27 Questions
Which of the following is NOT a tax characteristic of gifts made to a trust?
Gifts made to a trust are treated as gifts made to the trust beneficiaries
Which of the following is TRUE regarding the situs of a trust?
The situs of a trust is its legal home
What are some reasons why trusts are useful and necessary?
All of the above
What are some advantages of living trusts?
All of the above
Which of the following is a disadvantage of using a Bypass Trust?
No Basis Adjustment at Second Death
Which of the following is a potential issue when using a Disclaimer Trust?
The surviving spouse may not follow through with the planning
According to the text, how much can a married couple exclude from transfer taxes with proper planning?
$24.12 million
Which of the following is a potential advantage of using a Bypass Trust?
Not Taxed at Second Death
Which of the following is a requirement for a Generation-Skipping Trust to be exempt from the GST tax?
The trust must be created for the benefit of a single skip person
What is the purpose of an irrevocable life insurance trust (ILIT)?
To remove life insurance policies from a client's taxable estate
What is the Crummey power in relation to a trust?
A power to create a present interest in the trust
What is the suggested limit for the annual Crummey withdrawal power?
$5,000 per beneficiary
Which type of policy is designed to provide liquidity to pay estate taxes or other taxes and/or expenses at the second death?
Second to die policy
What is the maximum duration of the non-charitable interest in a Charitable Remainder Trust?
20 years
What is the minimum annual payout required for a Charitable Remainder Trust?
5%
What is the purpose of drafting language in a trust that allows the trustee the discretion to make payments to the non-insured spouse during his or her lifetime?
To protect the non-insured spouse
Which of the following is true about Charitable Remainder Trusts and S Corporation stock?
Charitable Remainder Trusts are not allowed to hold S Corporation stock.
What determines the value of the donor's federal income tax deduction for gifts to a Charitable Remainder Trust?
The type of charitable remainderman and the kind of property contributed to the CRT.
What is the gift tax consequence of transferring to a Charitable Remainder Trust?
A transfer to a CRT qualifies for the unlimited gift tax charitable deduction.
Which of the following is NOT a characteristic of a beneficiary in a trust?
A beneficiary must be related to the grantor of the trust
What is the distinction between 'income' and 'principal' in a trust?
Income is what is earned by the trust, while principal is what is paid out to the beneficiaries
What is the difference between a simple trust and a complex trust?
A simple trust allows for the accumulation of income, while a complex trust requires the distribution of all income
What is a grantor trust?
A trust that allows the grantor to remain in control while alive
Which of the following is a requirement for a 'QTIP' trust?
All of the above
Which of the following is true about a 'QTIP' trust?
All of the above
Which of the following is a requirement for a Marital Deduction Trust for a Non-Citizen Spouse (Qualified Domestic Trust – 'QDOT')?
All of the above
What happens if the parent is the transferor and custodian of a Uniform Gift to Minors Act or Uniform Transfer to Minors Act account, and dies while the account is still open?
The account balance is taxed in the parent's estate
Learn about how trusts can be used to hold life insurance proceeds and access the cash value. Understand the implications of retaining ownership and how to draft language in the trust to allow trustee access. Test your knowledge with this quiz!
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
