except: A) GSTT gifts to direct skips qualifying for the annual exclusion are not subject to the tax. B) Assets transferred to a trust that has a grandchild as the sole beneficiary may be subject to both gift and generation skipping transfer tax. C) If all the beneficiaries of a trust are grandchildren (all whose parents are living) of the grantor then the trust is subject to GSTT. D) A "skip person" is a person who is one or more generations younger than the transferor.

D) A "skip person" is a person who is one or more generations younger than the transferor.

Which of the following charitable remainder trusts would be appropriate? A) A CRAT for an individual who wishes to make annual contributions to his alma mater. B) A CRUT for a widow who is on a fixed budget. C) A CRAT for a business owner who wants to transfer the business to his children. D) A CRAT for a wealthy individual who wants to remove appreciating property from her estate.

D) A CRAT for a wealthy individual who wants to remove appreciating property from her estate.

Colin would like to use his recent inheritance of $200,000 to establish a charitable remainder trust. Colin would like to have the flexibility to make additional contributions to the charitable remainder trust in the future. Which of the following would you recommend for Colin? A) A Charitable Remainder Annuity Trust B) A Charitable Gift Annuity C) A Charitable Lead Unitrust D) A Charitable Remainder Unitrust

D) A Charitable Remainder Unitrust

Janet would like to use her recent inheritance of $350,000 to establish a charitable remainder trust. She would like to have the flexibility to make additional contributions to the charitable remainder trust in the future. Which of the following would you recommend for Janet? A) A Charitable Remainder Annuity Trust B) A Charitable Gift Annuity C) A Charitable Lead Unitrust D) A Charitable Remainder Unitrust

D) A Charitable Remainder Unitrust

Of the following expenditures from an estate, which is not a deduction from the gross estate or adjusted gross estate to arrive at the taxable estate? A) Payment to United Charitable Organization (a charity qualifying under IRC Section 501(c)(3)) to satisfy a specific bequest. B) Distribution of assets to spouse to satisfy specific bequests listed in will. C) Payment to Second USA Bank for an outstanding credit card balance. D) A payment to decedent's friend for $10,000 to satisfy a specific bequest.

D) A payment to decedent's friend for $10,000 to satisfy a specific bequest.

Which of the following terms describes an insurance policy that covers the lives of two people and is payable only after both insureds have died? A) A variable life insurance policy B) An indexed universal life insurance policy C) A split-dollar life insurance policy D) A second-to-die life insurance policy

D) A second-to-die life insurance policy

Colleen transferred ownership of a whole life insurance policy on her life to an Irrevocable Life Insurance Trust (ILIT) six years ago and retained the right to borrow against the policy. When Colleen dies, the proceeds of the life insurance policy are: A) Included in Colleen's federal gross estate if she has any outstanding loans against the life insurance policy. B) Included in Colleen's federal gross estate if Colleen continued paying the policy premiums after the life insurance policy was transferred to the ILIT. C) Never included in Colleen's federal gross estate. D) Always included in Colleen's federal gross estate.

D) Always included in Colleen's federal gross estate.

Which of the following incidents of ownership held during the three-year period before death will cause the inclusion of life insurance proceeds in the gross estate? A) The right to change the beneficiary. B) The right to borrow against the policy. C) The right to convert group coverage to an individual contract. D) Any of the above incidents of ownership would be enough to bring the proceeds into the gross estate.

D) Any of the above incidents of ownership would be enough to bring the proceeds into the gross estate.

Andy's net worth is $18,500,000, consisting entirely of his separate property. His wife's net worth is $500,000, consisting entirely of her separate property. As part of Andy's estate plan, he would like to transfer as many assets to his wife as possible, while making the most of his applicable estate tax credit. He would also like to ensure that his wife has access to all of his net worth for the rest of her life. It is his wish that at his wife's death, the children will inherit whatever is left, with the least possible amount of transfer taxes owed. Which of the following estate plans would fulfill Andy's goals? Assume that Andy died this year and the exemption is $12,000,000, and that he had not used any of his exemption amount. A) Andy's estate could transfer $12,000,000 to Andy's wife as a specific bequest and direct his estate's executor to donate Andy's entire unused exemption to his wife. B) At Andy's death, his estate could create an ILIT for the sole benefit of Raymond's children by utilizing Andy's remaining applicable estate tax credit equivalency. These funds could be used to purchase life insurance on Andy's wife. Any remaining assets should be given the Andy's wife outright. C) At Andy's death, his estate should transfer $12,000,000 to an Irrevocable Trust for the sole benefit of Andy's children. The remaining assets should be given outright to Andy's wife. D) At Andy's death, $12,000,000 should be transferred to a bypass trust for the benefit of Andy's children. Andy's wife should be given the power to invade the bypass trust for an ascertainable standard. The remaining assets should be given outright to Andy's wife.

D) At Andy's death, $12,000,000 should be transferred to a bypass trust for the benefit of Andy's children. Andy's wife should be given the power to invade the bypass trust for an ascertainable standard. The remaining assets should be given outright to Andy's wife.

Raymond's net worth is $15,000,000, consisting entirely of his separate property. His wife's net worth is $200,000, consisting entirely of her separate property. As part of Raymond's estate plan, he would like to transfer as many assets to his wife as possible, while making the most of his applicable estate tax credit. He would also like to ensure that his wife has access to all of his net worth for the rest of her life. It is his wish that at his wife's death, the children will inherit whatever is left, with the least possible amount of transfer taxes owed. Which of the following estate plans would fulfill Raymond's goals? Assume that Raymond died when the federal exemption was $12,000,000 and that he had not used any of his exemption amount. A) Raymond's estate could transfer $10,000,000 to Raymond's wife as a specific bequest and direct his estate's executor to preserve Raymond's unused exemption to his wife. B) At Raymond's death, his estate could create an ILIT for the sole benefit of Raymond's children by utilizing Raymond's remaining applicable estate tax credit equivalency. These funds could be used to purchase life insurance on Raymond's wife. Any remaining assets should be given the Raymond's wife outright. C) Raymond should transfer $12,000,000 to an Irrevocable Trust for the sole benefit of Raymond's children and his wife today. D) At Raymond's death, $12,000,000 should be transferred to a bypass trust for the benefit of Raymond's children. Raymond's wife should be given the power to invade the bypass trust for an ascertainable standard. The remaining assets should be given outright to Raymond's wife.

D) At Raymond's death, $12,000,000 should be transferred to a bypass trust for the benefit of Raymond's children. Raymond's wife should be given the power to invade the bypass trust for an ascertainable standard. The remaining assets should be given outright to Raymond's wife.

Which type of trusts permit additional contributions to the trust after its inception? A) Charitable remainder annuity trusts (CRATs) B) Charitable remainder unitrusts (CRUTs) C) Both CRATs and GRATs D) Both CRUTs and GRUTs

D) Both CRUTs and GRUTs

A donor with reservations about a child's financial and emotional sophistication at the time they receive an outright distribution of all property from a 2503(c) trust at age 21 can do which of the following: A) Delay the distribution by up to 10 years. B) Dictate that the distribution be split into 5 equal parts spread over 5 years. C) Make a decision at the time the minor turns 21 on whether to go ahead with the distribution or to allow the trust property to revert back to the donor's estate. D) Consider alternatives to the 2503(c) trust because full distribution at age 21 is a required part of the trust.

D) Consider alternatives to the 2503(c) trust because full distribution at age 21 is a required part of the trust.

Which of the following is the most appropriate strategy for a small estate? A) Maximize annual gifting under the annual exclusion each year. B) Implement irrevocable trusts for marital transfers. C) Name a relative as power of attorney to handle all healthcare and estate matters. D) Create healthcare planning documents and create an estate plan that minimizes the probate estate while ensuring the estate has sufficient liquidity to satisfy state death taxes.

D) Create healthcare planning documents and create an estate plan that minimizes the probate estate while ensuring the estate has sufficient liquidity to satisfy state death taxes.

Michael has a wife, Diane, and two children. Michael's daughter, Maureen, graduated from college in May and began a career as a teacher. This year, Michael rewarded Maureen for her hard work and purchased a new car for her that cost $21,000. The funds to purchase the car came from an account that is part of Michael's separate assets (not marital). Since the gift exceeded the gift tax annual exclusion amount of $16,000, the excess of $5,000 will be a taxable gift and will reduce Michael's applicable gift tax credit amount. How can Diane help Michael avoid making a taxable gift? A) Diane can elect to split the gift with Michael by making the $5,000 portion of the taxable gift a gift attributable to Diane. B) Diane can choose to pay any applicable gift tax upon Michael's death under gift splitting C) Diane can't help Michael since the car was purchased with separate assets. D) Diane can elect to split the gift with Michael for Michael's final tax year, attributing $10,500 of the gift to Diane.

D) Diane can elect to split the gift with Michael for Michael's final tax year, attributing $10,500 of the gift to Diane.

Elizabeth, a widow, has decided to set up trusts for each of her four grandchildren to take advantage of the generation-skipping transfer tax exemption. This year, she gives each grandchild $71,000. Assume the annual exclusion is $16,000. If Elizabeth has not made any previous taxable gifts, which of the following is true? A) Her taxable gifts total $284,000 and she will owe $113,600 in gift tax. B) Her taxable gifts total $284,000 but she will owe no gift tax. C) Her taxable gifts are $0 and she will owe no gift tax. D) Her taxable gifts are $220,000 and she will owe no gift tax.

D) Her taxable gifts are $220,000 and she will owe no gift tax.

Which of the following assets will pass through probate? A) A life insurance policy with a named beneficiary B) Assets held in an inter-vivos trust C) A pay-on-death account with a named beneficiary D) Household goods left to family members via a side letter

D) Household goods left to family members via a side letter

Some reasons to use life insurance to fund business continuation agreements include which of the following: I. It provides sufficient assets for the buyer to perform on the contract. II. Insurance protects the company and its shareholder because the IRS cannot challenge the value of stock if provided for in a Shareholders Agreement (SHA). III. Funding with insurance ensures the agreement will be legally enforceable. IV. The insurance provides tax-advantaged dollars at the time when the agreement is triggered. A) IV only B) II and IV C) I, II and III D) I and IV

D) I and IV

Which of the following advisors is (are) qualified to give estate-planning advice? I. Attorneys II. CPAs III. Financial planners A) I only B) I and II C) II and III D) I, II and III

D) I, II and III

John is 67 years old and would like to transfer some of his assets to his adult son, Murray. John does not want to incur any gift tax liability and also needs some cash flow, so he is considering selling the assets to his son. A friend recently informed John that a self-canceling installment note (SCIN) is a good planning strategy. Which of the following statements regarding self-canceling installment notes (SCINs) is/are correct? I. To be effective, a SCIN must reflect a risk premium to compensate the seller for the possibility of cancellation. II. A seller of a SCIN may accept security without jeopardizing the installment sale treatment. III. At the seller's death, the present value of any remaining SCIN balance is excluded from the seller's gross estate. IV. A SCIN is a debt ordinarily extinguished at the seller's death. A) I only B) III only C) I and II D) I, II, III and IV

D) I, II, III and IV

Which of the following are characteristics of a qualified disclaimer? I. The disclaimant may not direct the bequest to another person selected by the disclaimant. II. The disclaimer must be irrevocable. III. The disclaimer must be received by the executor of the estate in writing within nine months of the death of the decedent. IV. The disclaimant may disclaim any percent or fraction of an asset. A) I and II B) I, II, and III C) I, III, and IV D) I, II, III, and IV

D) I, II, III, and IV

Which of the following is (are) correct regarding qualifying disclaimers? I. The disclaimer must be in writing. II. The property must be disclaimed within 9 months of the date of death. III. The disclaiming party cannot have benefited from the property previous to disclaiming. IV. The disclaiming party cannot direct the interest to any other specific person. A) I only B) II only C) I and II D) I, II, III, and IV

D) I, II, III, and IV

Which statement(s) is/are true for Generation-Skipping Transfer Tax (GSTT)? I. Applies to transfers to persons who are two or more generations lower than the transferor. II. Gifts to unrelated individuals are exempt from the GSTT. III. There is a lifetime exemption for GSTT equal to the federal exemption for estate tax. IV. Transfers qualifying for gift tax annual exclusion generally are also excluded from GSTT. A) IV only B) I and IV C) II and III D) I, III, and IV

D) I, III, and IV

An intentionally defective grantor trust (IDGT) can be set up for all of the following tax-efficient reasons EXCEPT: A) Having the grantor(s) retain the liability of the income taxes due on the assets in trust will help "burn down" the grantor's assets for transfer tax purposes. B) The grantor can substitute property in trust without causing inclusion in the grantor's gross estate. C) By creating an installment sale to an IDGT, a grantor can "freeze" the transfer tax value of the transferred asset at the date of transfer. D) IDGT can be revocable trust and still accomplish their desired income and transfer tax objectives.

D) IDGT can be revocable trust and still accomplish their desired income and transfer tax objectives.

Which of the following is not a benefit of an Intentionally Defective Grantor Trust (IDGT)? A) An IDGT allows more trust income to be taxed at the grantor's lower individual rates compared to trust income tax rates. B) IDGTs enable the grantor to remove assets from her taxable estate. C) A grantor may sell an appreciating asset to the IDGT without owing any capital gains tax or tax on interest income. D) IDGTs allow a grantor to reclaim the assets at any time.

D) IDGTs allow a grantor to reclaim the assets at any time.

Jack purchases a life insurance policy on his own life and names his three children as beneficiaries. Which of the following is true? A) The premium payments Jack makes are taxable gifts to his children. B) If Jack sells the policy to his children, the proceeds are subject to gift tax. C) If Jack transfers the policy to an ILIT, the transfer is not subject to gift tax. D) If Jack transfers ownership of the policy to his children, the transfer is a taxable gift.

D) If Jack transfers ownership of the policy to his children, the transfer is a taxable gift.

Last year, a mother gifted property to her daughter. The mother purchased the real estate for $80,000 several years ago, and the property was valued at $125,000 on the date of the gift. Which of the following statements are true? A) If the daughter sold the property for $130,000 today, her loss would be $5,000. B) The daughter's basis will be $125,000. C) If the daughter sold the property for $100,000, her gain would be $25,000. D) If the daughter sold the property for $40,000, her loss would be $40,000.

D) If the daughter sold the property for $40,000, her loss would be $40,000.

Which of the following statements is correct regarding the applicable estate tax credit? A) An estate must still file an Estate Tax Return (Form 706) even if the taxable estate is less than the federal exemption. B) A spouse is entitled to utilize the unused exemption from her first spouse who died ten years ago, as well as the unused exemption from her second spouse who died last year. C) An ABC Trust arrangement utilizes a General Power of Appointment Trust, a QTIP Trust, and a GST Trust to maximize the use of a decedent's applicable estate tax credit. D) In order to utilize the portability provision, the executor of the first spouse to die must file an estate tax return, even if no estate taxes are due.

D) In order to utilize the portability provision, the executor of the first spouse to die must file an estate tax return, even if no estate taxes are due.

Which of the following is correct regarding property transfers? A) The executor can record a deduction for losses incurred from property that has decreased in market value. B) Tuition for family members should be paid directly to the student via check, with the memo field filled out "for tuition only." C) Appreciated property should be gifted rather than transferred via will. D) Income-producing property should be transferred to family members in lower income tax brackets.

D) Income-producing property should be transferred to family members in lower income tax brackets.

Marie is the founder and sole owner of Purple Cakes Bakery. Allen has offered to buy her business for a price Marie considers reasonable, but Allen does not have all of the funds necessary to pay for the business at the current time. Marie wants to accept Allen's offer and retire. Allen is not related to Marie and has good credit. Given these facts, which transfer method should be used to transfer the business to Allen? A) Grantor Retained Annuity Trust B) Self-Canceling Installment Note C) Private Annuity D) Installment Sale

D) Installment Sale

Which of the following is not a transfer cost associated with estate planning? A) Document preparation B) Attorney's fees C) CPA's fees D) Insurance premiums

D) Insurance premiums

Which of the following transfers would result in a taxable gift? A) George gifts $14,000 to his daughter Georgette. B) Eli gifts $50,000 to his wife Renee, who is a U.S. citizen. C) Alex gives Lisa, his favorite employee, a new car at Lisa's retirement worth $20,000. D) Kevin transfers $20,000 to Cindy, his ex-wife. They were divorced five years ago.

D) Kevin transfers $20,000 to Cindy, his ex-wife. They were divorced five years ago.

Which of the following is (are) considered real property? A) Securities B) An RV used for cross country trips C) Property located inside a residence D) Land that the residence sits on

D) Land that the residence sits on

What is the least efficient way for a grandparent to make a gift to a grandchild? A) Pay each child's tuition directly to the university B) Send checks of $10,000 each year to each grandchild for the purpose of paying tuition C) Establish 529 accounts for each grandchild D) Leave funds for each grandchild to pay their tuition in his will

D) Leave funds for each grandchild to pay their tuition in his will

Maud is a single 56-year-old woman who owns Shoe Designs, LLC. Her net worth is about $450,000 and she has not done any estate or business succession planning. 20 years ago, she had a falling out with her only daughter, Lena, and they have not had any contact since then. She has no other family and wants to donate her estate to Blogs for Dogs, a non-profit dog shelter. Which of the following statements would be correct if Maud died tomorrow? A) Finding a successor to take over her business will be a relatively simple task for her executor. B) Since she has no close family and her net worth is under the federal exemption amount, she does not need to do any estate planning. C) Maud's wish to donate her estate to charity can be accomplished through the state's intestacy laws. D) Lena will likely inherit all of Maud's property and no assets will go to charity.

D) Lena will likely inherit all of Maud's property and no assets will go to charity.

Which of the following statements are correct regarding the taxable estate calculation? A) Funeral expenses and administrative expenses are deducted from the adjusted gross estate to calculate the taxable estate. B) Accounting and legal fees are deductible from the adjusted gross estate to calculate the taxable estate. C) Assets transferred to a surviving spouse are excluded from the gross estate. D) Losses from property that declined in value before the decedent's death are not deductible on the estate tax return.

D) Losses from property that declined in value before the decedent's death are not deductible on the estate tax return.

Which of the following tasks could be performed by a financial planner who is not a licensed attorney or accountant? A) Drafting wills, trust documents, and powers of attorney B) Providing complex tax advice on the sale of an asset C) Assessing the fair market value of a small business D) Making investment recommendations and assisting with investment decisions

D) Making investment recommendations and assisting with investment decisions

Ron, a terminally ill patient, sold the ownership of his life insurance policy to a viatical settlement provider for $200,000. Which of the following statements is (are) true with respect to the transfer? I. Ron will be subject to income tax on the sale proceeds if he lives beyond 2 years. II. Ron will be subject to income tax on the sale proceeds less his cost basis. A) I only B) II only C) Both I and II D) Neither I nor II

D) Neither I nor II

Elizabeth, a widow, has decided to set up trusts for each of her four grandchildren to take advantage of the generation-skipping transfer tax exemption. This year, she gives each grandchild $284,000. Assume the annual exclusion is $16,000 and the GST exemption is $12,000,000. If Elizabeth has not made any previous taxable gifts, on what amount will she owe gift tax? A) $428,800 B) $284,000 C) $1,072,000 D) None

D) None

Reese donated $100 to her church and $300 to the United Way. Which of the following is true regarding her contribution to the charitable organizations? A) Reese must file IRS Form 8283. B) Both her church and the United Way are required to send a confirmation of the contribution to Reese. C) Only her church is required to send a confirmation of the contribution to Reese. D) Only the United Way is required to send a confirmation of the contribution to Reese.

D) Only the United Way is required to send a confirmation of the contribution to Reese.

Which of the following transfers would result in gift tax? A) Bob gifts $11,000 to his daughter, Barbie. B) Elroy gifts $50,000 to his wife, Elizabeth, who is a U.S. citizen. C) Adam gives his favorite employee, Aaron, a new car at Aaron's retirement worth $20,000. D) Pete transfers $20,000 to his ex-wife, Patricia. Pete and Patricia were divorced five years ago.

D) Pete transfers $20,000 to his ex-wife, Patricia. Pete and Patricia were divorced five years ago.

Uncle Joe died recently. In Uncle Joe's will, he left his house to his favorite niece, Rachel, and his car to his other niece, Margaret. He did not use a residuary clause. Uncle Joe also owned a life insurance policy on his own life and named his two nieces the beneficiaries of the policy. He also owned a 401(k) plan without a listed beneficiary. Which of the following statements is correct? A) All assets will be transferred via the will. B) All assets will be transferred via the state's intestate probate laws. C) Some assets will be transferred via the will, and the remaining assets will transfer by operation of contract. D) Some assets will be transferred via the will, some by contract, and some by the state's intestate probate laws.

D) Some assets will be transferred via the will, some by contract, and some by the state's intestate probate laws.

Four people own one piece of property. Which of the following forms of property ownership titling of those listed must they use? A) Life estate B) Tenancy by the entirety C) Community property D) Tenancy in common

D) Tenancy in common

Which of the following statements regarding the annual exclusion for gifts is true? A) The maximum annual exclusion that can be used each year is the federal exemption amount. B) The annual exclusion is not applicable towards gifts in trust. C) The Crummey provision is utilized so that trust income can be withdrawn tax-free. D) The Crummey provision allows the annual exclusion to be applied toward future interest trust contributions by granting beneficiaries a limited, temporary withdrawal right.

D) The Crummey provision allows the annual exclusion to be applied toward future interest trust contributions by granting beneficiaries a limited, temporary withdrawal right.

A decedent's will creates a general power-of-appointment (GPOA) trust that distributes income to her spouse for life and gives the spouse a general power of appointment over the assets in the trust. Which of the following statements concerning a GPOA trust is correct? A) The GPOA trust only qualifies for the unlimited marital deduction if the trustee has discretion over making trust distributions. B) The spouse can only appoint trust assets for the benefit of the decedent. C) The trust assets do not qualify for the unlimited marital deduction. D) The GPOA trust qualifies for the unlimited marital deduction.

D) The GPOA trust qualifies for the unlimited marital deduction.

Which of the following statements concerning the GSTT is not correct? A) Each individual can exclude taxable transfers from GSTT up to the lifetime exclusion amount. B) The GSTT is applied to a gift after the application of the annual exclusion. C) Gifts that are subject to GSTT can be split. D) The GSTT only applies to transfers in trust.

D) The GSTT only applies to transfers in trust.

Which of the following rights will not cause an insurance policy to be included in the gross estate of the owner/insured? A) Transfer of the policy into an ILIT 2 years before the death of the owner/insured B) The decedent had the right to assign the policy. C) The executor is listed as the beneficiary on the policy. D) The decedent has the right to change a charitable beneficiary to another charitable beneficiary.

D) The decedent has the right to change a charitable beneficiary to another charitable beneficiary.

Which of the following is not a reason that the proceeds of a life insurance policy would be included in a decedent's gross estate? A) The proceeds of the policy are payable to the estate. B) The decedent transferred the ownership of the policy to his daughter six years before his death, but retained the right to change the beneficiary of the policy. C) The decedent transferred the ownership of the policy to his son six months before his death. D) The decedent transferred the ownership of the policy to his wife four years ago.

D) The decedent transferred the ownership of the policy to his wife four years ago.

Which of the following is not a benefit of an Intentionally Defective Grantor Trust (IDGT)? A) IDGTs allow the grantor to transfer property free of estate taxation. B) A grantor can transfer appreciated property into an IDGT without incurring taxable capital gains on the transfer. C) The grantor is liable for the trust's income tax. D) The grantor can reclaim the trust assets once they are transferred into an IDGT.

D) The grantor can reclaim the trust assets once they are transferred into an IDGT.

Which of the following is not true regarding taxation of trust income? A) Trust income is taxed to the trust if it is accumulated and taxed to the beneficiaries if it is distributed. B) Beneficiaries are liable for all income tax in a simple trust. C) A trustee with discretionary powers may be liable for tax on all trust income earned. D) The grantor is always liable for all tax on trust income.

D) The grantor is always liable for all tax on trust income.

Which of the following is not a requirement of the unlimited marital deduction? A) In order to claim a marital deduction, the decedent must have been married as of the date of his death. B) The surviving spouse must receive property through the estate. C) The surviving spouse must be a U.S. citizen. D) The gross value of qualifying property left to the surviving spouse is included in the marital deduction.

D) The gross value of qualifying property left to the surviving spouse is included in the marital deduction.

All the following statements regarding the probate process are correct EXCEPT: A) Distribution of probate assets involves more time and expense due to the involvement of the probate court system B) The probate process involves retitling assets to the appropriate heirs C) The probate process provides a window for creditors to raise claims against the estate. D) The probate process allows assets to be transferred privately.

D) The probate process allows assets to be transferred privately.

Which of the following statements regarding the probate process is not correct? A) The probate process can cause delays during which the heirs will be waiting to receive their assets. B) One advantage of the probate process is that it provides clear title to the heirs and beneficiaries. C) The probate process ensures that creditors are given proper notice to make claims against the estate, and that heirs are protected from late claims by creditors. D) The probate process ensures the proceedings are kept private and confidential.

D) The probate process ensures the proceedings are kept private and confidential.

Which statement about the gift tax marital deduction is not correct? A) One spouse may gift any amount to the other US citizen spouse without gift tax as long as the gift is not terminal interest property. B) The unlimited gift tax marital deduction is not available to non-citizen spouses. C) Non-citizen spouses may receive survivor benefits under a joint-and-survivor annuity. D) The regular annual exclusion is available for gifts to non-citizen spouses.

D) The regular annual exclusion is available for gifts to non-citizen spouses.

Which of the following is an appropriate strategy for transferring property? A) Bequeath property that has decreased in market value via a will provision. B) Pay college tuition for family members by creating a revocable trust and naming them as beneficiaries. C) Gift appreciated property to a family member who wants to sell the property for cash. D) Transfer income-producing property to family members in lower income tax brackets.

D) Transfer income-producing property to family members in lower income tax brackets.

Which of the following is an allowable deduction from the adjusted gross estate to arrive at the taxable estate? A) Applicable credit for the lifetime exemption. B) Gift of $350,000 to non-citizen relative living overseas. C) Deduction of each gift made under the annual exclusion. D) Transfers to the decedent's spouse totaling $450,000 during their marriage.

D) Transfers to the decedent's spouse totaling $450,000 during their marriage.

The executor elects to use the alternate valuation date. Which of the following statements is not correct? A) This election is irrevocable. B) This election applies to all property included in the estate. C) The executor makes this election to decrease the value of the gross estate. D) When the executor makes this election, the heirs will receive the assets with a higher basis.

D) When the executor makes this election, the heirs will receive the assets with a higher basis.

As a non-attorney CFP®, you are asked to assist one of your clients who is very frugal to prepare her will using LegalZoom.com. Which of the following statements is correct? A) It is permissible as long as you get a waiver from your client. B) It is permissible as long as you are not an heir, legatee or beneficiary. C) Advise her that LegalZoom is not very reputable and direct her to a better website. D) You cannot assist her.

D) You cannot assist her.

The alternate valuation date A) is required if the fair market value of the estate's assets has decreased. B) if elected may be revoked in an amended return, provided that the first return was filed on time. C) must be used for valuation of all of the estate's assets (with no exceptions) if the alternate valuation date is selected. D) can be elected only if doing so reduces the value of the gross estate and the estate tax liability.

D) can be elected only if doing so reduces the value of the gross estate and the estate tax liability.

Angela and Barry, both in their late sixties, recently got married. Angela is wealthy and has a large portfolio of investments and real estate, with significant accrued gains. On her death, Angela wants to ensure a comfortable lifestyle for Barry, and she also wants to protect the balance of her children's inheritance in the event that Barry remarries. In order to achieve these objectives and minimize tax on her death, Angela should leave her estate to Barry: A) and the children in a QTIP trust, with access to income and capital available to all beneficiaries on her death. B) in a revocable trust, with the remainder trust assets would be distributed to her children. C) in trust, with Barry named as the income beneficiary for life, and her children as remainder beneficiaries. D) in a bypass trust, with an income right for Barry using the 5x5 Power, and the remainder to her children upon death. The balance of her estate would flow into a QTIP trust, with her children as remainder beneficiaries.

D) in a bypass trust, with an income right for Barry using the 5x5 Power, and the remainder to her children upon death. The balance of her estate would flow into a QTIP trust, with her children as remainder beneficiaries.

All of the following are subject to generation-skipping transfer tax (GSTT) EXCEPT A) taxable terminations. B) taxable distributions. C) direct skips. D) indirect skips.

D) indirect skips.

All of the following are transfer costs associated with estate planning EXCEPT A) attorney fees for documents. B) costs of retitling real estate. C) estate and inheritance taxes. D) property taxes on inherited property.

D) property taxes on inherited property.

If a deceased person had incidents of ownership in a life insurance policy at the time of his or her death, the death benefits will be included in the decedent's gross estate. A decedent would be considered to have possessed incidents of ownership EXCEPT A) when the decedent was authorized to change beneficiaries. B) when the decedent assigned the policy proceeds as security for a loan. C) when the decedent could cancel the policy at any time during his or her lifetime. D) when the decedent did not own the policy, but paid the policy premiums.

D) when the decedent did not own the policy, but paid the policy premiums.