Exam 3- Estate
Of the following statements regarding Tangible Personal Property Trusts (TPPTs), which is true?
A TPPT is designed to utilize temporal discounts to transfer tangible personal property at a reduced gift tax cost.
Of the following, which does not reduce a grantor's federal gross estate?
A contribution of depreciable personal property to a revocable living trust.
Which of the following statements concerning an Irrevocable Life Insurance Trust (ILIT), is correct?
A contribution to an ILIT that includes a Crummey power is eligible for the gift tax annual exclusion.
All of the following statements concerning a power of appointment trust are correct except:
A special power of appointment trust that limits the surviving spouse's right to an ascertainable standard qualifies the trust for the unlimited marital deduction.
Which of the following statements concerning trusts is correct?
A trust can have several beneficiaries, including different classes and individuals.
Doug graduated from the University of Pittsburgh. Each year, season tickets are sold only to those who make a contribution to the university of $1,000 or more. If Doug contributes $1,000, so that he meets the requirements to purchase season tickets, how much is his deductible contribution for the year?
$0.
In an attempt to exclude the death benefit of a paid up $500,000 face value whole life insurance policy from his gross estate, Jerry gifted the policy to his daughter. Six months prior to the gift, Jerry had been diagnosed with a terminal illness and given a 12 month life expectancy by his doctor. Jerry died 4 years after the gift of the life insurance policy. What amount is included in his federal gross estate related to this whole life insurance policy
$0.
Marcia contributed $600,000 to an irrevocable trust with no retained powers in 2018 and did not retain any powers over the transferred assets. She named her only daughter as the sole income and remainder beneficiary and paid gift tax at the date of the transfer of $25,000. In 2020, Marcia died of lung cancer. The fair market value of the property in the irrevocable trust was $3,000,000 at the date of her death. What amount of the trust assets are included in Marcia's gross estate?
$0.
Sally was recently diagnosed with stage four lung cancer. Her doctors have given her 9 months to live. She has many medical expenses and needs money. If Sally sells a whole life insurance policy, with a $1,000,000 face value and a $250,000 adjusted basis to a viatical settlement provider for $350,000, how much capital gain will Sally have to recognize for income tax purposes on the sale?
$0.
Stephanie contributed $450,000 to a revocable living trust in 2008. She named herself as the income beneficiary and her only son as the remainder beneficiary. The term of the trust was equal to Stephanie's life expectancy. Stephanie died in 2020, when the fair market value of the trust's assets is $2,000,000. How much is included in Stephanie's probate estate related to the revocable living trust?
$0.
When a U.S. citizen married to a resident alien dies, what is the maximum value of a specific, outright bequest of property that can qualify for the unlimited marital deduction without a QDOT?
$0.
Jim purchased a yacht from Ronald for $200,000 seven years ago. The terms of the sale included a note of $50,000 and cash for the remaining amount. Ronald had a zero basis in the yacht. Immediately after purchasing the yacht, Jim's business began to fail and Jim could no longer make the payments. In exchange for the note, Jim gave Ronald a life insurance policy on his life with a face value of $50,000. This year, Jim died and Ronald received the death benefit as the designated beneficiary of the policy. How much of this death benefit is taxable to Ronald?
$50,000.
Carol and Joe, unrelated business partners, began operating a drug store in southern Florida. They funded a buy/sell agreement with a cross-purchase life insurance arrangement. Carol purchased a life insurance policy with Joe as the insured, and Joe purchased a life insurance policy with Carol as the insured. If Carol dies, which of the following is/are true? 1. The death benefit of the life insurance policy on Carol's life, owned by Joe, is excluded from Carol's federal gross estate. 2. The death benefit of the life insurance policy on Carol's life, owned by Joe, is included in Carol's federal gross estate if Carol own's 50% or more of the stock of the drug store. 3. The value of the life insurance policy on Joe's life, owned by Carol, is included in Carol's federal gross estate. 4. The death benefit of the life insurance policy on Carol's life, owned by Joe, is included in Carol's federal gross estate.
1 and 3.
Watson, Inc. has four equal partners. All four partners are interested in entering into a buy-sell arrangement. How many life insurance policies would be purchased to properly fund using a cross-purchase agreement?
12 policies.
Within how many months must an heir file a qualified disclaimer for it to be valid?
9 months.
In which of the following situations would the death benefit of a life insurance policy be taxable, partially or wholly?
Adam sold a $100,000 death benefit life insurance policy to Dawson for $35,000 as part of cross-purchase buy-sell agreement. Dawson and Adam were the only two shareholders of Cupper Corporation and each owned a policy on the other.
Which of the following statements regarding 2503(b) trusts is correct?
All income of a 2503(b) trust must be paid to the beneficiary at least annually.
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:
Always included in Colleen's federal gross estate.
Jack purchased a life insurance policy on his own life and never designated a beneficiary. In this case, the life insurance policy death benefit is:
Always included in Jack's federal gross estate.
A trust created to receive an amount equal to the decedent's remaining applicable estate tax credit equivalency at the decedent's date of death is a:
Bypass trust.
Gayle is the owner and insured on a $1,000,000 face value life insurance policy in pay status. Gayle's adjusted basis in the life insurance contract is $250,000. If Gayle gifts this life insurance policy to her daughter and listed beneficiary, Celeste, which of the following statements is correct?
Celeste can amend the beneficiary designation of the life insurance policy to include her son, Matt, as a co-beneficiary.
Which of the following allows an individual to refuse property from the estate of a decedent?
Disclaimer.
Which of the following is not an advantage of using a revocable trust?
Estate tax reduction.
Louie gave a $1,000,000 life insurance policy on his own life to his brother. At the date of the gift, the life insurance policy was valued at $200,000. Which of the following statements regarding the gift of this life insurance policy is correct?
If Louie dies two years after this gift, his federal gross estate will include $1,000,000.
Warren purchased a single premium life insurance policy on his life 15 years ago for $65,000. The current value of the policy is $155,000. Which of the following statements regarding Warren's life insurance policy is true?
If Warren takes a loan of $155,000 against the cash surrender value of the life insurance policy, he will recognize $90,000 of long-term capital gain.
If a decedent bequeaths the outright ownership of his house to his children subject to his wife's right to live in that house for the remainder of her life, which of the following statements is correct?
If the executor makes a QTIP election on the house, the house is not included in the decedent's taxable estate.
Which of the following statements concerning trusts is false?
Income within a trust is not taxed until the beneficiary receives a distribution.
Which of the following is not a valid settlement option for the designated beneficiary of a life insurance policy?
Individual Retirement Account Rollover.
Do the assets in a revocable trust that requires the trustee to create a QTIP trust for the benefit of the spouse at the death of the grantor automatically qualify for QTIP treatment?
No, the executor must elect QTIP assets on the 706.
Your son has been studying trusts in his financial planning class. He has come to you for more information. Of the following statements listed below, which do you tell him?
Of the many reasons people create trusts, one reason is to provide for asset management.
Which of the following statements is not true?
Only a full, outright donation of property will qualify as a deductible charitable contribution.
Robin contributed $100 to the United Way and $300 to the Church of Good People. Which of the following statements concerning her contribution to the charitable organizations is correct?
Only the Church of Good People is required to send a confirmation of the contribution to Robin.
Which of the following assets is most likely found in a wealth replacement trust?
Permanent life insurance.
A spendthrift clause:
Protects the trust assets from the claims of the beneficiary's creditors
A trustee is subject to which of the following?
Prudent Man Rule.
The Organization to Prevent Cruelty to Animals receives contributions from the general public to fund programs to prevent cruelty to animals. Of its total support during the year, 75% of the funds are from contributions from supporting individuals. What type of charity is The Organization to Prevent Cruelty to Animals?
Public Charity.
Many individuals who have been diagnosed with terminal illnesses sell their life insurance policies to viatical settlement providers. Which of the following statements is true regarding the transfer of a policy from an individual with a terminal illness to a viatical settlement provider?
Regardless of when the individual dies, the payment from the viatical settlement company is excluded from income tax.
Which of the following statements is false regarding See-Through Trusts?
See-Through trusts are required to provide the custodian of the IRA the trust document by April 15 following the year of the owner's death.
A trust created in the will of a decedent is a:
Testamentary trust.
The main difference between a 2503(b) and a 2503(c) trust is:
The 2503(c) trust must terminate, or the beneficiary must have the right to receive the trust's assets, when the beneficiary reaches age 21. A 2503(b) trust may hold property for the lifetime of the beneficiary.
Which of the following is not an issue when considering whether to deduct the adjusted basis or the fair market value of contributed property?
The capital gains rate in effect at the time of the transfer.
Which of the following statements concerning trust formation is correct?
The grantor of a trust contributes property to a trust which will be managed by the trustee.
Which of the following statements concerning a pooled income fund is correct?
The income of a pooled income fund is paid to the contributors.
Which of the following is not a reason for using life insurance in an estate plan?
The insured can borrow the death benefit from the life insurance policy to fund his retirement.
When a U.S. citizen dies and bequeaths property to his U.S. citizen spouse, the marital deductions is limited to the following amount:
The marital deduction is unlimited.
Who has the right to surrender a life insurance policy for its cash surrender value?
The owner of the life insurance policy.
Which of the following statements regarding term life insurance is correct?
The premium on a term life insurance policy reflects the actuarial risk that the insured will die during the term of the contract.
At age 69, John, a widower, needs more than his pension and Social Security income to pay his living and medical expenses. His children do not have the resources to help him and he has already liquidated his individual retirement accounts. Which of the following is true if John decides to surrender his whole life insurance policy to the insurer?
The surrender value of the policy would be paid to John and the life insurance contract would be cancelled.
All of the following statements concerning a Trusteed IRA or a "see-through" trust are correct EXCEPT?
They can both be used to avoid RMD.
Which of the following statements is false regarding Trusteed IRAs?
Trusteed IRAs require the named beneficiary to name his or her successor.
Jackie's father died last month and she is the listed beneficiary on his insurance policy. Jackie has contacted the insurer and has requested a lump-sum payment of the death benefit of the life insurance policy. Which of the following statements regarding this lump-sum payment is true?
When Jackie receives the lump-sum payment of the death benefit from the insurer, part of the payment will be taxable.
Four years ago, Marvin gave a life insurance policy with a $750,000 death benefit to his daughter, Marsha. At the time of the gift, the value of the life insurance policy was $65,000, and Marvin paid $10,000 in federal gift tax. Marvin unexpectedly died this year. What amount will be included in Marvin's federal gross estate related to this life insurance policy?
$0.
Pamela's dad, Tim, died on August 10 of this year. Six years ago, Tim had gifted ownership of a paid-up $1,000,000 whole life insurance policy on his life with a replacement value of $100,000 and an adjusted basis of $100,000 to Pamela. If Pamela, as designated beneficiary, receives the death benefit of the life insurance policy this year, how much will be taxable to her?
$0.
Terrence contributed $15,000 to a foreign charitable organization. At the time of the contribution, the organization told him that his contribution was tax deductible for income tax purposes. Ignoring any income limitations, how much of the $15,000 contribution is deductible?
$0.
Twelve years ago, Paul purchased a single premium $1,000,000 life insurance policy on his own life for $150,000 and named his daughter as the sole beneficiary. Paul gifted ownership of the policy to Holly this year when the value of the life insurance policy was $200,000. Paul paid $15,000 of gift tax on the transaction. At Paul's death, how much of the death benefit that Holly receives will be subject to income tax?
$0.
Chris donated one of his original creation paintings to his alma mater, Backwoods University. His adjusted basis in the artwork was $400 and the fair market value was $150. Chris also contributed 100 shares of XYZ corporation that had an adjusted basis of $50 and a fair market value equal to $1,000 (held long-term). Ignoring the AGI limitations, what is the maximum amount Chris can deduct in relation to these donations?
$1,150.
In 1999, Maria funded a bypass trust with $675,000, the applicable estate tax credit equivalent amount at the time. At Maria's death in 2020, her will included a testamentary bypass trust and a residual bequest to her U.S. citizen husband. If Maria's net worth at her death was $11,400,000 how much will be transferred to the bypass trust to maximize its benefits?
$10,905,000.
Justin's grandfather contributed $350,000 to a simple irrevocable trust naming Justin as the income beneficiary and his brother, Ryan, as the remainder beneficiary. At the time of the transfer Justin's grandfather paid $12,000 of gift tax. This year, the trust generated $14,000 of taxable dividend income and $3,000 of capital gains. What amount of taxable income will Justin include on his federal Form 1040 from this trust this year?
$14,000.
Phil contributed $300,000 to an irrevocable trust and did not retain any right to the trust's assets. The income beneficiary of the irrevocable trust was Phil's nephew, and the remainder beneficiary of the irrevocable trust was Phil's niece. At the time of the transfer, Phil paid gift tax of $20,000. Phil died two years later, when the value of the irrevocable trust was $1,200,000. Based solely on there facts, how much is included in Phil's gross estate?
$20,000.
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?
$200.
Connie cooks and delivers meals for the homeless and the elderly at Thanksgiving. Connie spends $200 on food, she drives 300 miles, and she spends 15 hours of her time (valued at $10/hour) completing the charitable service each year. Of these expenses, how much will Connie deduct on her income tax return for the year?
$242.
Maggie contributed $10,000 to a private non-operating foundation that has never made any distributions. Maggie also contributed $15,000 to a private operating foundation. Maggie's AGI for the tax year was $100,000. What is Maggie's charitable contribution deduction for the year?
$25,000.
Janice died in 2020. She had been married to Thomas for 17 years, and the two had amassed a community property estate of $29,500,000. Janice's will directs three specific bequests to her mother, brother, and father of $700,000, $450,000, and $200,000, respectively and creates a bypass trust to receive property equal to any remaining applicable estate tax credit available after her specific bequests. The bypass trust gives Thomas the right to income for his life and the remainder of the trust to her two sons and leaves the residual of the estate to Thomas. Janice's will directs the residual to be used to pay the estate taxes. What is the marital deduction on Janice's federal estate tax return?
$3,170,000.
Last year, Jerry gave a life insurance policy with a $400,000 death benefit to his son, Brad. At the time of the gift, the value of the life insurance policy was $50,000 and Jerry had to pay $5,000 in federal gift tax. Jerry unexpectedly died this year. What amount will be included in Jerry's federal gross estate related to this life insurance policy?
$405,000.
Denis sold a parcel of land to a qualified charitable organization for $10,000. The parcel of land had a fair market value of $100,000 and an adjusted basis of $50,000. What taxable gain must Denis recognize at the time of the contribution?
$5,000.
In an attempt to exclude the death benefit of a paid up $500,000 face value whole life insurance policy from his gross estate, Jerry gifted the policy to his daughter. Six months prior to the gift, Jerry had been diagnosed with a terminal illness and given a 12 month life expectancy by his doctor. What is the gift tax value of the gift of this policy
$500,000 discounted for Jerry's six month life expectancy.
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?
$57,000.
The owner of a life insurance policy has decided to surrender the life insurance policy to the insurer. Since inception of the life insurance contract, the owner has paid premiums of $100,000 and received cash policy dividends equal to $20,000. If at the surrender date, the owner receives a cash payment of $140,000 from the insurer, what is his gain/ loss subject to income tax on the life insurance policy?
$60,000.
Of Pablo's $10,000,000 federal gross estate, his will includes one specific bequest of $7,500,000 to his wife, Ariana, and directs the debts and other expenses of $1,000,000 to be payable from the residuary of the estate. The residuary heirs are Pablo's children. What is the amount of the marital deduction included on Pablo's federal estate taxreturn?
$7,500,000.
Jeff died in the current year. He had inherited the following property from his wife in 1999:*No QTIP election. Considering only the property listed above, what is the value of the property included in Jeff 's gross estate?
$750,000.
An executor may elect the unlimited marital deduction for which of the following transfers? 1. Decedent's will directs the creation of a CRAT and the decedent's nonresident alien spouse is the income beneficiary. The trustee of the CRAT is a citizen of the United Kingdom. 2. Bequest to U.S. citizen spouse of the right to use property for the remainder of her life. Executor has elected QTIP on the property. 3. A payment of $650,000 to fulfill a specific bequest to decedent's U.S. citizen spouse. Decedent's spouse became a U.S. citizen two months before the filing of the decedent's estate tax return. 4. A payment of $250,000 to fulfill a specific bequest to decedent's resident alien spouse
2 and 3.
Which of the following statement(s) is/are correct regarding buy-sell arrangements? 1. Entity purchase arrangements increase the income tax basis for some survivors upon the death of another owner. 2. Cross-purchase arrangements increase the income tax basis for all survivors upon the death of another owner.
2 only.
Given only the following information, which would qualify for the estate tax unlimited marital deduction?
A bequest of 2,000 shares of Holiday Incorporated stock to a surviving spouse. The surviving spouse is a U.S. citizen.
Which of the following statements is true?
A bypass trust aids in guaranteeing the full use of an individual's applicable estate tax credit.
Which of the following trusts would qualify for the unlimited marital deduction?
A power of appointment trust.
Trusts are a general tool that are beneficial in many financial planning situations. Many trust benefits, such as asset protection and control, are appropriate considerations for a family with a special needs person. Which of the following is not generally associated with planning for a special needs situation?
A special general advocate trust.
Trusts are a general tool that are beneficial in many financial planning situations. Many trust benefits, such as asset protection and control, are appropriate considerations for a family with a special needs person. Which of the following is generally correct regarding special needs trusts?
A special needs trust under 42 U.S.C. Sec. 1396p(d)(4)(A) will permit a family member to contribute to the trust for the benefit of the special needs child without adversely effecting government benefits if funds are paid back to the State to the extent of the benefit at the death of the child.
Which of the following statements regarding universal life insurance policies is true?
A universal life insurance policy will be cancelled if the pure cost of insurance protection increases and the cash accumulation account does not have the funds to pay the additional cost.
Travis, 28, and his wife, 26, have recently moved into a new home. They financed $350,000 of the $500,000 purchase price and utilized all of their savings to pay the down payment of $150,000. Travis's wife stays at home with their 3-year old son, Alex, and is expecting a baby in two months. Which of the following statements is not correct?
A whole life insurance policy would provide Travis with the least expensive temporary life insurance needed to eliminate the mortgage at his death.
Which of the following property arrangements can be classified as marital property? 1. Tenants by the entirety. 2. A QDOT. 3. A QTIP Trust. 4. A POA trust. 5. Joint tenancy with rights of survivorship.
All of the above.
Which of the following statements is not correct?
An organization that spends less than 85% of its adjusted net income on activities engaged in for the active conduct of its exempt purpose is a public charity.
As part of his employee benefit package, Larry's employer provided him with a $50,000 term life insurance policy. Larry named his wife, Cynthia, as the sole beneficiary of the life insurance policy. Which of the following statements is true with regard to this life insurance policy?
At Larry's death, the death benefit payable to Cynthia will be included in Larry's federal gross estate.
Raphael is the owner of a variable life insurance policy on his life. His wife, Isabel is the designated beneficiary. Which of the following statements is correct?
At Raphael's death, the variable life insurance policy death benefit will be paid to Isabel.
All of the following are characteristics of revocable trust except:
At the grantor's date of death, the fair market value of the trust's assets are included in his probate estate.
James owned a life insurance policy with his brother, Fred, as the insured. When James died, his will specifically bequeathed the policy to his sister, Lolita. Which of the following statements regarding the value of the life insurance policy to include in James' federal gross estate is not true?
Because Fred is still alive, the value of the policy included in the gross estate is zero.
Four years ago, Walter created a charitable remainder trust with himself as the income beneficiary and a charity as the remainder beneficiary. In the current year, Walter would like to make an additional contribution to the trust. Which of the following charitable trusts would allow Walter to make an additional contribution during the year?
CRUT.
Jason is the owner of a paid-up whole life insurance policy on his own life. All of the following statements are correct except:
If Jason gifts the whole life insurance policy to his son, the value for gift tax purposes is the sum of the policy's interpolated terminal reserve plus any unearned premium.
Mary selected her son as the beneficiary of a whole life insurance policy on her life. Which of the following statements concerning this beneficiary designation is incorrect?
If Mary entered an irrevocable beneficiary designation, she is the complete owner of the life insurance policy and can amend the irrevocable beneficiary designation at anytime.
Which of the following statements is true?
If a life insurance policy owner takes a loan from the policy, the death benefit of the policy will be reduced by any outstanding loans plus the accumulated interest due on the loan at the death of the insured.
Which of the following statements regarding life insurance is true?
If an individual designates a charitable organization as the beneficiary of his life insurance policy, but retains the right to change the beneficiary designation, the death proceeds of the life insurance policy will be included in his gross estate.
Mr. Fahey, age 71, has been paying the premium on a whole life insurance policy for the past 30 years. The policy has a $1,000,000 death benefit and has built up a cash value of $250,000. Mr. Fahey's adjusted basis in the life insurance policy is $200,000. Which of the following statements is not correct?
If the insurer pays Mr. Fahey a life insurance policy dividend of $3,000, his adjusted basis in the whole life insurance policy will increase to $203,000.
Jimmy and Rebecca have been married for 35 years. Jimmy had a net worth of $13,000,000 when he died in 2020 (Rebecca had nothing). Which of the following scenarios would incur the lowest overall (at Jimmy's death and Rebecca's death) estate taxes assuming the property transfers at equal value at the death of both individuals and utilizing 2020 estate tax rates? (Assume that portability is not elected.)
In his will, Jimmy funds a trust with $11,580,000 for the benefit of his two children. Rebecca will receive an annual income distribution from the trust. All other assets will transfer to Rebecca.
Which of the following statements is correct regarding the Federal bankruptcy and inherited IRAs?
Inherited IRAs are not retirement accounts.
Jerry is the owner, the insured, and the beneficiary of a whole life insurance policy. Which of the following situations regarding this scenario is incorrect?
Jerry's estate will include the death benefit in its taxable income.
Kim is the income beneficiary of a QTIP trust, which includes a provision stating that any estate tax due on the QTIP's assets at Kim's death are to be paid by Kim's estate and not from the QTIP assets. When Kim dies, which of the following will occur?
Kim's estate is entitled to be reimbursed for any estate tax paid by the estate on assets held in the QTIP trust.
Maureen created a Qualified Personal Residence Trust (QPRT) in 1999. The annuity term of the QPRT is ending this year. If Maureen continues to live in the house after this year, how is Maureen's estate planning affected?
Maureen must begin to pay the remainder beneficiary of the QPRT a fair market value rent.
Jeremy and Rosa were married forty years ago after meeting on the beaches of Cozumel. Rosa moved to the U.S. with Jeremy, but she never applied for U.S. citizenship. If Jeremy is concerned about using the marital deduction for the fair market value of the property he bequeaths to Rosa, which of the following techniques could he use?
Qualified Domestic Trust (QDOT).
Which of the following does not qualify as a charitable organization?
Republican National Committee.
Gillian transfers property to a revocable trust naming herself as the income beneficiary and the United Way as the remainder beneficiary. What type of trust has Gillian created?
Revocable living trust.
Juan's will creates a General Power of Appointment Trust (GPOA Trust) that distributes income to his wife annually for life and gives his wife a general power of appointment over the assets in the trust. Which of the following statements concerning a GPOA Trust is correct?
The GPOA Trust automatically qualifies for the unlimited marital deduction because Juan's wife has a general power of appointment over the trust's assets.
Which of the following property interests qualifies for the unlimited marital deduction?
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
Which of the following situations would not cause the inclusion of an irrevocable trust in a grantor's gross estate?
The grantor retains an annuity from the irrevocable trust for a term of years less than his life expectancy.
Which of the following is not considered an incident of ownership?
The insured making cash gifts to the owners of the life insurance policy of the premium amount.
The owner of a whole life insurance policy would like to exchange his life insurance policy for an annuity on his life. Currently, the value of the life insurance policy is $150,000, excluding a $50,000 loan the owner has against the life insurance policy, and the owner's adjusted basis in the policy is $65,000. Which of the following statements is true?
The owner's basis in the annuity after the exchange will be $115,000.
Which of the following statements regarding bypass trusts is false?
The right to appoint the assets of the trust to herself, her creditors, or anyone she desires will not create an interest which will cause inclusion of the trust's assets in the surviving spouse's gross estate.
Which of the following is not a requirement for a GPOA Trust to be eligible for the unlimited marital deduction?
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 contributions would require the taxpayer to obtain a statement of value from the IRS?
The taxpayer is never required to obtain a statement of value.
Which of the following is not a benefit of the unlimited marital deduction?
The use of the unlimited marital deduction can shelter the future appreciation of an asset from estate taxes at the death of the second-to-die spouse.
In 2006, Donna, age 30, purchased a regular whole life insurance policy on her life and designated her sister, Robin, as the beneficiary. The policy death benefit is $1,000,000. On January 1, 2020, Donna, on the advice of her CFP® professional, assigned the policy to an ILIT. At the time, the cash value of the policy was $100,000. The named beneficiary of the trust is Robin and the trustee is James. Which of the following statements regarding the life insurance policy is/are correct?
The value of the policy for gift tax purposes is the interpolated reserve plus the unexpired premium.
Todd irrevocably transfers property to a trust over which he retains an annuity payment each year equal to 6% of the initial fair market value of the property transferred to the trust. Todd designates the United Way as the remainder beneficiary. Which of the following statements concerning this transfer is true?
Todd will receive an income tax charitable deduction on his income tax return for the year in which the trust is formed.
All of the following statements concerning the income beneficiary of a trust are correct, EXCEPT:
When the property is paid to the remainder beneficiary at the termination of a trust, if the income beneficiary is a different individual than the remainder beneficiary, the income beneficiary is treated as having made a taxable gift to the remainder beneficiary.
