You are a CFP 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 a
c. No, preparing Catherine's will would be considered the unauthorized practice of law.
Drafting legal documents, such a wills, is an activity reserved for licensed attorneys. If you are not a licensed attorney and you prepare a legal document, you have e
You are a financial planner and you are preparing for a meeting with your new client, Anne. What would you be most likely to ask Anne to bring to the meeting with her?
a. Pictures of her children
b. Her parents
c. Any will
d. Sales records for her ex-husb
C. Any will
You would be most likely to ask Anne to bring any will with her. In addition, you would be likely to request copies of any other estate planning documents as well as tax documents.
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.
Minimizing transfer costs, not maximizing transfer costs, is a common estate planning goal. All of the other answers are common estate planning goals.
Tracey is a financial planner who 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
d. 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.
Only activity d) would be considered the unauthorized practice of law. The drafting of legal documents is reserved
You are opening a new financial planning practice and you would like to put together a team of experts to help your clients. Which of the following groups represents the best team to help your clients?
a. Financial planner, CPA, and attorney.
b. CPA, psyc
a. Financial planner, CPA, and attorney.
The best team for your client would include a financial planner, CPA, and attorney. A licensed insurance specialist is also a good asset to an estate planning team, but the team described in option b is not as good
Elizabeth, who is not a licensed attorney, recently started her own financial planning practice. Which of the following activities would be considered the unauthorized practice of law?
a. Preparing a last will and testament for her first client.
b. Helpin
a. Preparing a last will and testament for her first client.
Only licensed attorneys should prepare last will and testaments for clients.
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 an estate?
c. Ricky's insurance policy on his own life may not be paid out to the named beneficiary.
The proceeds of insurance policies with named beneficiaries pass outside of probate via state contract law. Ricky's failure to plan his estate will not affect his in
Only individuals who currently have assets in excess of the applicable estate tax credit equivalency amount need estate planning.
a. True
b. False
b. False
Everyone needs estate planning in order to minimize taxes, ensure that their loved ones receive their property, and to provide for their loved ones financially after their death.
Estate planning is the process of accumulation, management, conservation, and transfer of wealth considering legal, tax, and personal objectives.
a. True
b. False
a. True
This is the definition of estate planning.
The estate planning process is fairly simple and can generally be completed by a financial planner without any assistance from a licensed attorney or CPA.
a. True
b. False
b. False
Estate planning is a complex process that usually requires the skills of a licensed attorney and a CPA, as well as a financial planner.
Diana's will leaves all of her property to her husband, George. If he does not survive her by more than eight months, the property will transfer to Diana's only daughter. Diana dies on May 1 and George dies on the following December 1. Of the following st
b. Diana's property will transfer to her daughter and the property will not be eligible for the unlimited marital deduction in Diana's estate.
Diana's property will not transfer to George because he failed to survive her for at least eight months. Therefo
Karen, age 58, recently visited her attorney to discuss the appropriate estate planning documents she needed to effectuate her estate planning goals. Given the following goals, which document is appropriate to clarify Karen's burial wishes?
Do Not Resusci
Side Instructional Letter
The side instructional letter is the appropriate place to identify Karen's burial wishes.
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
c. Nellie gave Jessie the power to use Nellie's money to pay Jessie's creditors.
Giving Jessie the power to pay his own creditors creates a general power of appointment over the assets. The other powers do not benefit Jessie and thus do not create a gener
Jose recently died with a probate estate of $900,000. He was predeceased by his wife, Guadalupe, and his daughter, Lucy. He has two surviving children, Pete and Fred. Jose was also survived by eight grandchildren, Pete's three children, Naomi, Daniel, Nic
d. Under Jose's will Fred will receive $300,000.
Under the will Pete and Fred will each receive 1/3 shares. Lucy's 1/3 share will flow to her children, with each of them receiving 1/2 of the 1/3 share.
Which of the following are parties to a power of attorney?
a. The principal's mother, even though she is not named as the principal's agent.
b. The guardian ad litem.
c. The principal, or person granting the power.
d. The attorney who prepares the power o
c. The principal, or person granting the power.
The parties to a power of attorney are the principal and the agent.
Under which of the following circumstances would a decedent be considered to have died intestate?
a. The decedent handwrote a will, but did not sign or date it.
b. The decedent was not of "sound mind" when he signed his statutory will.
c. The decedent fai
d. All of the above.
Option a describes an invalid holographic will. Option b describes a situation in which the testator is not "of sound mind" and therefore cannot make a valid will. If the decedent dies without a valid will, he is said to have died int
Charlotte is getting ready for her first meeting with her new financial planner, Samantha. What information does Charlotte not need to bring to this meeting?
a. Previously filed income tax and gift tax returns.
b. A copy of her current will.
c. A detailed
d. Charlotte should bring all of the above information to her first meeting with Samantha.
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
a. A statement of the domicile of the testator.
A statement of the domicile of the testator is a provision that is commonly found in a will. Neither a secondary clause nor a disclosure clause exist. Property owned tenancy by the entirety transfers by oper
Eugene is considering having his attorney prepare a springing power of attorney in which his gives his friend, Eleanor, the power to handle his finances. Why should Eugene include such a document in his overall estate plan?
a. In the event that Eugene bec
a. In the event that Eugene becomes disabled, Eleanor will be able to pay Eugene's bills.
Eugene should not make Eleanor the agent of his springing power of attorney if she is not legally competent or is not of the age of majority. If Eugene wants Eleanor
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 unexpected incapacity?
A springing durable power of attorney.
A re
c. 1, 2, and 4
Fee simple ownership is not an arrangement that helps to deal with unexpected incapacity. All of the other arrangements are methods of dealing with unexpected incapacity.
Natalie and her younger sister Kate purchased a beach-front condominium together 15 years ago. They own the property as a joint tenancy with rights of survivorship. At the time of the purchase, Natalie, being the older sister, was in a better financial po
a.
Because the property is owned JTWROS they automatically own 50% each. Answer b is incorrect because if Natalie were to die today, then her share of the condominium would transfer to Kate. Answer c is incorrect because if Kate died today, then Natalie's
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 the owner of the life estate.
c) An undivided interest in property held by two
b)
A complete interest in property with all the rights associated with outright ownership.
Rosie and her brother Michael decided recently to purchase an RV together. They both want to use the RV to take their families camping. The price for the RV was $10,000. Since Michael expects to use the RV 60% of the time and Rosie 40% of the time, Michae
Tenancy in Common
Fee Simple ownership is for one owner. They cannot own the property JTWROS because they own unequal ownership percentages. Tenancy by the Entirety and Community Property must be owned between married people.
Brett died recently leaving all his assets in a trust for his wife Greer. Brett was concerned that Greer would not be able to manage her money adequately to maintain her standard of living for the rest of her life. Therefore, he placed the assets into a s
Paul hold the legal title to the property.
Paul holds the legal title to the property as trustee for the trust. Greer as the beneficiary holds the equitable title. A life estate identifies the person who has a current beneficial right in the property, whi
Under what circumstances would property be subject to ancillary probate?
a) If the decedent is a resident of one state and owns real property in another state.
b) If the decedent is a tenant in common with an unrelated person.
c) If the decedent was a res
(a) If the decedent was a resident of a community property state.
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 fee simple by Ralphie's wife. Ralphie and his wife do not live in a community property state
c) A beach house owned tenancy in common by Ralphie and his mother.
Option a is incorrect because the property of Ralphie's wife would not be included in his probate estate. Option b is incorrect because property owned JTWROS passes outside of probate. Op
Kathi and Darrin, who are married, own their home together as community property. They purchased the home 17 years ago for $100,000. After many improvements and a surge in the market, the home is now worth $200,000. If Darrin died today and left his share
$100,000
Kathi's one-half interest in the home will have a basis of $100,000 due to a step-to fair market value of both halves at Darrin's death because the property is owned as community property.
Curtis, who was married, recently died owning several assets. Given the assets below, determine whether each asset should be included in Curtis' probate estate
A $500,000 life insurance policy on his own life. His daughter Ann was the named beneficiary an
No, this item is not included in the probate estate.
The life insurance policy had a designated beneficiary who was alive at Curtis's death because she received the property, thus the proceeds are not included in Curtis's probate estate
Which of the following is not a method for transferring property outside of the probate process?
State Contract Law
State Intestacy Law
State property titling law with survivorship feature
State Trust Law
State Intestacy Law
Property transferred via the state intestacy law will pass through probate.
Nate owns the following property:
A personal residence titled 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 leaving two children, Michael and Kris
$1,000,000
The probate estate will include the personal residence and the life insurance policy. The life insurance policy is included because the named beneficiary was already dead at Nate's death. The car is not included because of the JTWROS ownership,
Curtis, who was married, recently died owning several assets. Given the assets below, determine whether each asset should be included in Curtis' probate estate.
Curtis's portion of acreage owned as community property with his wife.
Yes, this item is inclu
Yes, this item is included in the probate estate.
Community property is always included in the gross estate
Which of the following assets would pass through probate?
A life insurance policy with a named beneficiary.
Assets held in trust.
A pay-on-death account with a named beneficiary.
Household goods.
Household goods
All of the other options describe assets that do not pass through probate.
Curtis, who was married, recently died owning several assets. Given the assets below, determine whether each asset should be included in Curtis' probate estate.
His personal residence worth $250,000 titled fee simple.
Yes, this item is included in the pro
Yes, this item is included in the probate estate.
Items owned fee simple is always included in the gross estate
Chad and Ross (both males) have been involved in an intimate relationship for the past 25 years. Chad's family is quite wealthy, and has provided Chad with every "extra" in life. Unfortunately, Chad's family is also very conservative and they do not appro
a) A well-drafted will leaving everything to Ross with a no-contest clause.
While all of these options may seem to accomplish Chad's goal, option a has the most inherent risk. The trust options and titling option are much less likely to be susceptible to
Lois, an elderly, single woman, recently came to you to, an estate planning professional, to discuss her estate plan. After a lengthy discussion you determine that Lois completed several transactions last year that may be subject to gift tax. The transact
$63,000
The retitling of the bank account is not a complete gift. It will not be complete until Ronnie actually withdrawals from the account. The retitling of the vintage automobile is a completed gift of one-half of the value. The beneficiary designation
Which of the following is true concerning the 5/5 Lapse Rule?
a) The 5/5 Lapse Rule deems that a taxable gift has been made where a power to withdraw in excess of $5,000 or five percent of the trust assets is lapsed by the powerholder.
b) The 5/5 Lapse Ru
a) The 5/5 Lapse Rule deems that a taxable gift has been made where a power to withdraw in excess of $5,000 or five percent of the trust assets is lapsed by the powerholder.
Option a is the definition of the 5/5 Lapse Rule. Option b is incorrect because t
Lois, an elderly, single woman, recently came to you to, an estate planning professional, to discuss her estate plan. After a lengthy discussion you determine that Lois completed several transactions last year that may be subject to gift tax. The transact
$0
Lois did not have any qualified transfers. A qualified transfer is a transfer directly to a medical provider for qualified expenses or to a qualified educational institution for tuition. While $50,000 was used for medical expenses, the money was not pa
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
d) Pete transfers $20,000 to his ex-wife, Patricia. Pete and Patricia were divorced five years ago.
Option a would not result in gift tax because the gift does not exceed the annual exclusion. Option b is incorrect because a person can gift an unlimited a
Brody and Tanya recently sold some land they owned for $150,000. They received the land five years ago as a wedding gift from Brody's Aunt Jeanette. Aunt Jeanette purchased the land many years ago when the property was worth $20,000. At the date of the gi
$92,400
In general, when a donor makes a gift of property other than cash to a donee, the donee will take the property at the donor's adjusted basis. The holding period of the donee will include the holding period of the donor for purposes of subsequent t
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 $28,000 and gives each son the right to withdraw up to $14,000. In the current year, when the total trust asse
a) Chad has made a taxable gift to Ronnie of $4,500.
This question addresses the 5/5 Lapse Rule. The 5/5 Lapse Rule states that a taxable gift has been made where a power to withdraw in excess of $5,000 or 5% of the trust assets is lapsed by the powerhold
Rachel died eight months ago and her executor is finalizing her estate tax return. The executor has determined that Rachel's adjusted gross estate is $10,120,000 and that her estate is entitled to a charitable deduction in the amount of $500,000. Calculat
c. $1,712,000
Subtract the charitable deduction from the adjusted gross estate to get the taxable estate ($10,120,000 - $500,000 = $9,620,000).
The tentative tax on the taxable estate is $3,793,800 ($345,800 + 0.40 ($8,620,000)).
Subtract the applicable e
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 daug
d. The decedent transferred the ownership of the policy to his wife four years ago.
Option a is incorrect because the proceeds of the policy would be included in the estate if the proceeds are payable to the estate. Option b is incorrect because the deced
Maxwell died August 8, 2014. Of the following transfers made during his life, which is included in his gross estate?
a. The transfer of a whole life insurance policy on Maxwell's life to an ILIT on September 16, 2010.
b. The sale of his term insurance pol
c. The transfer of a whole life insurance policy on Maxwell's life (face value $150,000) valued at $20,000 to his son on September 16, 2012.
The transfer would be included in Maxwell's gross estate because transfers of life insurance on the decedent's lif
Fred, the founder and CEO of WonderCo, recently passed away. At his death, Fred owned 80% of the stock of WonderCo; and the WonderCo stock was his only asset. WonderCo is a publicly traded company. Which of the following discounts would be applicable to F
a. Key Person Discount
Option b is incorrect because Fred owns a controlling interest in WonderCo; therefore, a Minority Discount is not applicable. Therefore, option c is also incorrect. Option d is incorrect because answer a is correct; since Fred was b
Carolyn made the following transfers during her life:
The transfer of her home to an irrevocable trust for the benefit of her four children on January 1, 2014. Carolyn retained the right to live in the home for the remainder of her life. The fair market v
c. $1,200,000
Carolyn's gross estate would include the fair market value of the home at her date of death, but not the value of the trust listed in #2. The transfer listed as #1 would be included in Carolyn's gross estate because Carolyn retained an inter
In 2012, 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
d. $2,000,000
The death benefit of a life insurance policy transferred within three years of the decedent's date of death is included in the decedent's gross estate. In this case, Lori transferred the policy one year before her death, so the full death be
When Ronnie died seven months ago he left his prize art collection to his daughter Kate. Ronnie had a fantastic eye for selecting artwork by unknown painters, buying the painting cheap, and then selling them for a high profit once the painter was recogniz
c. $85,000 long term capital gain.
Kate's basis in the property is equal to the date of death value. The holding period for inheritances is long term regardless of how long the decedent or the legatee held the property. Thus her gain is $100,000 (sale pri
Which of the following statements is false?
a. The unlimited marital deduction is a deduction from a decedent's adjusted gross estate to arrive at the decedent's taxable estate. The unlimited marital deduction is limited to the value of the assets include
b. The credit for tax paid on prior transfers was repealed in 2005. At that time, the credit became a deduction.
The credit for tax paid on prior transfers was NOT repealed in 2005. The state death tax credit is repealed in 2005 and is replaced with a ded
Mario's executor determined that the estate tax liability for Mario's estate is $600,000. However, Mario's executor forgot to file the estate tax return and filed and paid 65 days late. Calculate the penalties that Mario's estate will now have to pay.
a.
b. $90,000
The failure-to-file penalty of $90,000 (5% x $600,000 x 3 months) is reduced by the failure-to-pay penalty of $9,000 (0.5% x $600,000 x 3 months), creating an adjusted failure-to-file penalty of $81,000. Adding the failure-to-pay penalty of $9,
Eric died on July 24, 20xx. At the time of his death, he owned 1,000 shares of Jefferson Crab stock. Given the daily trade prices for Jefferson Crab surrounding Eric's date of death, at what value will the Jefferson Crab be included in Eric's gross estate
a. $103,290
Since the stock is not traded on the date of Eric's death, the value is determined utilizing the artificial valuation formula in the text, the average of the high and low for the 2 relevant dates, Monday and Tuesday.
[($104 x 2) + ($103 x 5)]/
Bobby, a single man, owned a building with a fair market value of $2,000,000. Bobby's adjusted basis in the building was $1,000,000. In 2014 Bobby agreed to sell the building to his adult son, Robby for $1,300,000. What is the amount of Bobby's taxable gi
b. Bobby has made a taxable gift of $686,000.
The discount of $700,000 ($2,000,000 - $1,300,000) is treated as a gift eligible for the annual exclusion, thus creating a taxable gift of $686,000 for 2014.
Gina, age 79, recently had a stroke. Afraid that she may not live long enough to see her family enjoy her beach house, she would like to transfer it to her daughter, Taylor. Gina does not want to pay any gift tax or utilize any of her lifetime credit amou
c. SCIN
A SCIN is a note with a self-cancelling premium payment attached so that the note will cancel at the transferor's death. The GRAT, QPRT and the GRUT are irrevocable trusts and will result in a current taxable gift.
Jennifer purchased her mother's home through the use of a SCIN. Under the terms of the SCIN, Jennifer was to pay her mother $22,000, plus interest and a SCIN premium, per year for 10 years. If Jennifer's mother died after six payments were made, what woul
d. $220,000
The buyer's adjusted basis in property transferred through the use of a SCIN is the fair market value of the property on the date of the sale regardless of the number of payments made by the seller. In this case, the fair market value of the p
Which of the following statements is true?
a. Angela transferred her home to a QPRT in 2010. She retained the right to live in the home for 13 years, and at the end of the term, the home transfers to Angela's three children. Angela dies in 2013, when the
d.
Option d is correct because Cathy's surviving heirs become equal heirs in Earl's estate because Cathy predeceased Earl. Accordingly, each heir receives 1/6 (Kenny, Tim, Aaron, Cathy's three kids) of Earl's estate.
Option a is incorrect because the valu
Lisa made the following transfers during 2014:
- $17,000 to her grandson for his law school tuition.
- $1,000 to her neighbor to help him pay a hospital bill.
- A transfer of property valued at $100,000 to a GRAT. Lisa retained an annuity valued at $40,00
c. $63,000
Lisa's transfers to her grandson and neighbor are not qualified transfers because the payments were not made directly to the educational or medical institution. The transfers are eligible for the annual exclusion, though. As such, the taxable a
Of the following, which property transfers at death by contract?
a. Roth IRAs.
b. Property titled Joint Tenancy with Rights of Survivorship (JTWROS).
c. An Irrevocable Living Trust.
d. A Grantor Retained Annuity Trust (GRAT).
a. Roth IRAs.
Only the Roth IRA transfers property at death by contract. The beneficiary designation is the contract, and at the death of the account owner, the account assets will be transferred to the beneficiary. All of the others transfer by state pro
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.
Option a is incorrect because the buyer of a SCIN only makes payments until the earlier of (1) the seller's death or (2) the term set forth in the SCIN.
Option b is incorrect becaus
Paula, a single woman, transferred $2,000,000 to a GRAT naming her two sons as the remainder beneficiaries, while retaining an annuity with a present value of $860,000. If this is the only transfer that Paula made during the year, what is Paula's total ta
b. $1,140,000
The present value of the expected future remainder interest is a gift of a future interest subject to gift tax. The value of the expected future remainder interest is $1,140,000 ($2,000,000 - $860,000). Because this is a gift of a future int
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 is in good heal
d. Installment Sale
Marie would sell the business to Allen utilizing an installment sale and would charge a reasonable rate of interest.
Because Allen would not have to pay the full sale price at the date of the transfer, he would not need to have all of
Maxine agrees to purchase Jacob's property utilizing a private annuity. Jacob's table life expectancy is ten years at the date of the agreement and the property has a fair market value of $400,000. The private annuity payment is $45,000 per year, and Maxi
d. $400,000
Maxine bought the property utilizing the private annuity. Maxine's gross estate will include the fair market value of the property purchased. The expected present value of the remaining private annuity payments will be a debt of the estate.
Kristi transferred $10,000,000 to the Kristi Family Trust. The trust is designed as an irrevocable grantor trust. Kristi retained a 5% annuity payout from the trust for the lesser of five years after the establishment of the trust or until her date of dea
a.
The fact pattern describes a Grantor Retained Annuity Trust (GRAT) established by Kristi. If Kristi dies during the term of her annuity interest, the full fair market value of the trust assets will be included in her gross estate.
Option b is false bec
During the year, Edward created a trust for the benefit of his five children. The terms of the trust declare that his children can only access the trust's assets after the trust has been in existence for 20 years and the trust does not include a Crummey p
d. $100,000
Because the trust does not include a Crummey provision, the transfer to the trust is a gift of a future interest and is not qualified to be offset by the annual exclusion. Therefore, the entire transfer to the trust is subject to gift tax.
Which of the following is true regarding a Grantor Retained Annuity Trust (GRAT)?
a. At the end of the GRAT term, a taxable gift occurs.
b. If the grantor dies during the trust term, a pro rata portion of the trust assets will be included in the grantor's
c. Interest and dividends earned by assets in a GRAT are taxed to the grantor.
Option a is incorrect because a taxable gift occurs when the GRAT is established, not when the GRAT term ends.
Option b is incorrect because if the grantor dies during the trus
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 terms
b. Avoidance of probate
Option a is incorrect because use of a revocable living trust does not reduce the grantor's federal estate taxes because the full fair market value of the trust assets are included in the grantor's gross estate.
Option c is incorre
In 1999, Price funded a bypass trust with $675,000, the applicable estate tax credit equivalency amount at that time. At Price's death in 2014, his will included a testamentary bypass trust and a residual bequest to his U.S. citizen wife. If Price's net w
c. $4,665,000
Price's executor would fund the testamentary bypass trust with the difference between the applicable estate tax credit equivalency at Price's death (2014 - $5,340,000) and the funding amount of the inter vivos bypass trust ($675,000). In thi
Mary's husband, Patrick, died two years ago. Patrick's will included the following three testamentary trusts: a trust for the benefit of Mary's children, but giving Mary a general power of appointment over the trust assets for the remainder of her life (G
a. 1 only
Only the GPOA Trust would be included in Mary's gross estate. Because the withdrawal right of the Bypass trust was limited to an ascertainable standard, its assets are not included in Mary's gross estate. Mary does not have an interest in the as
Robbie transferred $100,000 to an irrevocable trust for the benefit of his minor child, Dominic. The transfer was eligible for the annual exclusion. The trust permits the trustee to accumulate trust income within the trust, and only make distributions to
b. 2503(c) Trust
A 2503(c) trust allows income to be accumulated within the trust until the minor beneficiary attains the age of majority and the transfer of property to the trust qualifies for the annual exclusion.
A 2503(b) trust requires the trustee to
Which of the following is NOT a feature of a testamentary trust?
a. Creation under a last will and testament.
b. Shifts the income tax burden to a lower-bracket taxpayer.
c. Results in the inclusion of assets in the gross estate.
d. Does not avoid probate
b. Shifts the income tax burden to a lower-bracket taxpayer.
All of the other answers are features of a testamentary trust.
Paul would like to transfer a substantial portion of his net worth to his son, Chad. Paul believes that the assets will appreciate in value before his death, but Paul does not need any of the assets to sustain his current standard of living. However, Paul
a. An Irrevocable Trust
The assets transferred to the irrevocable trust would be excluded from Paul's gross estate, and would be subject to the management of the trustee as directed by Paul. As such, Chad would not be able to access the assets.
An outrigh
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 o
a. $0
Nothing is included in Gene's gross estate. The full fair market value of the trust is excluded from Gene's gross estate because the transfer to the trust was irrevocable and Gene did not retain any right to the trust's assets. Furthermore, because
Arthur transfers property valued at $250,000 to a charitable organization in return for a single life annuity based on his life value at $130,000. Arthur's adjusted basis in the transferred property was $95,000. Arthur died two years after the transaction
b. $120,000
The value of the property contributed less the value of the annuity received is Arthur's charitable deduction for income tax purposes.
$250,000 - $130,000 = $120,000.
Which of the following is NOT a requirement for a testamentary charitable bequest to qualify for the unlimited charitable deduction?
a. The bequest must be contingent upon some other event occurring.
b. The amount of the bequest must be determinable at th
a. The bequest must be contingent upon some other event occurring.
The bequest CANNOT be contingent upon some other event occurring. The bequest must be mandatory. All of the other statements are requirements for a testamentary charitable bequest to quali
This year, Dottie donated $10,000 in cash to her church and she also donated medical supplies with a fair market value and adjusted basis of $20,000 to the Red Cross. Dottie's AGI for this year is $50,000. What is Dottie's charitable income tax contributi
c. $25,000
The deduction of charitable donations in the form of cash is limited to 50% of AGI. Dottie's AGI is $50,000, so the deduction of any cash donations to a public charity will be limited to $25,000. The deduction of charitable donations of ordinar
Of the following, which is not an issue when considering whether to deduct the adjusted basis or the fair market value of property contributed to a charitable organization?
a. The current market rate of interest.
b. The donor's current and projected adjus
d. The capital gains rate in effect at the time of the transfer.
Option d is not an issue when deciding whether to deduct the adjusted basis or the fair market value since the transfer generally does not created a capital gain.
All of the other options ar
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
d. $58,400
Ignoring any AGI limitations, Steve could deduct 80% of the $10,000 contribution, or $8,000. The $400 contribution to the public broadcast television station will not be reduced by the value of the mug and the pen because those items are consid
Chelsea graduated from the University of Alabama. Each year, football season tickets are sold only to those who make a contribution to the university of $2,000 or more. Chelsea contributes $2,000, so that she meets the requirements to purchase season tick
b. $1,600
For a contribution to a university where the donor receives the right to purchase tickets to athletic events, only 80% of the contribution will be allowed as a charitable contribution. The price of the actual tickets is not deductible. $2,000 x
Angelina contributed $25,000 in cash to a foreign charitable organization. Her AGI was $25,000. At the time of the contribution, the organization told her that her contribution was tax deductible for income tax purposes. Ignoring any income limitations, h
a. $0
Foreign charitable organizations are not qualified charitable organizations and contributions to such organizations do not qualify for a charitable deduction. It is always the responsibility of the donee to determine the deductibility of his contrib
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 y
d. A Charitable Remainder Unitrust.
Option a is incorrect because additional contributions may not be made to a CRAT.
Option c is incorrect because a CLUT is not a charitable remainder trust.
Option b is incorrect because each donation is a separate annui
Reese donated $100 to her church and $300 to the United Way. Which of the following is true with regard to 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 con
d. Only the United Way is required to send a confirmation of the contribution to Reese.
Option a is incorrect because IRS Form 8283 must be filed whenever the aggregate total of all non-cash contributions exceeds $500.
Options b and c are incorrect becaus
Donna has AGI of $100,000. Donna owns a rare antique in which she has an adjusted basis of $200,000. The antique is currently worth $2,000,000. Assuming that Donna's AGI will remain at $100,000 for the next six years, which of the following would you reco
c. Donna should deduct $50,000 this year.
Option c is correct because, given Donna's AGI, she will obtain the maximum tax benefit by electing to deduct the adjusted basis of the antique, subject to a ceiling of 50% of her AGI. Electing to deduct the adjus
Which of the following qualifies for the unlimited marital deduction?
a. An outright bequest to resident alien spouse.
b. Property passing to a noncitizen spouse in a QTIP.
c. An outright bequest to a resident spouse who, prior to the decedent's death was
c. An outright bequest to a resident spouse who, prior to the decedent's death was a noncitizen, but who after the decedent's death and before the estate tax return was filed, became a U.S. citizen.
Of the options, only an outright bequest to a resident a
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. An interest in property for a term equal to an individual's life.
a. An ownership interest in a life insurance policy.
The ownership interest of a life insurance policy is not a terminable interest. The ownership interest does not terminate.
All of the other interests listed are terminable interests. A life estate is a
Of the following statements, which is false?
a. The availability of the unlimited marital deduction merely postpones the potential estate tax due.
b. Property that is not included in the decedent's gross estate cannot qualify for the unlimited marital ded
c.
Option c is a false statement. If the death benefit of a life insurance policy is included in a decedent's gross estate, and the surviving spouse is the listed beneficiary and receives the proceeds, the value of the death benefit will be eligible for t
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 be a U.S. citizen.
c. The surviving spo
d. The gross value of qualifying property left to the surviving spouse is included in the marital deduction
Options a, b, and c are all requirements of the unlimited marital deduction. Option d is incorrect because only the net value, not the gross value,
Of the following, which is not a benefit of the unlimited marital deduction?
a. The use of the unlimited marital deduction can shelter future appreciation of an asset from estate taxes at the death of the second-to-die spouse.
b. The estate tax on propert
a.
Property that transfers to the second-to-die spouse is eligible for the marital deduction and, to the extent that it is not consumed, will be included in the second-to-die spouse's gross estate at the fair market value at his date of death, including a
Raymond's net worth is $10,000,000, 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 much to his wife as possible,
d.
Only option d would give Raymond's wife access to all of his estate, and utilize his applicable estate tax credit; therefore, option d is the best option. Option a is not the best option because we do not know what the state of the law portability will
Which of the following statements is incorrect?
a. When a decedent's taxable estate is less than the applicable estate tax credit equivalency, the estate is said to be overqualified.
b. When too few assets pass to a decedent's surviving spouse, and as suc
d.
Option d is incorrect because the ultimate beneficiary of a QTIP Trust is chosen by the grantor of the QTIP Trust. All of the other statements are correct.
In which of the following situations would the use of a QDOT be appropriate?
a. Tom dies and is survived by his wife, Tina, who is not a U.S. citizen.
b. Regina dies and is survived by her husband, Raul, who becomes a U.S. citizen two months after Regina'
a.
Option b does not describe a situation in which the use of a QDOT would be appropriate because Raul became a U.S. citizen prior to the due date of the estate tax return and therefore, any property transfers to Raul would qualify for the unlimited marit
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 est
c.
Option a is incorrect because a QTIP is not the same as a "B" trust. Option b is incorrect because the income of the trust must be paid to the spouse, not to any other beneficiary. Option d is incorrect because the surviving spouse does not choose the
Miguel and Jane have been married for 45 years. Miguel is a citizen of Mexico, where the couple has lived for the past 25 years. Given the following list of separate property owned by Jane, and considering Jane's will leaves everything to Miguel outright,
a. $0
Because the property is transferred outright to a noncitizen spouse, it does not qualify for the unlimited marital deduction. Therefore, $0 is eligible for the unlimited marital deduction.
Amanda has been married to Javier for 25 years. Javier is a Honduran citizen. Amanda would like to make an inter vivos transfer to Javier. What is the maximum amount that Amanda can transfer to Javier without incurring transfer taxes or utilizing any of h
a. $145,000
There is a special annual exclusion for noncitizen spouses of $145,000. A spouse can transfer up to $145,000 to his noncitizen spouse without incurring gift taxes.
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 Edw
a.
Although copyrights are terminable interests, no person other than Edward has any interest in the property, since all rights were given to Edward. Therefore, the transfer of the copyrights to Edward will qualify for the marital deduction. Option b does
Overqualification means that the decedent used too much of his applicable estate tax credit.
True
False
False.
Overqualification occurs when too many assets pass to the surviving spouse and the decedent fails to take advantage of his applicable estate tax credit.
One advantage of the unlimited marital deduction is that the payment of any estate taxes can be deferred until the death of the surviving spouse.
True
False
True.
This is an advantage of the unlimited marital deduction.
Provided that a survivorship clause does not require the surviving spouse to survive the decedent for more than nine months, any transfers subject to the survivorship clause will qualify for the unlimited marital deduction.
True
False
False.
In order to qualify for the unlimited marital deduction, the survivorship clause may not exceed six months and the surviving spouse must actually survive the survivorship period.
Property disclaimed by a surviving spouse will still qualify for the unlimited marital deduction.
True
False
False.
If the surviving spouse properly disclaims certain property, that property will not qualify for the unlimited marital deduction.
Which of the following is NOT a reason that the death benefit of a life insurance policy would be included in a decedent's gross estate?
a. The beneficiary of the policy is the estate of the decedent
b. The decedent transferred the ownership of the policy
d. The decedent transferred the ownership of policy to his partner four years ago.
Do insurance policy proceeds apply to either the income tax or estate tax treatment of a life insurance?
Yes - benefits received under a periodic settlement option are partially subject to income tax.
Use of an Irrevocable Life Insurance Trust can accomplish which of the following?
1. Create a vehicle to avoid Generation Skipping Transfer Tax.
2. Make proceeds available to the surviving spouse.
3. Ensure that proceeds will be excluded from the probate
d. 1, 2, 3 and 4
An ILIT will accomplish all of the items listed in this question.
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 shareho
a. A stock redemption plan must have a corporation as a party to the contractual arrangement.
The corporation must be a party to the stock redemption plan. A stock redemption plan is a stock purchase by a corporation, so the cost basis of the surviving sh
Which of the following is not a reason that the death benefit of a life insurance policy would be included in a decedent's gross estate?
a. The beneficiary of the policy is the estate of the decedent.
b. The decedent transferred the ownership of the polic
d. The decedent transferred the ownership of the policy to his partner four years ago.
Option a is incorrect because the proceeds of the policy would be included in the estate if the proceeds are payable to the estate.
Option b is incorrect because the de
Which of the following are included in the gross estate:
a. Proceeds from a life insurance policy owned by the decedent insured that was assigned to an ILIT two years before death of the insured.
b. A secular trust where the only income beneficiary was th
d. Gift taxes paid two years prior to the decedent's date of death for gifts made four years earlier.
Incidence of ownership of life insurance policies assigned within three years of death are includible in the decedent's estate, as are CRATs and CRUTs. A
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 o
a.
Periodic annuity settlement benefits are not fully subject to income tax because the recipient has a tax basis equal to the original proceeds. Proceeds are includible in estate for tax purposes only if grantor retained an incident of ownership. Life in
Which of the following describes joint and survivorship life insurance?
1. It is generally not includible in any insured's gross estate, if owned in an ILIT.
2. It can provide liquidity to pay estate taxes at the death of the second insured.
3. It pays a
c. 1, 2 and 4
Survivorship life pays the entire death benefit at the second death and is generally not included in the insured's gross estate if owned in an ILIT.
Which of the following accurately reflects the use of split-dollar life insurance in a business setting?
1. It can be a fringe benefit to an employee.
2. The insurance premiums are usually split between the employer and the employee (insured).
3. It may b
d. 1, 2 and 3
All these statements are correct. Split dollar life insurance is an arrangement where an employee and employer generally share the premium cost and cash value for death benefit of a life insurance policy covering the life of the employee.
Some reasons to use life insurance to fund business continuation agreements include which of the following:
1. It provides sufficient assets for the buyer to perform on the contract.
2. Insurance protects the company and its shareholder because the IRS ca
b. 1, 3 and 4
The IRS may challenge the valuation of stock in business continuation agreements, with or without insurance; the IRS is not bound by any contractual agreement between the company and its shareholders.
Which of the following statement(s) concerning the choice of a stock redemption (entity agreement) versus a cross-purchase partnership buy-sell agreement funded with insurance is FALSE?
a. The use of existing insurance to fund the agreement causes a trans
a. The use of existing insurance to fund the agreement causes a transfer-for-value problem if an entity agreement is selected, but does NOT cause this problem if a cross-purchase approach is used.
Transfer-for-value problems can be created if existing pol
A client asks you to explain the statement, "Life insurance proceeds are tax-free." You answer that the general rule(s), subject to some exceptions, is/are that death benefits received from a life insurance policy due to the death of the insured are incom
c. 1 and 2
Death benefits from a modified endowment contract (MEC) are still income tax free unless sold. Statement 2 subjects the policy proceeds to income tax if the policy was transferred to a transferee who took under a transfer for value rule.
Eric and Tawny gift $120,000 to an Irrevocable Life Insurance Trust with Crummey provisions. The trust has, as beneficiaries, their three children. A few weeks later, Eric dies in an auto accident. Tawny, with the assistance of her attorney and Financial
a. $0
This was a cash gift, not a gift of life insurance. Therefore, none of the gift will be included in Eric's gross estate as the trust is irrevocable.
Prairie Dog Corporation (PDC), an oil drilling company, has a "key-person" variable universal life policy on Digger Phelps, its vice-president of drilling operations. The owner and beneficiary of the policy are the corporation. Which of the following is c
d. Any death benefit paid will be nontaxable to PDC.
PDC is the owner and beneficiary of the policy. For the same reason, premiums are NOT considered a gift or taxable to Digger, nor will they appear in his gross estate. "Key person" life premiums are not
The best life insurance policy for the payment of federal estate taxes for a 55-year-old couple with illiquid assets is:
a. An individual whole-life policy on each spouse on a cross-ownership basis.
b. A joint first-to-die life insurance policy owned join
d. A joint and last-to-die life insurance policy owned by an irrevocable life insurance trust.
A second-to-die life policy provides insurance for a lower cost than insuring each spouse individually. Due to the unlimited marital deduction, there is no need
Which of the following rights will not cause an insurance policy to be included in the gross estate of the owner/insured if retained within the three years prior to the death of the owner/insured assuming the policy was in an ILIT?
a. The right to pay the
d. The right to change the name of a charitable beneficiary to another charitable beneficiary.
Any incidence of ownership (answers a, b or c) constitute incidence of ownership and would cause the policy to be included in the gross estate. The right to cha
Which of the following constitute incidences of ownership in an insurance policy:
1. The right to name or change the name of the beneficiary.
2. The right to surrender the policy.
3. The right to assign the policy.
4. The right to borrow cash from the pol
d. 1, 2, 3 and 4
All of these rights are incidences of ownership.
Which of the following statements about split-dollar life insurance and its uses is incorrect?
a. Stock redemption plans can be funded by split-dollar life insurance.
b. All policy values and benefits of a split-dollar life insurance policy are subject to
b. All policy values and benefits of a split-dollar life insurance policy are subject to the claims of company general creditors.
Only the portion of benefit in the policy that is attributable to the actual contributions of the company are subject to the
XYZ Corporation is a closely held corporation. Martin McFly, along with the three other owners, set up a stock redemption agreement requiring the corporation to buy all shares of a deceased or disabled shareholder. The plan is funded by entity life insura
d. None of the above
The deceased shareholder's estate will not increase due to the life insurance, as the deceased shareholder does not own the insurance policy and already has the value of his business interest in his gross estate. There is a step-up in
Death benefit proceeds from a life insurance policy are included in a decedent's gross estate in which of the following circumstances:
1. The decedent gave the policy to his father four years ago, but retained the right to change the name of the beneficia
d. 1 and 2
Statement 1 is included because the decedent retained an ownership right and statement 4 was transferred more than 3 years ago.
Cheryl, age 58, is the owner of a closely-held partnership business which makes up 65% of her adjusted gross estate. More than half the assets of the corporation are real estate holdings. Cheryl wants to undertake a transfer of some sort to her son, Roger
d. Cheryl gives up the right to use the 6166 election.
The amount required to use the Section 6166 is that the ownership asset must make up at a minimum of 35% of the estate. Section 303 is not appropriate because this is a partnership and there is not st
Hazel, a widow, died. She had made no previous lifetime taxable gifts and she died with a gross estate of $5,250,000, consisting solely of a diversified portfolio of publicly traded, income-producing stocks. Her debts were $75,000 and estate administrativ
b. Deduct estate administrative expenses on the estate's fiduciary income tax return.
The alternative valuation is not beneficial because there is no estate liability. No estate tax is due therefore no installment payment is needed and 6166 does not apply
Federal estate and gift taxes are determined by the fair market value of the property transferred. Which of the following statements are true?
1. Asset values are based upon the fair market value on the date of death or six months after the date of death
c. 1, 2 and 3
The value of the assets transferred may use an alternative valuation date. Special use valuation is only available if certain qualifications are met (see 2032 (a)).
Which of the following statements is incorrect?
a. When a decedent's taxable estate is less than the applicable estate tax credit equivalency because of the overuse of the marital deduction, the estate is said to be overqualified.
b. When too few assets p
d. The ultimate beneficiary of a QTIP Trust is selected by the surviving spouse.
Option d is incorrect because the ultimate beneficiary of a QTIP Trust is chosen by the grantor of the QTIP Trust. All of the other statements are correct.
Mrs. Riley dies in 2014 leaving her entire $7.2 million estate through her will to her penniless husband, John. His estate goes to their children at his death. He has terminal cancer with a life expectancy of only 1 to 2 years. The alternative valuation d
a. Elect Portability
The alternative valuation can only be used if it reduces both the gross estate (yes) and reduces the estate tax due (no, because it was all left to a spouse so no estate tax would be due in either situation). Since the new estate law
Argo and his wife, who had made no previous gifts, gifted $125,000 in total present interest gifts to each of 6 grandchildren in separate accounts in the current year. They allocated their GST exemption to the accounts. How much GST tax do they each owe?
a. $0
They are allowed $5,340,000 (2014) each. They used only $582,000, net of the $28,000 per donee annual exclusion.
(125,000 x 6 = 750,000 in gross gifts, less 28,000 x 6 = 168,000 which equals $582,000)
They have each allocated $291,000 (1/2 of 582,00
Which of the following are characteristics of a qualified disclaimer?
1. It may not direct the bequest to another person selected by the disclaimant. It must be received by the executor of the estate within 9 months of the death of the decedent.
2. It mus
b. 1, 2 and 3
A qualified disclaimer must be written, irrevocable and received by the executor of the estate within 9 months. It must not direct the asset and can be for any interest partial or full.
Which of the following is not necessary to properly execute a Section 303 stock redemption?
a. The value of the stock must be greater than 35% of the decedent's adjusted gross estate, including gifts made in the last 3 years.
b. The 303 redemption can onl
c. The 303 redemption can be made without a positive earnings and profits account.
The closely-held stock must make up 35% of the decedent's adjusted gross estate value and must be the stock of a closely-held firm. The E and P account must be positive or
Jack and his wife, Carol, were in an auto accident. Carol died three weeks before Jack did. His gross estate was $6.2 million. One of the major assets in his estate was closely held stock in an equipment leasing firm (C corporation) with which rapidly app
b. 2 and 5
Due to rapid increase in asset value, statement 1 would likely provide a higher estate value and therefore the alternate valuation date is not likely useful. Statement 3 - QTIP is not an issue as Carol and Jack both die, and she is not his heir
Which of the following apply to Section 303 redemption?
a. The closely held interest must meet the 25% rule.
b. Qualifying redemption amounts are limited by the payment of death taxes and estate administration taxes and costs.
c. A publicly traded stock w
b. Qualifying redemption amounts are limited by the payment of death taxes and estate administration taxes and costs.
The rule is 35% of the gross estate. The stock must be closely-held and it can be either common or preferred.
Which statement(s) is/are true for Generation Skipping Transfer Tax (GSTT)?
1. Applies to transfers to persons who are two generations or more lower than the transferor.
2. There are no exceptions for GSTT
3. There's a $5,340,000 lifetime exemption in 201
c. 1, 3 and 4
Big Mike, a very generous man, has given his granddaughter, Jordan, a gift equal to $5.34 million last year and paid any relevant taxes. He now wants to give his grandson, Colin, a gift of $5.34 million plus the annual exclusion of $14,000 on his birthday
D. $10.4804 million
Which one of the following transfers made this year by 85-year old Jennifer is not sooner or later subject to the Generation Skipping Transfer Tax?
A. A gift of a remainder interest in a trust just established which is paying an income interest to Jennife
A. A gift of a remainder interest in a trust just established which is paying an income interest to Jennifer. The remainderman is a grandson whose parents died in an auto accident earlier this year before the inception of the trust.
The Generation Skipping Transfer Tax (GSTT) has all the following characteristics, except:
A. GST 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 bene
d
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. In the current year, she gives each grandchild $280,000. If Elizabeth has not made any previous taxabl
d. None
The $5.34 million GSTT exemption will fully cover her $1,064,000.
Which statement(s) is/are true for Generation Skipping Transfer Tax (GSTT)?
1. Applies to transfers to persons who are two generations or more lower than the transferor.
2. There are no exceptions.
3. There is a $5,340,000 lifetime exemption in 2014 for G
c. 1, 3 and 4
There are exceptions to the GSTT including the predeceased parent rule. Gifts qualifying for the annual gift tax exclusion are excluded for GSTT. The lifetime exemption for GSTT is $5,340,000 (2014).
Big Mike, a very generous man, has given his granddaughter, Jordan, a gift equal to $5.34 million last year and paid any relevant taxes. He now wants to give his grandson, Colin, a gift of $5.34 million plus the annual exclusion of $14,000 on his birthday
d. $10.4804 million
Total guess??? Not sure why this is though! Oooops
Which one of the following transfers made this year by 85-year old Jennifer is not sooner or later subject to the Generation Skipping Transfer Tax?
a. A gift of a remainder interest in a trust just established which is paying an income interest to Jennife
a. A gift of a remainder interest in a trust just established which is paying an income interest to Jennifer. The remainderman is a grandson whose parents died in an auto accident earlier this year before the inception of the trust.
Options b, c, and d al
Your client, Albert, is 68-years old. He is interested in establishing a trust with a value of $6,000,000 for his family. He is aware of the Generation Skipping Transfer Tax, and he has asked you for your advice as to which of the following would be consi
d. A trust that Albert had established 3 years ago for Albert's favorite employee, Sam, who has just turned 20.
Due to the age difference of more than 37� years and the non-related party status, the trust for Sam is a skip person. The reason Patrick is no
The Generation Skipping Transfer Tax (GSTT) has all the following characteristics, except:
a. GST 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 bene
d. A "skip person" is a person who is one or more generations younger than the transferor.
Options a, b, and c are true but in the case of option d, a grandchild whose parent has died has moved up a generation with regard to skip-person considerations. A
Which of the following describes joint and survivorship life insurance?
1. It is generally not includible in any insured's gross estate, if owned in an ILIT.
2. It can provide liquidity to pay estate taxes at the death of the second insured.
3. It pays a
c.