Deck 14: Estate Planning

Question 1

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
A trust in which the settlor or named beneficiary can retain income from the trust, usually for life, and after death, the trust property goes to a qualified charity

Answer 1

B

Question 2

Estate planning must always take place before the death of a testator.

Answer 2

False

Question 3

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
An unlimited amount of a decedent's gross estate that may be given to the surviving spouse without being subject to federal estate tax

Answer 3

A

Question 4

If a husband gives his wife a gift of $500,000, neither party has to pay federal gift tax.

Question 5

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
The right to pass on an interest in property to whomever a donee chooses, including himself/herself, the estate, creditors, or creditors of the estate

Question 6

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
An estate created by operation of law and not directly by the parties themselves

Question 7

After it is established, an estate plan does not need to be reviewed again until the testator's death.

Question 8

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
An increase in the income tax of appreciated property, which is valued on the date of the donor's death or the alternate valuation date

Question 9

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
A practice available to spouses to join in annual gifts and combine their individual gifts to donees to avoid gift taxes

Question 10

Gifts of future interests do not qualify for the annual gift tax exclusion.

Question 11

Estate administration expenses can be used as a deduction for estate tax purposes.

Question 12

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
An immediate and unrestricted interest in real or personal property

Question 13

An elderly beneficiary may choose to disclaim an inheritance.

Question 14

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
The least expensive form of life insurance, which provides pure protection without cash surrender or loan value

Question 15

A charitable remainder annuity trust allows for additional contributions to be made to the trust property.

Question 16

Only attorneys are qualified to give estate-planning advice.

Question 17

If a same-sex couple has a legally recognized civil union in their home state, they qualify for the federal marital deduction.

Question 18

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
The right of a beneficiary or heir to refuse a gift by will, trust, or inheritance without any adverse tax consequences

Question 19

MATCHING:
a.marital deduction
b.charitable remainder
c.gift splitting
d.present interest
e.legal life estate
f.stepped-up basis
g.general power of appointment
h.term life insurance
i.disclaimer
j.bypass trust
An estate planning device whereby a portion of a deceased spouse's estate passes to a trust instead of directly to the surviving spouse

Question 20

When it is designed appropriately, an estate plan should meet all the tesatator's objectives and provide him/her with a comfortable retirement income.

Question 21

Which of the following is NOT a benefit of a charitable remainder trust?

A)It acts as a form of life insurance that benefits the settlor's children.
B)It reduces income tax.
C)It increases current income by providing life income for the settlor.
D)It reduces federal estate tax liability.

Question 22

A QTIP trust must:

A)Be in the form of a testamentary trust
B)Give the surviving spouse the right to all the income from the trust property for life
C)Allow the trustee to use any amount of the trust principal for any purpose
D)Give the surviving spouse a general power of appointment

Question 23

To qualify for the charitable deduction, a gift cannot be made to a(n):

A)Private school
B)Religious charity
C)Individual
D)Library

Question 24

Which is NOT a major type of life insurance?

A)Universal life insurance
B)Whole life insurance
C)Term life insurance
D)Custodial life insurance

Question 25

Which is NOT a potentially adverse factor that could diminish any estate?

A)Administration expenses
B)Trusts that transfer property after the deaths of both spouses
C)Forced liquidation
D)Termination of employment

Question 26

Which is NOT a common method of reducing the gross estate?

A)Life insurance
B)Trusts that do not avoid multiple taxation
C)Gifts made during the donor's lifetime
D)Special power of appointment

Question 27

Which is NOT a way in which an estate planner can use trusts to benefit family members?

A)Identify the estate assets and the beneficiaries who are to receive them.
B)Diminish problems such as will contests.
C)Reduce federal and state death taxes.
D)Avoid probate.

Question 28

The practice of gift splitting is available only between:

A)Spouses
B)A parent and a natural child
C)A parent and an adopted child
D)Siblings

Question 29

As part of an estate plan, a will allows the testator to:

A)Protect a spendthrift child
B)Preserve privacy
C)Appoint both personal and property guardians for minor children
D)Provide a lifetime income for the surviving spouse

Question 30

Which of the following is a feature of a Charitable Remainder Annuity Trust?

A)It is revocable.
B)Payments to the beneficiary vary annually.
C)It counteracts the effects of inflation.
D)Additional contributions cannot be made to the trust property.