estate planning Exam 2 BEST STUDY
GUIDE RATED A+
Which of the following is not a party to a Trust?
Beneficiary(ies)
Settlor
✅
Trustee
Magistrate - correct answer Magistrate
Which of the following parties is/are the legal owner of trust property?
Trust Protector
Beneficiaries
✅
Trustee or Co-Trustees
The Settlor - correct answer Trustee or Co-Trustees
Which party or parties is allowed to use and enjoy trust assets?
A spendthrift relative
The beneficiary(ies)
✅
The Trust Protector
The Internal Revenue Service - correct answer The beneficiary(ies)
Your client, Josephine, left the $2,000,000 you invested for her (her entire estate)
to a trust in which you were named Trustee. The trust provided that all income
was to be paid to Josephine's 55 year-old son, Joseph, for life, and when Joseph
passed away, the trust balance would pass to Joseph's young daughter
(Josephine's granddaughter), Emmanuelle. In following the prudent investor rule
and your fiduciary duties, what's your best choice for investing the $2,000,000
portfolio.
,estate planning Exam 2 BEST STUDY
GUIDE RATED A+
Raw land in the Utah desert
High-yield (junk) bbonds
✅
Cryptocurrency; it made Sam Bankman-Fried a billionaire!
A balance portfolio of blue-chip stock and bonds - correct answer A balance
portfolio of blue-chip stock and bonds
A "Gift Trust," or one in which the Settlor has parted with dominion and control of
the assets, and created for the benefit of another is usually: Irrevocable
Redeemable
✅
Irredeemable
Revocable - correct answer Irrevocable
Heather, a widow with a $2,000,000 gross estate, created a $1,000,000 trust for
her son, Henry, with strict conditions on distributions due to Henry's gambling
addiction, and penchant for making large losing parlay bets on the Browns and
Bears. What can you infer about the major reason for Heather to create this trust?
To avoid community property laws when she dies
To reduce Heather's federal estate taxes
To provide creditor protection for Henry and to protect him from squandering his
inheritance
correct answer ✅
To enable Henry to inherit under his state's statute of decedent and distribution -
To provide creditor protection for Henry and to protect him
from squandering his inheritance
, estate planning Exam 2 BEST STUDY
GUIDE RATED A+
Frank, a single taxpayer, dies in 2023 with a $5,000,000 gross estate after gifting
away $4,000,000 (total) in 2020 into 2 equal trusts for his children, Francesca, and
Freddy. What are the transfer (gift, estate and GST) tax results for Frank?
$0 of gift taxes; and $3,600,000 of estate taxes
$0 of gift taxes; and $2,000,000 of estate taxes
✅
$1,600,000 of gift taxes and $2,000,000 of estate taxes
$0 of gift and estate taxes - correct answer $0 of gift and estate taxes
The gift tax "annual exclusion" (the gift amount below which can be ignored and
not counted as 'taxable gifts') was $10,000 per donor, per donee, per year
between 1987-2001. But since 1997, it's been indexed for inflation. What's its
value today (2023)?
$17,000
$15,000
✅
$12,920,000
$10,000 - correct answer $17,000
When a separate trust (one that avoids probate) is the beneficiary or legatee of
any assets passing under the will, (including any previously forgotten assets still
titled solely in decedent's name), the trust is called a/an:
Pourover Trust
Generation Skipping Trust
✅
Marital Trust
Probate Trust - correct answer Pourover Trust
GUIDE RATED A+
Which of the following is not a party to a Trust?
Beneficiary(ies)
Settlor
✅
Trustee
Magistrate - correct answer Magistrate
Which of the following parties is/are the legal owner of trust property?
Trust Protector
Beneficiaries
✅
Trustee or Co-Trustees
The Settlor - correct answer Trustee or Co-Trustees
Which party or parties is allowed to use and enjoy trust assets?
A spendthrift relative
The beneficiary(ies)
✅
The Trust Protector
The Internal Revenue Service - correct answer The beneficiary(ies)
Your client, Josephine, left the $2,000,000 you invested for her (her entire estate)
to a trust in which you were named Trustee. The trust provided that all income
was to be paid to Josephine's 55 year-old son, Joseph, for life, and when Joseph
passed away, the trust balance would pass to Joseph's young daughter
(Josephine's granddaughter), Emmanuelle. In following the prudent investor rule
and your fiduciary duties, what's your best choice for investing the $2,000,000
portfolio.
,estate planning Exam 2 BEST STUDY
GUIDE RATED A+
Raw land in the Utah desert
High-yield (junk) bbonds
✅
Cryptocurrency; it made Sam Bankman-Fried a billionaire!
A balance portfolio of blue-chip stock and bonds - correct answer A balance
portfolio of blue-chip stock and bonds
A "Gift Trust," or one in which the Settlor has parted with dominion and control of
the assets, and created for the benefit of another is usually: Irrevocable
Redeemable
✅
Irredeemable
Revocable - correct answer Irrevocable
Heather, a widow with a $2,000,000 gross estate, created a $1,000,000 trust for
her son, Henry, with strict conditions on distributions due to Henry's gambling
addiction, and penchant for making large losing parlay bets on the Browns and
Bears. What can you infer about the major reason for Heather to create this trust?
To avoid community property laws when she dies
To reduce Heather's federal estate taxes
To provide creditor protection for Henry and to protect him from squandering his
inheritance
correct answer ✅
To enable Henry to inherit under his state's statute of decedent and distribution -
To provide creditor protection for Henry and to protect him
from squandering his inheritance
, estate planning Exam 2 BEST STUDY
GUIDE RATED A+
Frank, a single taxpayer, dies in 2023 with a $5,000,000 gross estate after gifting
away $4,000,000 (total) in 2020 into 2 equal trusts for his children, Francesca, and
Freddy. What are the transfer (gift, estate and GST) tax results for Frank?
$0 of gift taxes; and $3,600,000 of estate taxes
$0 of gift taxes; and $2,000,000 of estate taxes
✅
$1,600,000 of gift taxes and $2,000,000 of estate taxes
$0 of gift and estate taxes - correct answer $0 of gift and estate taxes
The gift tax "annual exclusion" (the gift amount below which can be ignored and
not counted as 'taxable gifts') was $10,000 per donor, per donee, per year
between 1987-2001. But since 1997, it's been indexed for inflation. What's its
value today (2023)?
$17,000
$15,000
✅
$12,920,000
$10,000 - correct answer $17,000
When a separate trust (one that avoids probate) is the beneficiary or legatee of
any assets passing under the will, (including any previously forgotten assets still
titled solely in decedent's name), the trust is called a/an:
Pourover Trust
Generation Skipping Trust
✅
Marital Trust
Probate Trust - correct answer Pourover Trust
