ALU 202 Mid-Year Practice Exam (Lion's Street) – Questions With Verified Solutions

ALU 202 Mid-Year Practice Exam (Lion's Street) –
Questions With Verified Solutions

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Terms in this set (129)



All of the following are financial 3) income replacement
objectives of a well-planned estate
EXCEPT:


1) maximized wealth
2) tax savings
3) income replacement
4) appropriate asset ownership


A legal agreement whereby property 2) trust
is held and managed for the welfare
of the beneficiary is:


1) estate
2) trust
3) situs
4) partnership


The basis from which to determine 1) taxable estate
whether an individual is subject to the
estate tax is:


1) taxable estate
2) fair market value of the personal
property
3) total income
4) business assets only

,All of the following statements 1) Some property is taxed based upon potential uses
regarding special use valuation are
correct EXCEPT:


1) Some property is taxed based upon
potential uses
2) Property value is assessed
according to its current use
3) The value of stocks/bonds are the
price upon the date of death
4) Life insurance products set aside
for the benefit of the decedent's
estate are taxed as part of the estate


Examples of income with respect to 4) gains received from the sale of the property
the decedent (IRD) include all of the
following EXCEPT:


1) uncollected lottery winnings
2) outstanding stock dividends
3) accounts receivables from a cash
basis sole proprietor
4) gains received from the sale of the
property


All of the following are factors to 3) the state in which the charitable trust was
consider in a charitable giving established
application for life insurance EXCEPT:


1) past history of charitable
contributions
2) amount of annual contributions
3) the state in which the charitable
trust was established
4) the annual premium as a
percentage of client's annual income

,Foreign assets owned by former US 2) generate a decreasing proportional estate tax for
citizens: 10 yrs after US citizenship is renounced


1) do not generate estate tax once US
citizenship is renounced
2) generate a decreasing proportional
estate tax for 10 yrs after US
citizenship is renounced
3) are completely exempt from estate
taxes if all assets are located outside
of the US
4) generate an increasing
proportional estate tax for 10 yrs after
renouncing US citizenship


All of the following are characteristics 3) grantor retains incident of ownership of the trust
of the Irrevocable Trust EXCEPT:


1) trust assets are not vulnerable to the
grantor's creditors
2) assets removed from the estate and
put into the trust reduce the size of
the estate and the estate tax
3) grantor retains incident of
ownership of the trust
4) income generated by the trust
assets is taxed to the trust, often at a
lower rate than received by the
grantor

, All of the following statements 3) Public trusts cannot exist for more than 21 yrs after
regarding the rule against perpetuities creation
are correct EXCEPT:


1) Certain charitable trusts can exist
for an unlimited period of time
2) Private trusts can exist for a period
not to exceed 21 yrs after the creation
of the trust
3) Public trusts cannot exist for more
than 21 yrs after creation
4) Charitable trusts must not name a
specific individual or individuals are
beneficiary


All of the following are valid reasons 3) estate creation
for purchasing life insurance on an
elderly individual EXCEPT:


1) estate transfer
2) long term care needs
3) estate creation
4) final expenses


All of the following statements 1) It's a type of revocable trust
regarding charitable trusts are correct
EXCEPT:


1) It's a type of revocable trust
2) Assets placed in are managed on
behalf of the charity
3) The life insurance policy on the
grantor can be made an asset of the
trust
4) It's not subject to the rule against
perpetuities