7 Questions
Which act should be approached with caution when making large funding gifts to a minor?
Uniform Transfer to Minors Act
What is required for an annual exclusion gift in trust to be exempt from the GST tax?
The trust must be created for the benefit of a single skip person and must be vested in that single beneficiary for estate tax purposes.
What is the purpose of an irrevocable life insurance trust (ILIT)?
To remove life insurance policies from a client's taxable estate
Which of the following is true about transferring a life insurance policy to an irrevocable life insurance trust (ILIT)?
The insured must live for 3 years after the transfer for the policy to be excluded from their estate.
What is a Crummey power?
A power of withdrawal that creates a present interest in a trust.
What is the purpose of a hanging power in a trust?
To prevent the lapse of an unused portion of a Crummey power.
What is the purpose of second to die coverage in a life insurance policy?
To provide liquidity to pay estate taxes or other expenses at the second death.
Test your knowledge on Trust Planning for Children and learn about the implications of the Uniform Gift to Minors Act and Uniform Transfer to Minors Act transfers. Discover why caution is necessary when making large funding gifts and understand how the kiddie tax may affect a minor's income. Also, explore the potential consequences if a parent is both the transferor and custodian and passes away while the UGMA or UTMA account is still open.
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