Dalton Quizzes Flashcards

Question

Does the a revocable grantor trust count in the probate process?

Answer 1

No. The assets in trust will be included in the Grantor's gross estate because the trust is a revocable grantor trust. The trust structure passes assets to heirs outside the will and therefore no probate process is required for retitling. The assets have already been retitled to the trust. The installment notes are IRD assets and will not get stepped to the FMV.

Answer 2

Crummey is a provision or power to withdraw from a trust. A Bypass trust is used in marital estate planning. A grantor trust is subject to income tax to the grantor. A defective grantor trust is treated as a grantor trust for income tax purposes but as a completed gift for gift and estate tax purposes.

Answer 3

Rationale The correct answer is "B." Assets should be properly retitled regardless of being in or out of probate. A Will can be contested in the probate process.

Answer 4

Rationale The correct answer is "C." Answer "C" is a false statement. If the death benefit of a life insurance policy is included in a decedent’s gross estate, the value of the death benefit will be eligible for the unlimited marital deduction. All of the other answers are true statements.

Answer 5

A charitable lead trust is an irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members or other beneficiaries. Charitable lead trusts are often considered to be the inverse of a charitable remainder trust

Answer 6

Rationale The correct answer is "C." The Charitable Remainder Annuity Trust would be the best option because the charity is the remainder beneficiary and David would be the income beneficiary. The CRAT is a better option than the CRUT because the payout from the CRAT would be a fixed dollar amount, rather than a fixed percentage. David wants a stable payout each year which would lead us to a fixed dollar amount, and thus the CRAT.

Answer 7

Rationale The correct answer is "E." All bequests are included in the gross estate. Although not relevant to the question, all of the bequests except for the one to the University of Phoenix qualify for the unlimited charitable deduction. The University of Phoenix is a for-profit institution and is therefore, not a charity.

Answer 8

Rationale Answer: C Bill made taxable gifts of $6 million, which he paid no gift tax on due to the applicable exclusion amount. Therefore, he has reduced his exclusion amount from $11.58 million to $5.58 million. His entire estate is then transferred to his wife so none of the remaining $5 million in his gross estate is taxable. So the total unused exclusion is $5.58 million.

Answer 9

v. 遗赠；遗留；把传下去

Answer 10

Rationale The correct answer is "C." Answers "A", "B" and "D" do nothing to reduce estate tax at the second death since these three strategies would cause the decedants unified credit amount to be added into the surviving spouse's gross estate.

Answer 11

Rationale Answer: C One of the advantages of utilizing UTMA and UGMA accounts is the ability to lower the gross estate by contributing to the accounts. The annual gift tax exclusions apply but the assets in the account are in the child’s estate not the donor’s. Choice A is incorrect because these accounts can severely reduce the child’s ability for financial aid. Choice B is incorrect because the custodian no longer has any control over the assets upon maturity. The child may or may not choose to use the assets wisely. Choice D is incorrect because the assets placed in this account may not be transferred or revoked.

Answer 12

The trust document will determine how the assets are distributed, not the will.

Answer 13

Rationale Solution: The correct answer is C. A $15,000 gift may be made by each spouse each under the annual gift exclusion amount and a $11.58M gift from each spouse may be made to utilize the applicable lifetime exclusion amount of $11.58M each in 2020. ($11,580,000 X 2) + ($15,000 X 2) = $23,190,000

Answer 14

Rationale The correct answer is "A." A CRAT provides a sum certain income payout without annual revaluation of underlying trust assets. A GRAT has no charitable beneficiary. A CLAT pays income to a charity and the remainder usually to a non-charitable beneficiary.

Answer 15

Rationale The correct answer is "D." Joint tenants with rights of survivorship and tenants by the entirety pass outside probate. The municipal bond and one half of the community property are inlcuded in probate, equaling $32,500.

Answer 16

Rationale The correct answer is "B". The retained interest in answer "B" prevents it from being a completed gift. The 529 ownership is deemed a completed gift once made but can be undone by withdrawing. The right to withdraw does not prevent the gift from being complete. The 529 is the only deemed gift which has this bind of capability.

Answer 17

Joint life insurance comes in two flavors: first-to-die, which pays out to the surviving spouse after the first dies; and second-to-die, or survivorship, which pays a death benefit to the heirs after both spouses are gone.

Answer 18

Rationale The correct answer is "D." 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 for liquidity until the death of the second spouse. The ILIT keeps the insurance proceeds from being included in the gross estate of either spouse as long as neither has any incidence of ownership in the trust or policy.

Answer 19

Portability of applicable exclusion (exemption) amount between spouses—surviving spouse may also use any portion of the decedent spouse’s exemption that remained unused at spouse’s death (up to a total of $23,160,000 in 2020) a. Decedent spouse must have died after December 31, 2010, and executor must have filed a timely estate tax return making election to allow portability b. If surviving spouse has more than one predeceased spouse, only the unused exemption amount of the last deceased spouse is available c. Surviving spouse may apply deceased spouse’s unused exemption amount to lifetime transfers (gift tax) and to transfers at death (estate tax)

Answer 20

Rationale The correct answer is "A." 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 permits the portability of the estate applicable exclusion between spouses, disclaiming any of the property is not necessary as Mrs. Bailey's unused credit can be utilized by George in addition to his own (up to $23,160,000 in 2020).

Answer 21

Rationale The correct answer is "D." 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 change a charitable beneficiary to another charitable beneficiary is not an incidence of ownership because the first charitable beneficiary may no longer exist.

Answer 22

An A-B trust is a joint trust created by a married couple for the purpose of minimizing estate taxes. Upon the death of the first spouse, an A-B trust divides into two. It is formed with each spouse placing assets in the trust and naming as the final beneficiary any suitable person except the other spouse The "A Trust" is also commonly referred to as the "Marital Trust," "QTIP Trust," or "Marital Deduction Trust." The "B Trust" is also commonly referred to as the "Bypass Trust," "Credit Shelter Trust," or "Family Trust."

Answer 23

Rationale The correct answer is "B." Wolfgang could put $11,580,000 in the B trust (applicable exemption for 2020) and $4,720,000 in the A Trust. He has a total of $16,300,000 including his half of community property. If $11,580,000 goes to the B Trust, the remainder of $4,720,000 would go to the A trust. He would not include Anastasia's separate property in his estate.

Answer 24

n. 行为；事迹；[法]契约 | vt. 立契转让

Answer 25

The grantor must be competent and the deed must be delivered during the grantor's lifetime. Recording of deed does not affect gifting, but may affect future rights in the property. A gift can be made subject to a mortgage.

Answer 26

Rationale The correct answer is "C." Statement "III" is incorrect because Henry can appoint to anyone he wishes including himself, his heirs, or his creditors under a general power of appointment. The other statements are correct.

Answer 27

Convert property owned outright into joint tenancy with right of survivorship (JTWROS) or tenancy in common a. JTWROS property will avoid probate, but the entire date-of-death (DOD) value must be included in the gross estate if the decedent purchased the property initially. b. Tenancy in common property will not avoid probate, but only the decedent’s share of the property will be included in his estate at death

Answer 28

n. 房客；佃户；承租人；占用者 | vt. 租赁；租借

Answer 29

n. 租用；占有；租期；租用权

Answer 30

Rationale The correct answer is "B." 50% of the fair market value must be included in Rick's estate because of the deemed contribution rule because his joint tenant Amber is his spouse. If he titled JTWROS with anyone but a spouse we would use the "actual contribution rule" in which case he would have $400,000 included in his gross estate. Note that is he had titled the property tenants in common, he would have had $400,000 inclusion.

Answer 31

Property with rights of survivorship (JTWROS) pass outside of probate. " municipal bonds held in a sole & separate account.," and "Mutual Fund which are community property "must pass through probate (only the decedent's half of the community property in statement V passes through probate) for purposes of retitling .

Answer 32

An irrevocable trust is a type of trust where its terms cannot be modified, amended or terminated without the permission of the grantor's named beneficiary or beneficiaries. The grantor, having effectively transferred all ownership of assets into the trust, legally removes all of their rights of ownership to the assets and the trust. This is in contrast to a revocable trust, which allows the grantor to modify the trust, but thus loses certain benefits such as creditor protection.

Answer 33

■ For any specific term (usually two to five years) ■ Grantor receives an annual payment from the trust of either a fixed amount or a fixed percentage of the initial FMV of the trust assets ■ Trust is not included in grantor’s gross estate if grantor lives beyond term of trust ■ If grantor dies before expiration of the trust term, the grantor’s gross estate includes the FMV of the trust assets required to produce the annuity (if QPRT, full FMV of residence is included in gross estate) ■ Gift is a future interest (no annual exclusion) ■ Trust cannot be used as a PRT (QPRT is used instead) ■ This transaction does not make use of minority discounts ■ Trust is an irrevocable trust ■ Purchasing power risk to transferor ■ Interest rate risk to transferor ■ Reinvestment risk to transferor ■ This transaction makes use of the applicable exclusion amount ■ This transaction may require sophisticated valuation at the time of initial transaction

Answer 34

a. Makes payments at least annually of a fixed percentage of the net FMV of the trust assets as determined annually b. All other characteristics are like a GRAT

Answer 35

The term “probate estate” does not refer to all of a decedent's estate. Rather, the probate estate consists of assets held in the decedent's name alone that do not have a beneficiary designated. ... A decedent's gross estate includes all of decedent's real and personal property, regardless of whether it is a probate asset

Answer 36

Rationale Solution: The correct answer is A. Amounts paid directly to a school for tuition are excluded from gift tax. Amounts over $15,000 of the $24,000 per donee are included as "taxable gifts." So, $9,000 from each of the gifts to Buffy and Bobbie are included as taxable gifts in his estate under "Post 1976 taxable gifts."

Answer 37

adv. 尽管如此(仍然)

Answer 38

Rationale Solution: The correct answer is C. 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 $11.58M (2020).

Answer 39

The value of a gift of securities is the average of the high and the low on the date of the gift assuming the date of the gift is a trade date

Answer 40

1. Allows a terminable interest to be passed to a surviving spouse and the property to still qualify for the marital deduction 2. Election is made on Form 706 3. Requirements a. Income from the trust must be payable to the surviving spouse at least annually for life. b. The value of the trust assets must be included in the gross estate of the surviving spouse when she dies, valued on the DOD of the second spouse. c. The surviving spouse is not usually given a general POA. 4. Usually, first spouse to die has specified the ultimate recipient of the property (the remainderman) in the trust document 5. Sometimes called a C trust or a Q trust; often used in second marriages to protect assets for the children of the first marriage

Answer 41

Rationale The correct answer is "D." The surviving spouse generally has no dispositive powers in a QTIP trust. The surviving spouse must be the SOLE income beneficiary who must receive ALL income from the trust at least once each year for the rest of his/her life.

Answer 42

Rationale The correct answer is "C." All of these devices qualify for the charitable deduction except for answer "C." There is no charitable beneficiary in a GRAT and therefore no charitable tax deduction.

Answer 43

The use of sale and leaseback is indicated where a person wants to retain the use of the asset, has cash flow problems, is in a high income tax bracket and is seeking to divert income. A rental expense will provide a full deduction where a loan payment is part principal; this can be especially useful if the asset has a long depreciable life when compared to the debt obligation's life. Highly and rapidly appreciating assets are commonly used in this type of arrangement. A sale/leaseback will not reduce the debt because the obligation must still be listed on the balance sheet, however the lease payment may be an expense and provided a greater deduction than depreciation expense.

Answer 44

Rationale The correct answer is "D." Both the GPOA Trust and Q-Tip Trust require distribution of income at least annually to the spouse. A TPP Trust holds tangible personalty. Only the Estate Trust permits income accumulation.

Answer 45

如果设保人活得比信托期限长

Answer 46

There is no charitable beneficiary in a GRAT and therefore no charitable tax deduction. if the grantor survives the trust term, none of the trust assets are included in his estate. if the grantor dies during the trust term, all of the trust assets are included in his gross estate. Interest and dividends earned by assets in a GRAT are taxed to the grantor. a taxable gift occurs when the GRAT is established, not when the GRAT term ends

Answer 47

Rationale The correct answer is "C." All of these methods work as means of avoiding probate except community property titling. The decedents' one-half of community property goes into probate.

Answer 48

a. This is a trust created by a New York statute. b. When an individual opens an account in trust for another, it is not a completed transfer. The income is taxed to the grantor until the trust is made irrevocable.

Answer 49

—A donor makes an irrevocable transfer of assets to a charity, and receives an annuity from the charity in return. a. Donor is eligible for an income tax charitable deduction based on the difference between the value of the donated property and the present value of the annuity payments that will be received

Answer 50

PIF—This is an irrevocable transfer of assets to a charity for an income stream from the charity’s commingled asset management. A charitable deduction is available. a. Created and maintained by the charity b. Donor transfers property, including irrevocable remainder interest, to charity (must be a public charity and managed by the charitable remainderman) c. Property commingled with property of other donors d. Grantor retains income interest for one or more beneficiaries for life (no term trusts) e. Investments cannot include tax-free municipal bonds f. Payment to donor is determined by earnings of trust annually

Answer 51

1. A CRT is an irrevocable trust in which the remainder beneficiary is a qualified charity. 2. A CRT can take the form of a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT).

Answer 52

Common features of both a CRAT and a CRUT : a. Trust is irrevocable b. Remainder interest is paid to charity c. Trust can last for life of grantor or for a term of up to 20 years d. Present value of the remainder interest at inception of the trust must be at least 10% of the initial FMV of the property transferred to the trust e. The charity does not have to know it was named as the remainder beneficiary f. Annuity/unitrust payout rate must be at least 5%, and less than or equal to 50%

Answer 53

a. Grantor receives either a fixed percentage of the initial FMV of the property transferred to the trust or a fixed dollar amount annually b. Annuity must be paid in spite of necessity to invade principal because of income deficiency c. No additional contributions are permitted after inception d. Very inflexible

Answer 54

a. Grantor receives a fixed percentage of the trust assets, valued annually b. Unitrust amount may be limited to income earned c. Trust may provide for catch-up provisions when income does not meet the percentage requirement and then later exceeds the current percentage payout d. Annual valuation may be expensive if property in trust is not easily valued (e.g., closely held businesses, real estate) e. Additional contributions to the trust are permitted after inception f. Very flexible

Answer 55

A nondurable power of attorney cannot act on your behalf if you become disabled or incompetent. You would generally choose a nondurable power of attorney for a specific matter, such as handling your affairs in your physical absence. ... This means the power of attorney is effective regardless of your health condition.

Answer 56

Rationale Answer: D Neither Martha, Lacy nor Betty are capable of providing proper authorization on behalf of Martha. Sharron needs approval from someone who has a durable power of attorney to make decisions in case of mental incapacity. Choice A is incorrect because Lacy does not have legal authority to make decisions for Martha. Choice B is incorrect because although Betty does have a power of attorney it becomes ineffective once Martha becomes incapacitated. Choice C is incorrect because neither A or B are correct.

Answer 57

Rationale The correct answer is "C." Limited partnerships are conduit entities and do not pay taxes. IRC Chapter 14 affects valuation only by assigning a value of zero to any non-qualified interests retained by the donor. The right to the income retained in this question is considered qualified because it is income that is fixed in time and dollar amount and thus can be valued.

Answer 58

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. Any amount subject to the gross up rule is includible in the taxable estate but must be for gifts made within three years of death.

Answer 59

Rationale The correct answer is "D." Remainder trusts distribute the remainder of the property to the charity while generally distributing income to a non-charitable beneficiary. To provide immediate income to the trust, a charitable lead trust (CLT) would be required. The estate tax advantage is that there is an unlimited charitable deduction at the estate level. The estate tax advantage of the CLT is that the gross estate is less than it would have been if the income had not been distributed to the charity.

Answer 60

n. 资料；文集

Answer 61

Rationale | The correct answer is "A." Answers "B" through "D" do not bring the trust corpus in the grantor's estate.

Answer 62

Rationale The correct answer is "D." Due to the age difference of more than 37 1/2 years and the non-related party status, the trust for Sam is a skip person. The reason Fred is not a skip person is because he is a first generation descendent. Billy is not a skip person because his mother's death moves him up a generation (predeceased parent rule).

Answer 63

the death benefit is included in decedent's gross estate IF the decedent retained an ownership right.

Answer 64

Under Section 2035, the proceeds of a life insurance policy on the life of the decedent will be includable in the decedent’s gross estate if, within three years of death, the decedent made a completed transfer of all incidents of ownership in the policy. In other words, if someone owns a life insurance policy on her own life and gives the policy ownership away, the death benefits remain in the former owner’s gross estate for three years from the date of the gift. This rule is especially important for an irrevocable life insurance trust (ILIT).

Answer 65

Rationale The correct answer is "C." 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.

Answer 66

Rationale The correct answer is "A." Tenancy by the entirety is always between spouses and can only exist between two people. One spouse cannot partition the property without the consent of the other spouse.

Answer 67

Rationale The correct answer is "B." Installment sales cannot be used to transfer marketable securities. A partnership freeze would have preferential income rights. The CRUT could result in a loss of control of the portfolio with the remainder passing to a charity, not the children. The only problem using the FLP is that he will not get a discount for minority ownership and illiquidity of a highly marketable investment portfolio.

Answer 68

Rationale The correct answer is "D." The grantor will pay the income tax on all distributions and the full value of the trust will be included in Charles' gross estate if he were to die before the end of the trust term.

Answer 69

n. 遗产；遗赠物

Answer 70

Rationale The correct answer is "A." 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 qualify for the unlimited charitable deduction.

Answer 71

Rationale The correct answer is "D." The GSTT offers a maximum $11,580,000 (2020) exemption and may be funded for the full exemption amount for skip persons.

Answer 72

n. 资料；文集

Answer 73

Rationale The correct answer is "C." The corpus value may be included in the grantor's gross estate if grantor dies before the end of the term of the GRUT. GRUTs are irrevocable and income needs to be paid out annually with the amount recalculated annually. Due to grantor status, the GRUT will be part of the gross estate if the grantor dies before the end of the trust term.

Answer 74

The $15,000 annual exclusion is not available for bequests. So if someone made bequests with no arrangement, then the payment of estate tax is applied

Answer 75

Rationale | The correct answer is "C." They apply both to revocable and irrevocable trusts.

Answer 76

Rationale The correct answer is "D." Answer "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.

Answer 77

Rationale The correct answer is "C." All are prerequisites of gift-splitting, but only one gift tax return is required either where neither party or only one party exceeds the annual exclusion as determined after the gift splitting.

Answer 78

Rationale The correct answer is "A." 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.

Answer 79

adj. 好诉讼的；好争论的

Answer 80

n. 任务报告；任务报告中提出的情报 | 动词debrief的现在分词形式.

Answer 81

Rationale The correct answer is "A." The Crummey trust meets all of the client's objectives. B is wrong because it requires annual income distributions. C is wrong because it permits accumulation of income and then distribution of assets to the beneficiary (1) at age of majority 21. D is wrong as it does not produce income until George dies which could be later than granchild age 21.

Answer 82

the Qualified Personal Residence Trust would afford her the reduction in gross estate tax presuming she lives through the trust term. There is no such thing as a residential residence GRIT, RIT or SPLIT.

Answer 83

Rationale The correct answer is "B." Statement "I" is accurate if a creditor's claims should not be paid because it is illegitimate. The personal representative cannot withhold income from the estate, so statement "II" is incorrect. The personal representative cannot favor any beneficiary over another beneficiary, so statement "III" is incorrect.

Answer 84

Rationale The correct answer is "D." Answer "A" is incorrect because in 2020, it is the applicable exclusion amount not the marital deduction that is $11,580,000. The spouse must be a U.S. citizen unless a QDOT is utilized and property must be a complete transfer to qualify for the marital deduction. The terminal interest property that will qualify are those items which are the exception to the terminal interest rule such as (1) GPOA trusts (2) QTIP trust and (3) charitable trusts where the surviving spouse is the only non-charitable beneficiary.

Answer 85

Rationale The correct answer is "C." 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 there is no need for a 303 redemption.

Answer 86

合格的有期利率资产

Answer 87

A bypass trust, or AB trust, is a legal arrangement that allows married couples to avoid estate tax on certain assets when one spouse passes away. When one spouse dies, the estate's assets are split into two separate trusts. The first part is the marital trust, or “A” trust

Answer 88

Rationale The correct answer is "B." The A Trust, the Q-Tip Trust and the Estate Trust do not allow for splitting or sharing of income streams. Only the By-pass Trust allows for this income splitting or sharing. The bypass trust is the only non-marital trust of the list given.

Answer 89

Rationale The correct answer is "C." Gift and leaseback addresses the means to accomplish the desired objective of using pre-tax dollars to pay his son's tuition because the lease payments are a deductible business expense to the physician.

Answer 90

n. 放弃；弃权；免责声明

Answer 91

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.

Answer 92

adj. 自由裁量的；任意的，自由决定的，酌情行事的，便宜行事的

Answer 93

Rationale | The correct answer is "D." The CRAT but not the CRUT is subject to the probability test.

Answer 94

In a marital trust, Maryanne must be the ONLY income beneficiary, and QTIP trusts are a marital trust.

Answer 95

Rationale The best correct answer is "C." Answer "A" - This creates a situation where the entire value of the estate will be includible in the estate of the second to die although with portability this could possibly result in the same outcome as "C" but is not as good a choice. Answer "B" - This still leaves the entire amount in the estate of the second to die. Answer "D" - This statement is opposite of the correct order strategy.

Answer 96

The Section 2503(b) is a simple trust. A complex trust is a non-grantor trust which in a given year accumulates fiduciary income or distributes trust corpus, whereas a simple trust distributes no corpus. A 2503(c) trust allows for accumulation.

Answer 97

[经] 可归回权益 The term reversionary interest includes a possibility that property transferred by the decedent during life may: 1.) return to the decedent or the decedent’s estate; or 2.) be subject to a power of disposition by the decedent

Answer 98

Rationale The correct answer is "B." Answers A, C and D are all examples of either retained interest or reversionary interest. Only answer B is a completed gift.

Answer 99

信托关系

Answer 100

Rationale | The correct answer is "D." All are requirements for a valid trust.

Answer 101

- The trustee must make annual payments to your client of 5% of the fair market value of the account. - Additional assets may be added to the trust in a year subsequent to its creation. - The trust may not pay more than it earns. Upon the death of the later of the client or spouse the trustee is directed to pay all assets to the SPCA (Society for the Prevention of Cruelty to Animals an establish charity). ---The value of the trust assets is included in the gross estate of the settlor if he dies first

Answer 102

n. [律]财产增与者；托管财产者

Answer 103

adj. 统一的

Answer 104

Rationale The correct answer is "A." The "pour over" provision sweeps assets outside of a trust into the trust. Answer "B" is incorrect because a testamentary trust may not always preserve the unified credit. Answers "C" and "D" are incorrect because the "pour-over" provision does not operate to transfer assets to another person's estate or reduce probate expenses.

Answer 105

Rationale The correct answer is "D." 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 deductible as a business expense. Any death benefit pad will be nontaxable to PDC.

Answer 106

The presumption under USDA applies only when the order of death is not known.

Answer 107

The power to revoke, amend, or alter the gift, or retention of any rights will cause gifted property to be included in a donor's gross estate. ILIT that have insurance policies transferred into them will be added to the gross estate, if the ILIT was created and insurance purchased, it will be excluded from the gross estate. As the gift must be completed one year prior to the donor’s death.

Answer 108

Rationale | The correct answer is "D." An ILIT will accomplish all of the items listed in this question.

Answer 109

The “self-cancelling” feature means that if you die during the term of the note (which cannot be longer than your actuarial life expectancy at the time of the sale), then the “buyers” (your children, or other loved ones) are relieved of any future payment obligations, and receive the entire asset free of any transfer

Answer 110

Income in respect of a decedent (IRD) is income at death that the decedent had earned and was entitled to, but had not been received as of the date of death (DOD). 1.) IRD will be considered an asset for estate tax purposes (Form 706) and income for federal income tax purposes (Form 1040 or 1041

Answer 111

Rationale The correct answer is "C." Answer "A" is incorrect because the buyer of a SCIN (Self-Canceling Installment Note) pays the FMV plus the SCIN premium. Answer "B" is incorrect because each payments received by the seller consists of (1) interest income, (2) capital gain, and (3) return of adjusted basis. Answer "D" is incorrect because the transferee bought the right to cancel thus no gift.

Answer 112

Taxable gifts are those made by a taxpayer to any one individual in excess of $15,000 in any one year. However, tuition payments and medical payments that are paid directly to an educational facility/health care provider in excess of $15,000 are not taxable gifts but rather qualified transfers.

Answer 113

n. 封锁；障碍；[医]阻塞

Answer 114

The ownership interests of a tenancy in common do not have to be equal but income and costs are shared in proportion to ownership. I. Undivided interests in the property. II. Fractional share included in gross estate. III. Is presumed when property is transferred to two or more people. IV. Income and costs are shared in proportion to ownership interests.

Answer 115

可以考虑以下哪项替代

Answer 116

受益人指定

Answer 117

vt. 设计；发明；遗赠

Answer 118

adj. 严厉的；严重的；剧烈的；严格的；严峻的

Answer 119

In the case of an estate freeze, the property transferred would be appreciating in value and any future gain would occur in the transferee's estate.

Answer 120

Rationale The correct answer is "A." Answers "C" and "D" are all subtracted from the adjusted gross estate to arrive at the taxable estate. Answer "B" actually increases the gross estate.

Answer 121

Rationale | The correct answer is "C." The total value of the trust at his death because of his retained interest.

Answer 122

Rationale The correct answer is "B." Half of this statement is correct. Attestation clauses are verification by witnesses to the testator's signature, but grantor powers are not commonly found in wills.

Answer 123

n. 条款；[语]从句

Answer 124

Rationale The correct answer is "B." The private annuity cannot be secured by the transferred property and the interest portions of payments to the annuitant cannot be deducted by the transferee.

Answer 125

A revocable living trust is primarily established so that the trust assets avoid the probate process and provides for management of assets and grantor trust income tax status. The trust assets will transfer per the trust document and will not need to pass through probate. A revocable living trust does not reduce a grantor’s gross estate. The assets of a revocable living trust are included in a grantor’s gross estate at the fair market value at the grantor’s date of death.

Answer 126

1. A QPRT may be an appropriate estate planning technique for a vacation home 2. A PRT is similar to a QPRT and generally has the same tax benefits, but a PRT cannot hold any cash, and the trustee is not allowed to sell the residence and reinvest the proceeds in another residence. 3. QPRTs can hold only one residence. 4. You may own 2 QPRTs. 5. The donor retains all tax advantages.

Answer 127

v. 投降；屈服；放弃 | n. 投降；屈服；放弃

Answer 128

任何一方的配偶在婚姻期间获得的财产均为社区财产。

Answer 129

| 揭掉；去掉

Answer 130

A step-up in basis is the readjustment of the value of an appreciated asset for tax purposes upon inheritance. ... The asset receives a step-up in basis so that the beneficiary's capital gains tax is minimized. A step-up in basis is applied to the cost basis of property transferred at death.

Answer 131

Fee simple is a term that refers to real estate or land ownership. The owner of the property has full and irrevocable ownership of the land and any buildings on that land. He is free to do whatever he wishes on the land subject to local zoning ordinances. Fee simple and fee simple absolute are the same thing.

Answer 132

Rationale | The correct answer is "C." Fee simple ownership is included in probate and is not presumed in community property states.

Answer 133

Rationale The correct answer is "E." Tenancy by entirety cannot be terminated without the consent of the other spouse, death, or court intervention (divorce).

Answer 134

The term distributable net income (DNI) refers to income allocated from a trust to its beneficiaries. Distributable net income is the maximum amount received by a unitholder or a beneficiary that is taxable. This figure is capped to ensure there is no instance of double taxation.

Answer 135

Rationale The correct answer is "B." The amount taxed to beneficiaries is limited to the trust's DNI. If the amount distributed is greater than the total DNI, a proportional amount is allocated to each beneficiary based on the total distributed to beneficiaries. Example: ($50,000/$100,000) x $96,000 = $48,000.

Answer 136

Both gift tax paid on gifts made within 3 years of death and life insurance proceeds are includible in the donor's gross estate when these are given (or paid) less than three years prior to the donor's death.

Answer 137

The marital deduction is not a credit, but is a deduction against the adjusted gross estate in calculating the taxable estate.

Answer 138

Rationale 1. The correct answer is "B." The gift tax paid is includible in the gross estate under the "gross up" rule. 2. Also, the income tax refund would be part of the gross estate as income in respect of a decedent (IRD). 3. Finally, the revocable living trust is includible as a grantor trust. 4. The property valued at $200,000 is not be included in his gross estate because the grandfather completed the gift. ______________ 1. The 3-year rule applies to life insurance and gift taxes paid on gifts made within three years, so the insurance is not included but the gift tax paid is included(2 years). 2. Grantor retains an interest in the apartment complex and a retained interest reverts gifted property, back to grantor's estate. 3. The farm to a family member is not included in the gross estate because it was an outright gift. The farm will be added back as a post 76 gift at the value of the farm on the date of the gift.

Answer 139

Rationale The correct answer is "A." 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 terminable interest because the interest in the property terminates at the individual’s death. An interest in a patent is a terminable interest because a patent right terminates after a certain period of time. Answer "D" describes a life estate, so it is also a terminable interest.

Answer 140

A residence held in Community Property with a spouse.. | Because the decedent's portion of the residence must be probated.

Answer 141

In common law states, property acquired during a marriage is not automatically owned by both spouses. ... If a couple moves from a community property state to a common law state, each spouse retains a one-half interest in property accumulated during marriage while they lived in the community property state

Answer 142

JTWROS property avoids probate because the decedent’s share of the property passes to the surviving tenant(s) automatically by operation of law.

Answer 143

1. ) If assets pass to an heir by operation of law, the assets will avoid probate. 2. ) Assets passing by operation of law a. ) Property titled as JTWROS b. ) Property titled as tenants by the entirety c. ) Trust property—assets transferred to living trusts before grantor’s death avoid probate 3) Property passing by operation of law will not be probated, but will not exclude the property (or at least a portion of it) from inclusion in the gross estate. 4) Property passing by operation of law qualifies for the marital deduction if it is passed in a qualifying way to the spouse.

Answer 144

Estate taxes require that tax be paid on the full amount, including the portion of it that will be used to pay taxes.

Answer 145

n. (名词) 发生，发生率，发生范围影响（范围、程度）

Answer 146

Rationale The correct answer is "D." Since Clark is mentally incapacitated he cannot execute a valid will or power of attorney. Insurers are unlikely to write insurance on Clark for long-term care or health care after he has suffered a debilitating stroke.

Answer 147

Rationale The correct answer is "D." Property transferred by way of the marital deduction above the decedent's unified credit will be fully taxed upon the surviving spouse's death. A QDOT is used where the surviving spouse is not a U.S. citizen.

Answer 148

Rationale The correct answer is "B." The CRAT requires invasion of corpus to pay annual income if there is a shortage. The CRUT does not.

Answer 149

Rationale The correct answer is "D." Cash basis taxpayers may deduct a charitable gift only in the year paid to the charity. A gift of cash is adequate. The gift cannot be time or services. (Though life insurance may be considered an intangible in policy form, the proceeds represent a tangible financial asset.)

Answer 150

Rationale The correct answer is "D." A retained interest in a transfer, the donor's portion to the joint tenancy based on the actual contribution rule and the life insurance policy transferred less than three years before death will all be includible in the donor's gross estate.

Answer 151

because of the split gift and the retained interest so that require the filing of an IRS form 709 (gift tax) . Gifts to charities have unlimited transfers requiring NO gift tax filing.

Answer 152

Both CRATs and CRUTS serve to minimize income and estate taxes while providing life income to the beneficiary.

Answer 153

n. 过失；流逝；间隔；堕落；失效 vi. 流逝；失效；堕落；停止 vt. 使失效 1. If the beneficiary does not exercise this right within the specified time, the Crummey power is deemed to have lapsed and the assets remain in trust 2. A Crummey power is a lapsing POA that allows a trust beneficiary to withdraw assets from a trust for a limited time period.

Answer 154

A power of attorney (POA) is a document that allows you to appoint a person or organization to manage your property, financial, or medical affairs if you become unable to do so.

Answer 155

Create a credit shelter trust (B) equal to the exemption equivalent (with a provision for no invasion of principal) with the balance going into a QTIP trust, each with an outside trustee. The "A" trust is not good because it might give William complete access and would overqualify the estate.

Answer 156

adj. 直率的；完全的；彻底的 | adv. 率直地；立刻地；彻底地

Answer 157

A)Beneficiaries can be named as trustees of the CLT. B)Property transfers to a CLT are irrevocable. C)The maximum period for a CLT trust is 20 years if the trust is for a fixed term. D)The ultimate recipient of the remainder interest may be the grantor of the trust. In the case of charitable lead trusts, the remainder interest may revert to the grantor as the income for the term passes to a 501 (c)(3) charity.

Answer 158

In the year payments are made they are recognized for tax purposes, but the entire amount is not accelerated in the year of payment. Note that installment sale treatment is mandatory but need not be a sum certain at time of sale (i.e., purchase of business with earn-out). The selling price is agreed to and set in an installment sale.

Answer 159

An inter-vivos trust is a living trust created that holds assets of a trustor. A benefit of an inter-vivos trust is that it helps avoid probate or the legal process of distributing the owner's assets after his or her death

Answer 160

Rationale The correct answer is "B." Trust termination is predicated on revocability. All other trusts or provisions may be part of an irrevocable instrument, thus cannot be terminated.

Answer 161

Rationale The correct answer is "B." The rule is 35% of the gross estate. The stock must be closely-held and it can be either common or preferred.

Answer 162

n. 浪费的人 | adj. 浪费的；挥霍无度的

Answer 163

n. 谨慎；慎重；自行决定

Answer 164

Rationale The correct answer is "A." The spouse must have limited control over the QTIP (C trust) to maintain the trust benefits but it would be very unusual for the surviving spouse to have a GPOA over QTIP asset. The marital trust (A trust) allows the surviving spouse a general power of appointment.

Answer 165

Section 501(c)(3) is the portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. It's not taxable, there is no limit to the amounts gifted to 501(c)(3) charities.

Answer 166

An irrevocable life insurance trust (ILIT) helps minimize estate and gift taxes, provides creditor protection, and protects government benefits.

Answer 167

财产通过遗嘱认证

Answer 168

To collect assets from another trust or not held in trust and place them into a trust to control the distribution according to trust provisions

Answer 169

A unified tax credit is a certain amount of assets that each person is allowed to gift to other parties without having to pay gift, estate, or generation-skipping transfer taxes. The credit is afforded to every man, woman and child in America by the Internal Revenue Service (IRS)

Answer 170

The income will be reported on Delores' income tax return because she is considered to control the trust corpus.

Answer 171

The unused exclusion amount is based on the “last deceased spouse.” Holly’s unused exclusion does not matter. It was effectively lost when Joe remarried. Chartreuse has $2 million, which is left to her children, meaning $2 million of her $11.58 million exclusion has been utilized.

Answer 172

allowed $11,580,000 (2020) each person for a couple

Answer 173

The purpose here is to give the trustee enough leeway to prevent the beneficiary from wasting or depleting the trust corpus. A trust provision which provides beneficiaries with only as much trust principal or income (if any) as the trustee decides is appropriate and provides creditor protection for the beneficiary

Answer 174

Sprinkling provision within a life insurance agreement that allows the trustee of the policy to spread the death benefit around to the beneficiaries at his or her discretion

Answer 175

Rationale The correct answer is "D." The amount paid annually in a CRUT varies with the annual revaluation of the trusts assets. Thus, the CRUT corpus need not be used to make up for insufficient income payments. Assets are permanently "given" to the charity upon transfer to the CRUT, which is irrevocable. If the CRUT is for the life of the grantor and spouse, the assets are included in the first to die's gross estate at the value of the assets and then the remainder interest is netted out as the unlimited charitable deduction reducing the AGE to the taxable estate.

Answer 176

Survivorship life insurance can be used in an irrevocable life insurance trust (ILIT).

Answer 177

The testamentary interest will not qualify for the marital deduction. Jessica's interest is a terminable interest in QTIP(her husband established it). In other words, her interest terminates at her death and, as it is not a qualified terminable interest, it will not be included in her gross estate and will not qualify in his estate for the marital deduction.

Answer 178

A charitable lead trust is the remainder recipient a non-charitable beneficiary including possibly the original transferor (grantor). The corpus of this trust reverts to the transferor or designated non-charitable beneficiary A charitable remainder unitrust talks about the remainderman is the charitable beneficiary. In the charitable stock bailout and the pooled income fund, the charity is again the ultimate remainderman recipient.

Answer 179

A charitable remainder unitrust. The CRUT permits it. The CRAT requires invasion if the income is insufficient to meet the annuity payment requirements.

Answer 180

A written document in which one individual (principal) designates another person or persons to act as attorney-in-fact (agent) is termed a durable power of attorney. When the power is executed, the principal must be: a. at least 18 years old; and b. competent. 2. A DPOA survives the principal’s incapacity, but not death (a nondurable power of attorney does not survive principal’s incapacity). 3. The power may be limited (e.g., to pay my bills) or unlimited (e.g., to exercise all of the legal powers I have myself). It is important to differentiate a power of attorney from a power of appointment (POA), covered in detail later. A POA gives the holder the right to name the new owner of property. A power of attorney gives the agent the right to act in the principal’s place.

Answer 181

Rationale | The correct answer is "A." Answer "A" refers to a springing DPOA. The remaining options refer to the DPOA.

Answer 182

The Credit-Shelter Trust is the By-pass Trust and should be funded with the full available exclusion amount ($11.58 million in 2020) if possible.

Answer 183

Rationale The correct answer is "D." Answers "A," "B" and "C" are all requirements of the unlimited marital deduction. Answer "D" is incorrect because only the net value, not the gross value, of qualifying property left to the surviving spouse is excluded by the marital deduction. The term “net value” for marital deduction purposes equals the gross value of the qualifying property left to the surviving spouse less any taxes, debts, or estate administration expenses payable out of the spousal interest.

Answer 184

1. A QTIP trust qualifies for the unlimited marital deduction. 2. It does not give the spouse an unlimited general power. 3. A QTIP trust must distribute income annually only to the surviving spouse. 4. Only one beneficiary is permitted in a QTIP trust in order to qualify for the marital deduction. 5. The trustee may have the power to invade for the HEMS of the spouse only.

Answer 185

Two persons who leave all of their property to each other

Answer 186

Oral instructions made in front of witnesses and each other concerning disposition of assets

Answer 187

1）Two or more persons draw up wills to bequeath or dispose of property in a predetermined and agreed upon manner at the same time. 2) One will which covers both parties with the same result for the surviving party regardless of which one survives.

Answer 188

A charitable lead unitrust. Only a charitable unitrust among the choices allows additional contributions. Adding assets to the trust, however, increases current income to the charity, which would only occur in a charitable lead trust where the charity is the current income beneficiary. A CRUT can also have additional contributions.

Answer 189

A charitable pooled income fund. | The question describes a charitable pooled income fund which operates similarly to a mutual fund.

Answer 190

Rationale The correct answer is "D." The remaindermen, in this case is the charity and must be expected to receive the equivalent of 10% of the value regardless of the date of the inception of the CRUT and the CRAT. The income interest in a CRUT must be between 5% and 50% of the value of the trust as revalued annually, and the income interest of the CRAT must be between 5% and 50% of the original value of the trust. Additional contributions cannot be made to a CRAT, but can be made to a CRUT because the CRUT is revalued each year to determine the income distribution amount. As long as a CRAT is making required amounts of payment dollars to the beneficiary, it remains qualified regardless of the 7520 rates. The probability rules apply to CRATs but not CRUTs.

Answer 191

Only CRUTs permit additional contributions to the trust after its inception. CRATs do not permit additional contributions.

Answer 192

A charitable bargain sale. The bargain sale allocates the donor's gain from the sale on a pro-rata basis between the sale and the donation under current law. This means that a portion of the proceeds of both gift and sale are both basis and gain. This results in a capital gains for the donor of any appreciated asset that is the sale part. A charitable annuity is a purchase of an annuity for greater than the same cost as a commercial annuity. A charitable annuity is an exchange not a sale.

Answer 193

Direct payments to medical providers, colleges and universities and political contributions are not subject to federal gift tax regardless of the amount given. Indirect payments (check to child) are gifts.

Answer 194

An Intervivos trust. Testamentary trusts, QTIP and GPOA trusts all generally pass through probate. A credit shelter trust is usually a testamentary trust. With an intervivos trust, the assets are titled in the name of the trust by the owner and are used or spent down by him or her, while they are alive. When the trust owner passes away, the remainder beneficiaries are granted access to the assets, which are then managed by a successor trustee

Answer 195

Rationale The correct answer is "D." In a TPPT, the grantor irrevocably transfers ownership of the property, which does not meet our goal. A QDRO provides only a spouse or child with an interest in a qualified plan. A revocable living trust does not assist the parties because all assets held in trust would merely be transferred back to the grantor/owner.

Answer 196

v. 认为；视作

Answer 197

Rationale The correct answer is "D." The $5,919,000 adjusted gross estate (arrived at by combining 1/2 the mortgage on the home or $50,000 with the funeral expenses of $16,000 and the consumer debt of $15,000; totaling $81,000; subtracted from the gross estate to equal a $15,919,000 adjusted gross estate) minus the $294,000 total deductions ($260,000 to spouse; $20,000 to charity; plus $14,000 to the hospital), leaves $15,625,000 taxable estate (see calculation below). ``` 16,000,000 16,000 Funeral 15,000 Debts-C 50,000 Debts-M 15,919,000 AGE 34,000 UL 260,000 UM 15,625,000 ```

Answer 198

v. 抑制；阻挡；扣留；保留

Answer 199

[拉]当事人活着时有效(的)

Answer 200

信托期过后 vt. 幸免于难；存活；艰难度过；比 ... 活得长 vi. 活着；继续存在

Answer 201

Rationale The correct answer is "A." At the end of the trust term, ownership of the house is transferred to the beneficiaries of the QPRT. All of the other statements are true.

Answer 202

Rationale The correct answer is "B." Of the $1,000,000, we subtract $16,000 for funeral costs, then we subtract $50,000 (her share under JTWROS) of the mortgage and $15,000 of consumer debt, leaving $919,000. Charitable contributions and marital deductions are not taken into account in determining the adjusted gross estate. These two items constitute part of the calculation of the taxable estate.

Answer 203

1) although a gift made within three years of death is not included in the donor's estate, any gift taxes paid with respect to such gifts are included, 2) if the decedent possessed or retained a taxable interest or power with respect to certain property which would be included under another section of the code, the transfer or release of that power or interest within three years will be part of the gross estate.

Answer 204

A 2503(b) trustmay hold property for the lifetime of the beneficiary. ... The main difference between a 2503(b) and 2503(c) trust is that the 2503(b) trust may holdproperty for the life of the beneficiary, whereas the 2503(c) trust must distribute the propertyto the beneficiary when he reaches the age of 21.

Answer 205

Totten trusts are used to avoid probate, not to lower the value of the gross estate.

Answer 206

Uniform Gift to Minors Act UGMA 1. ) Adopted in all states 2. ) Gifts can include cash, securities, and life insurance, but usually not real property 3. ) No bonding or accounting usually required 4. ) Donees usually must receive property by age of majority

Answer 207

Uniform Transfers to Minors Act (UTMA) 1. ) More flexible than the Uniform Gift to Minors Act (UGMA) 2. ) Most states have adopted it 3. ) Allows any property interests including real estate to be a fiduciary gift

Answer 208

PIF—This is an irrevocable transfer of assets to a charity for an income stream from the charity’s commingled asset management. A charitable deduction is available. a. Created and maintained by the charity b. Donor transfers property, including irrevocable remainder interest, to charity (must be a public charity and managed by the charitable remainderman) c. Property commingled with property of other donors d. Grantor retains income interest for one or more beneficiaries for life (no term trusts) e. Investments cannot include tax-free municipal bonds f. Payment to donor is determined by earnings of trust annually

Answer 209

adj. 无缘无故的；无必要的；免费的 | free

Answer 210

Federal gift tax applies to all gratuitous transfers, but the annual exclusion provides an exemption for the first $15,000. Gifts can be split.

Answer 211

Rationale The correct answer is "A." Citizenship affects the application of the marital deduction; a non-U.S. citizen must receive distributions through a QDOT to utilize the marital deduction. The deduction is not always equal to the qualified property. It is commonly equal to the qualifying property less any expenses paid by the surviving spouse.

Answer 212

无限制的婚姻扣除适用于已故者总资产中的财产 | the unlimited marital deduction applies to property included in the decedent's gross estate

Answer 213

Rationale The correct answer is "E." Tenancy by entirety is a JTWROS between spouses and does not require probate. An IRA with a named beneficiary is a contractual arrangement and does not need probate.

Answer 214

Adjusted Gross Estate - The gross estate less debts, administration expenses, and losses during administration. Adjusted Taxable Estate - The adjusted gross estate less any marital and/ or charitable deductions.

Answer 215

A power of attorney alone ceases at the onset of incapacity, but a durable power of attorney continues until the donor's death, even through incapacity

Answer 216

Intervivos trusts can be either revocable or irrevocable, but if revocable, they become fully irrevocable at the time of the grantor's death, thus avoiding probate. During life, the revocable trust income is taxable to the grantor and at death of the grantor, the trust assets are included in the grantor's gross estate.

Answer 217

an oral will with two witnesses which is valid in some states, and not in others. Usually only includes personalty assets, not realty.

Answer 218

adj. 统一的

Answer 219

n. 免除(税) Gift and estate taxes have the same exemptions. The two forms differ. The estate tax return is the 706. The gift tax return is the 709. There are different deductions (n. 扣除；扣除额) and exclusions(n. 排除).

Answer 220

Rationale The correct answer is "D." Lucky's unified credit cannot be used to offset George's gift. Estate tax is not related to gift tax credits. The tax is to be paid out of the gift, hence the mention of "net gift" in the question. If George's adjustable taxable basis is less than the tax paid, George will have to recognize taxable income equal to the difference.

Answer 221

Rationale The correct answer is "B." Due to rapid increase in asset value, statement "I" would likely provide a higher estate value and therefore the alternate valuation date is not likely useful. Statement "III" - QTIP is not an issue as Janet and Jack both died, and she is not his heir; therefore, there is no use for a QTIP. Finally, special use valuation pertains to real property used in a trade or business.

Answer 222

Rationale The correct answer is "C." Wills are always probated. Incompetency management must be addressed in a separate document, such as a trust or power of attorney. Contract named beneficiaries take trump over will stipulations. Business price or value is determined either in an appraisal or in a buy/sell agreement.

Answer 223

Rationale The correct answer is "A." Cy created a grantor trust for a term of eight years; if he dies before the end of the term, the entire corpus is included in his estate. Therefore, if Cy dies today, the trust property is in his estate. While he is receiving income, the income is subject to income tax in Cy's estate. Once he lives more than eight years, the corpus is transferred and out of his estate.

Answer 224

Rationale The correct answer is "B." Crummey withdrawal powers allow a beneficiary to withdraw an amount contributed to the trust in a given year in order to create a gift of a present interest, thereby permitting use of the annual exclusion and/or applicable credit.

Answer 225

The proceeds of a policy transferred within three years of death are included in the gross estate of the transferor.

Answer 226

Tenancy in common allows for different percentages of ownership for different co-tenants. A decedent's share of the tenants in common property will be probated. Tenants in common titling does not provide for automatic retitling. A disadvantage is that children's creditors could have a claim on part of the orchard. An advantage is that a portion of the future appreciation will be shifted out of his estate.

Answer 227

Rationale The correct answer is "D." If an intervivos trust is irrevocable, it is not included in the grantor's estate. The power of attorney, as well as the attorney-in-fact, will not move the corpus to the holder's estate, nor will a nuncupative will. Only a general power of appointment can cause the corpus to be included in the holder of the power's estate. This result can happen when a general power of appointment is given to a child by a parent and subsequently the child predeceases the parent. Inclusion occurs even though the child has not exercised the power. Keep in mind that a GPOA should only be given to a spouse and is used to qualify for the unlimited marital deduction in a power of appointment trust.

Answer 228

The unrestricted ability to name the ultimate beneficiaries is a general power of appointment. We usually find this power in a general power of appointment trust used to qualify for the unlimited marital deduction. This power is typically given to the surviving spouse usually exercisable at his or her death through the will.

Answer 229

I. The annual income is usually taxed to the trust. II. If annual income is used to pay for support items for the grantor, then the income is taxed to the grantor. III. Unexpended principal and income must be payable to the beneficiary at the attainment of age 21

Answer 230

Revocable living trust is also known as a intervivos trust with specified beneficiaries. It avoids probate and is almost always revocable and therefore included in the grantor's gross estate. The GRAT avoids probate and is not included in the grantor's gross estate if the grantor outlives the GRAT term.

Answer 231

I. Tenants by the Entirety. II. Joint Tenancy with Rights of Survivorship. Tenancy by Entirety is Joint Tenancy or Joint Interest that can only exist between a husband and wife. This and JTWROS allow for automatic passage of property rights to other owners. Tenants in Common provides for ownership to pass to the owners' heirs. Community Property has no automatic retitling feature and therefore the decendants' half passes through probate.

Answer 232

Rationale The correct answer is "A." When one spouse dies, both halves of the community property receive a "stepped-up" income tax basis. While his original basis was $20,000, her basis in her half of the community property is $25,000 and since she also inherited his half of community property her total basis at the time of the sale was $50,000 therefore the gain is $5,000 and because it was inherited property the gain is long-term.

Answer 233

Rationale The best correct answer is "D." The power of attorney appoints an attorney in fact. This is the non-lawyer (agent) who acts on behalf of the principal. This is not an "attorney at law" although it may be.

Answer 234

Rationale The correct answer is "A." The value of the CRAT is included in the gross estate and then deducted from the adjusted gross estate as a charitable deduction. Only gift taxes paid on gifts made within three years are included under the gross up rule.

Answer 235

Rationale The correct answer is "B." An extension of time to file the income tax return (1040 etc.) automatically extends the time for filing gift tax returns. No separate form is required.

Answer 236

Rationale The correct answer "D." The $11.58 million GSTT exemption will fully cover her $1,060,000 in taxable gifts ($280,000 - $15,000) = $265,000 X 4 = $1,060,000. She will have utilized $1,060,000 of both her GST exemption and her gift tax exemption.

Answer 237

the interest of one spouse cannot be terminated or severed without the consent of the other spouse.

Answer 238

a. Sale of an asset for less than full consideration, usually made to related parties b. Considered part sale and part gift Rationale Answer "C" is a false statement because bargain sales usually occur among related parties. All of the other statements are true.

Answer 239

Rationale The correct answer is "A." 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 property titling law or by state trust law.

Answer 240

Rationale The correct answer is "A." Answer "B" is incorrect; Jackie and Julie cannot own property in a tenancy by the entirety because they are not married. Answer "C" is correct but is challengeable in probate; Jackie should write a will that specifically bequeaths property to Julie if she wants Julie to have that property. Answer "D" is incorrect; even if Jackie and Julie moved to a community property state, they would not be subject to the community property regime because they are not married.

Answer 241

带有无竞赛条款的意愿 A no-contest clause, also called an in terrorem clause, is a provision that you can include in your will or revocable living trust which states that if anyone files a lawsuit to challenge who you have provided for in your estate plan, then the person challenging the will or trust will receive nothing from your estate.

Answer 242

Rationale The correct answer is "C." Answer "A" is incorrect because the property of Ralphie's wife would not be included in his probate estate. Answer "B" is incorrect because property owned JTWROS passes outside of probate. Answer "D" is incorrect because property owned tenancy by the entirety passes outside of probate.

Answer 243

The parties to a power of attorney are the principal and the agent.

Answer 244

家庭用品

Answer 245

Rationale | The correct answer is "D." Only the assets household goods require retitling and therefore go through probate.

Answer 246

n. 遗嘱的附录；附录

Answer 247

Rationale The best correct answer is "A." A will can be revoked by physically destroying the will. None of the other answers would effectively revoke Dawson's will as destroying the will. B is ineffective. The handwritten will may or may not be effective and may not be found. D is an improper use of a codicil.

Answer 248

Rationale The correct answer is "B." Joint tenancy requires equal ownership therefore "C" is incorrect. Answer "A" is incorrect because joint tenancies may be established by spouses or nonspouses. Answer "B" is correct because if the two were married, each would be deemed to have contributed 50%, therefore only 50% would be included in the probate estate of the first spouse to die. Answer "D" is incorrect because if the property is held as a joint tenancy then the property will transfer automatically at the first tenant's death, regardless of what the will dictates.

Answer 249

The documents address different medical care concerns. A power of attorney addresses the providing of medical care, but generally does not address the ending of life sustaining treatment. The living will addresses the ending of life sustaining treatment, but not the providing of medical care. A DNR is not a replacement for either of the other two documents; it is an additional document that addresses the prevention of resuscitation in the event of heart failure for a terminally ill patient.

Answer 250

Rationale The correct answer is "B." Careful reading (D), analyzing (A) and describing the elements (C) are within the financial planners scope assuming the planner is competent to do so. Advising a client of legal implications of a provision is the unauthorized practice of law.

Answer 251

n. (遗嘱)执行人

Answer 252

Letters Testamentary. Surety Bond is the bond that an administrator must generally post. Letters of Administration is what empowers an administrator to act as the agent of a probate court. Intestacy Laws describes the state laws that govern the disposition of a decendent's estate if he has failed to prepare a valid will.

Answer 253

Property transferred via the state intestacy law will pass through probate.

Answer 254

n. 未留遗嘱而死亡

Answer 255

adj. 辅助的；附属的 | n. 助手；辅助设备

Answer 256

If the decendent is a resident of one state and owns real property in another state

Answer 257

A complete interest in property with all the rights associated with outright ownership.

Answer 258

An interest in property that ceases upon the death of the owner of the life estate.

Answer 259

An interest in property for a specified number of years.

Answer 260

An undivided interest in property held by two or more related or unrelated persons.

Answer 261

The ownership described here is the community property relationship. Property can be kept separate even in community property if one does not mix or mingle gifted property or inherited property (two examples of separate property) with community property

Answer 262

Giving Jessie the power to pay his own creditors creates a general power of appointment over the assets

Answer 263

``` Arizona California Idaho Louisiana Nevada New Mexico Texas Washington Wisconsin ```

Answer 264

an installment sale, would not meet Paul’s requirements because Chad would be able to access the assets immediately(he could spend money right away), and any assets returned to Paul as installment payments would be included in Paul’s gross estate.

Answer 265

because if Paul dies during the term of the GRAT, the assets will be included in Paul’s gross estate.

Answer 266

Because John has a general power of appointment over his father’s assets, John may appoint those assets to anyone for any reason and is not limited by an ascertainable standard such as health, education, maintenance, or support. Yes! If John predeceases his father, John’s gross estate would include his father’s assets even though they had not been previously appointed to John.

Answer 267

Rationale The correct answer is "D." Answer "A" is incorrect because a QTIP is not the same as a “B” trust. Answer "B" is incorrect because the income of the trust must be paid to the spouse, not to any other beneficiary. Answer "D" is correct because the surviving spouse may demand only income producing property. "C" is incorrect because the remaindermen will pay any estate taxes.

Answer 268

A SCIN is a note with a self cancelling premium payment attached so that the note will cancel at the transferor’s death. (an installment note that cancels at the seller’s death ----- Value of the notes canceled at the death of the seller is not included in seller’s gross estate) The GRAT, QPRT (QUALIFIED PERSONAL RESIDENCE TRUSTS) and the GRUT are irrevocable trusts and would result in a current taxable gift.

Answer 269

Rationale The correct answer is "A." Answer "B" is incorrect because Alton’s son Edgar is not a charity. Answer "C" is incorrect because a QPRT, or Qualified Personal Residence Trust, is a special form of a GRAT to which the grantor contributes his personal residence. Answer "D" is incorrect because a FLP would be more appropriate for transferring ownership of a family business than ownership of a painting. Answer "A" is correct because TPPTs or Tangible Personal Property Trusts are funded with personal property and the grantor retains the right to use the property that has been transferred to the trust.

Answer 270

n. 竞赛；比赛 vt. 驳斥；争取 vi. 奋斗

Answer 271

Rationale The correct answer is "D." Answer "D" is not an issue when deciding whether to deduct the adjusted basis or the fair market value since such a transfer does not create a capital gain. All of the other options are issues to consider. Interest is relevant because of the time value of money issue and the interest earned on any possible tax deduction/refund. Current and projected AGI for the next 5 years is relevant because any amount that is over the limit for this year can be carried forward for the lesser of 5 years or until death. When LTCG property is donated to a charity, to determine the income tax deduction on Schedule A you typically value it at FMV and then are limited to deducting only up to 30% of AGI. However, a special election can be made where you value at cost basis and then the limit is 50% of AGI. The question is asking about the factors that would impact that decision. The FMV and adjusted basis are also relevant factors since they determine the value of the gift under each option (FMV and limit to 30% of AGI, or basis and limit to 50% of AGI).

Answer 272

a bypass trust is an irrevocable trust into which the settlor deposits assets and which is designed to pay trust income and principal to the settlor's spouse for the duration of the spouse's life.

Answer 273

A payment made directly to an individual to reimburse him for medical expenses is not a qualified transfer. To be a qualified transfer, the payment must be made directly to the healthcare provider. All of the other options are true.

Answer 274

n. 接受捐赠者；受赠者

Answer 275

n. 损耗；挥霍

Answer 276

Rationale The correct answer is "C." Of the options, only an outright bequest to a resident alien spouse who becomes a U.S. citizen before the estate return is filed qualifies for the unlimited marital deduction. D)An income beneficiary of a CRUT who is a nonresident alien spouse.

Answer 277

Rationale The correct answer is "D." Each piece has to fit. He wants to benefit from a stream of income now and leave the remainder to the charity and he wants to be able to make additional contributions. A CRAT meets the first 2 requirements but not the third as you cannot make additional contributions (it will mess up the “annuity” of the CRAT). A CLUT meets the last requirement in that a Unitrust (whether CRUT or CLUT) allows for additions since the distribution is based on account value each year but does not meet the first 2 requirements (the charity gets the income stream and a noncharity gets the remainder). A PIF meets all the requirements except that it is not a charitable remainder trust. The charity provides a stream of income, the remainder is left to the charity and Colin could make additional contributions. A CRUT meets these requirements.

Answer 278

Rationale | The correct answer is "B." All of the other answers are characteristics of a testamentary trust.

Answer 279

``` A holographic (adj. 全息的；亲笔书写的) will is one that is handwritten, signed and dated. there is no category "self-prepared will. ```

Answer 280

Rationale The correct answer is "A." Answers "B" and "C" will not pass through probate because they pass by operation of law or state contract law. Answer "A" will pass through probate because it is owned fee simple by the decedent. The fact that the house is subject to a mortgage does not affect whether it passes through probate.

Answer 281

Rationale The correct answer is "C." Both trust assets are included in the gross estate of the decedent. The CRAT is then deductible as a charitable deduction from the adjusted gross estate (AGE). The CRUT is partially deductible as a qualified terminable interest property transfer under the unlimited marital deduction from AGE and the remainder is deductible as a charitable deduction from AGE.

Answer 282

The alternate valuation date is utilized to save on estate taxes. Most assets can utilize the AVD, with the exception of "wasting assets" and assets sold during the estate administration. "wasting assets" are any assets that naturally will decline in value as time passes. Copyrights become less valuable as they come closer to their expiration. Annuitized annuities will decline due to payouts. These “wasting assets” cannot use the AVD, the must use Date of Death value (DOD). Any assets sold between DOD and AVD will use the sale price. $700,000 (sale of residence) + $1,200,000 (AVD) + $600,000 (wasting asset - DOD) + $82,000 (wasting asset - DOD) + $175,000 (AVD) = $2,757,000

Answer 283

grandchildren’s real father is still alive, so he is skipped person

Answer 284

Tenants in common used the actual contribution rule as between married partners. He gets a step to for her 60% interest.

Answer 285

n. [律]撤消遗赠

Answer 286

n. 减少；减轻；缓和；减少额；（尤指）减税额 Abatement is the reduction in an estate when there is insufficient assets to satisfy all legatee provisions. Extinction Paribus is for those guessers who have no clue. An In terrorem clause is a "no-contest" clause.

Answer 287

Rationale The correct answer is d. The GST tax of $400,000 is added to the gift for the determination of the gift tax. Thus, $1,400,000 x 0.40=$560,000.

Answer 288

1. Unpaid medical expenses of a decedent can be deducted on the final 1040 or form 706. 2. Any executor fees may be deducted on form 706 or the 1041 return.

Answer 289

adv. 肯定地；断然地

Answer 290

Rationale The correct answer is b. Statements 1 and 2 are the nonmarital rusts and therefore the trustee can have the power to invade for all beneficiaries. The GPOA trust is a marital trust and the trustee would be redirected to invade for the spouse only or the trust would not qualify for the marital deduction.

Answer 291

Rationale The correct answer is b. James is not a skip person, and has interest in the trust (receives income). Skip Persons For termination purposes, skip person means a trust beneficiary who is either: A natural person assigned to a generation that is two or more generations below the settlor's generation, or A trust that meets either of the following conditions: All interests in the trust are held by skip persons; or No person holds an interest in the trust, and at no time after the transfer to the trust may a distribution be made to a non-skip person. Interest A person holds an interest in the trust if, at the time the determination is made, the person: Has a current right to receive income or corpus from the trust; Is a permissible current recipient of income or corpus from the trust (other than charitable entities); or Is a charitable or other entity described in section 2055(a) and the trust is a charitable remainder annuity trust, a charitable remainder unitrust, or a pooled income fund.

Answer 292

A 529 plan is an investment account that you can use for education savings. The plans are usually sponsored by states and offer great tax benefits. A 529 plan permits the donor to be the owner of the account, and thereby reserves the right to the donor, to take back the gift.

Answer 293

gets a step to FMV on her half at the death of R. There is a deemed contribution rule but one-half of community property goes to probate under the will.

Answer 294

adj. 遗嘱的；据遗嘱的；遗嘱中写明的 | All not half of the Qualified Plan will be included in the testamentary trust - no named beneficiary.

Answer 295

An inter-vivos trust is a living trust created that holds assets of a trustor. A benefit of an inter-vivos trust is that it helps avoid probate or the legal process of distributing the owner's assets after his or her death.

Answer 296

I. Revocable living trust. II. Living will. III. Springing durable power of attorney. Fee simple ownership is not an arrangement that helps to deal with unexpected incapacity.

Answer 297

If a beneficiary survives the testator but dies within the time limit set out in the survivorship clause then the gift to them will fail and will pass as though they had predeceased, so the beneficiary dying within the survivorship period never takes a vested interest. A survivorship clause is exactly what it sounds like; a clause in a will that makes a gift to a beneficiary conditional upon them surviving the testator by a set period of time. The survivorship period is commonly construed as 28 days, 30 days, or one calendar month, though any period not exceeding 6 months is acceptable. If a survivorship period exceeds 6 months, then this has the effect of creating a settlement for IHT purposes. This is due to the operation of section 92 of the Inheritance Tax Act 1984 (IHTA 1984). During the survivorship period the assets are held on trust, but as long as the gift takes effect within 6 months the trust is ignored, and the gift is treated as though it had taken effect immediately.

Answer 298

Tax Inclusion refers to whether an item's price already includes the applicable sales taxes, or if the taxes should be added to that price as a separate line item on the check.

Answer 299

while gift tax payments do not - tax exclusive

Answer 300

Rationale The correct answer is "D." The CRUT accomplishes all of these objectives. Income for parents eliminates "lead trust" and "pooled income." Control over assets eliminates CRATs. CRAT cannot provide for inflation. CRUT income can increase.

Answer 301

Rationale The correct answer is b. James is not a skip person, and has interest in the trust (receives income). Skip Persons For termination purposes, skip person means a trust beneficiary who is either: A natural person assigned to a generation that is two or more generations below the settlor's generation, or A trust that meets either of the following conditions: All interests in the trust are held by skip persons; or No person holds an interest in the trust, and at no time after the transfer to the trust may a distribution be made to a non-skip person.

Answer 302

is a termination of an interest in a trust, which results in the skip person(s) holding all the interests in the trust. Termination can result from death, lapse time, release of a power, or otherwise. A taxable termination is taxable at the time the termination occurs

Answer 303

Any executor fees may be deducted on form 706 or the 1041 return.

Answer 304

To provide immediate income to the trust, a charitable lead trust (CLT) would be required. The estate tax advantage is that there is an unlimited charitable deduction at the estate level. The estate tax advantage of the CLT is that the gross estate is less than it would have been if the income had not been distributed to the charity.

Answer 305

Rationale The correct answer is "C." AGE: $1,000,000 - $16,000 (admin cost) - $50,000 (1/2 debt from the mortgage) - $15,000 (credit card debt) = $919,000 Taxable Estate: $919,000 - $310,000 (marital deduction) - $34,000 (charitable deduction) = $575,000 The maritable deduction is calculated as follows: The total amount of the home is $200,000 therefore her portion would be $100,000. If the debt is $100,000 then her portion is $50,000. So she would be leaving $100,000 - $50,000 = $50,000 to the spouse for the home. So total marital deduction is $260,000 + $50,000 = $310,000. Charitable contributions and marital deductions are not taken into account in determining the adjusted gross estate. These two items constitute part of the calculation of the taxable estate.

Answer 306

An irrevocable life insurance trust (ILIT) is a trust that cannot be rescinded, amended, or modified, post creation. ... Once the grantor contributes property or life insurance death benefits to the trust, they cannot change the terms of the trust or reclaim any of the properties held within. 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.

Answer 307

A QTIP trust (officially a qualified terminable interest property trust) is a type of trust that allows someone to provide income for their surviving spouse and bequeath property and assets to a different set of beneficiaries

Answer 308

Fee simple is a term that refers to real estate or land ownership. The owner of the property has full and irrevocable ownership of the land and any buildings on that land. ... Fee simple and fee simple absolute are the same thing. Fee simple is the highest form of property ownership. Fee simple ownership is included in probate and is not presumed in community property states.

Answer 309

A Qualified Personal Resident Trust (QPRT) is a type of trust that allows its creator to remove a personal home from his or her estate. QPRTs can hold only one residence. You may own 2 QPRTs. The donor retains all tax advantages. Any income is taxed to the donor.

Answer 310

A trust that qualifies for the marital deduction. A qualified terminable interest property trust ("QTIP trust") allows a spouse to give a life estate in property to his or her spouse without incurring the federal gift tax. The terminal interest property that will qualify are those items which are the exception to the terminal interest rule such as (1) GPOA trusts (2) QTIP trust and (3) charitable trusts where the surviving spouse is the only non-charitable beneficiary.

Answer 311

Giving someone the power to pay his own creditors creates a general power of appointment over the assets

Answer 312

The pooled income fund (PIF) is often referred to as the “mutual fund of life income gifts.” A gift of cash or securities is transferred into a pooled income fund at Deseret Trust Company, which, as trustee, manages the assets and pays an income for life to you or the income beneficiaries you designate

Answer 313

Someone can establish a charitable remainder trust and would like to have some income and the flexibility to make additional contributions to the charitable remainder trust in the future.

Answer 314

A "5 by 5 Power in Trust" is a common clause in many trusts that allows the trust's beneficiary to make certain withdrawals. Also also called a "5 by 5 Clause," it gives the beneficiary the ability to withdraw the greater of: $5,000 or 5% of the trust's fair market value (FMV) from the trust each year

Answer 315

6014-NQuestion 4 of 307/5 Estate Which of the following statements is/are correct? I. The value of a CRAT where the decedent was the only non-charitable beneficiary is included in the gross estate of the decedent. II. Gift taxes paid two years prior to the death of the decedent for gifts made four years ago are included in the gross estate of the decedent under the gross up rule. ``` A)I only. Rationale The correct answer is "A." The value of the CRAT is included in the gross estate and then deducted from the adjusted gross estate as a charitable deduction. Only gift taxes paid on gifts made within three years are included under the gross up rule. B)II only. C)Both I and II. D)None of the choices. ```

Answer 316

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 stock in a partnership. Special use is for valuation of real property used in a trade or business. The reverse QTIP is a generation transfer tax election.

Dalton Quizzes Flashcards

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