Cannon Trust School Level II Exam Questions
With Correct Answers 2026 Rated A+
Bob intends to make gifts to the following. Which of the following will qualify for the
generation-skipping tax predeceased ancestor exception?
A. The children of his living children.
B. The child of his deceased child.
C. His grandnephew (whose parents are deceased).
D. His niece, if his brother is deceased. - CORRECT ANSWER -The child of his deceased child.
Generation skipping transfers occur in which of the following circumstances?
A. Only between family members.
B. Only between non-family members.
C. Only between persons over 37 1/2 years apart in age.
D. Only when assets aren't subject to gift or estate tax in the middle generation. - CORRECT
ANSWER -Only when assets aren't subject to gift or estate tax in the middle generation.
Allocation of the generation skipping transfer tax exemption for an irrevocable trust subject to a
taxable termination is made by which of the following?
A. Donor (or donor's estate) at the time the trust terminates.
B. Donee at the time the donee receives the property.
C. Donor (or donor's estate) at the time the trust is funded.
D. Donee at the time the trust is funded. - CORRECT ANSWER -Donor (or donor's estate) at t he
time the trust is funded.
The generation skipping transfer tax rules apply only to which of the following?
A. Property left in trusts that exceed the rule against perpetuity.
,B. Property passing two or more generations below the grantor.
C. Family members of the decedent.
D> All persons 37 1/2 years younger than the grantor. - CORRECT ANSWER -Property passing
two or more generations below the grantor.
Which of the following BEST describes the rate at which the generation skipping transfer tax is
applied?
A. At varying, progressive rates according to the unified
transfer tax rate schedule applicable at the time.
B. Only at the lowest estate tax rate applicable at the time.
C. Only at the highest estate tax rate applicable at the time.
D. Based on the size and nature of the transfer. - CORRECT ANSWER -Only at the highest estate
tax rate applicable at the time.
Which of the following is TRUE of the GSTT Exemption?
A. The GSTT Exemption is not indexed for inflation.
B. The GSTT Exemption is more than the Applicable Exclusion Amount.
C. The GSTT Exemption is indexed for inflation.
D. The GSTT Exemption is less than the Applicable Exclusion Amount. - CORRECT ANSWER -The
GSTT Exemption is indexed for inflation.
A client is looking to establish an irrevocable trust that provides income to his spouse for life,
then income to his children for life, with the remainder interest passing to his grandchildren.
This is an example of which of the following?
A. Crummey trust
B. Generation-skipping trust
C. Power of appointment marital deduction trust
D. Grantor retained annuity trust - CORRECT ANSWER -Generation-skipping trust
, Grandparents establish a trust for the benefit of children, children's spouses, and grandchildren.
If the trustee pays $50,000 directly to Princeton University for a grandchild's tuition, this
payment should be characterized as a $50,000:
A. Direct Skip.
B. Taxable Distribution.
C. Unlimited Exclusion Payment.
D. Taxable Termination - CORRECT ANSWER -Unlimited Exclusion Payment.
Under the Generation-Skipping Transfer (GST) tax rules, who is responsible for paying the GST
tax on a taxable distribution?
A. The transferor
B. The trustee of the GST trust
C. The skip person receiving the distribution
D. The IRS - CORRECT ANSWER -The skip person receiving the distribution
A transferor funds a trust for benefit of her grandchildren. This is an example of which of the
following types of transfers?
A. Taxable Distribution
B. Taxable Termination
C. Indirect Skip
D. Direct Skip - CORRECT ANSWER -Direct Skip
Which of the following statements is TRUE about transfer taxes in 2026?
A. The generation skipping tax exemption is $15,000,000.
B. The applicable exclusion amount for estate tax increased to $7,500,000.
C. The applicable credit amount for gift taxes is $7,500,000.
With Correct Answers 2026 Rated A+
Bob intends to make gifts to the following. Which of the following will qualify for the
generation-skipping tax predeceased ancestor exception?
A. The children of his living children.
B. The child of his deceased child.
C. His grandnephew (whose parents are deceased).
D. His niece, if his brother is deceased. - CORRECT ANSWER -The child of his deceased child.
Generation skipping transfers occur in which of the following circumstances?
A. Only between family members.
B. Only between non-family members.
C. Only between persons over 37 1/2 years apart in age.
D. Only when assets aren't subject to gift or estate tax in the middle generation. - CORRECT
ANSWER -Only when assets aren't subject to gift or estate tax in the middle generation.
Allocation of the generation skipping transfer tax exemption for an irrevocable trust subject to a
taxable termination is made by which of the following?
A. Donor (or donor's estate) at the time the trust terminates.
B. Donee at the time the donee receives the property.
C. Donor (or donor's estate) at the time the trust is funded.
D. Donee at the time the trust is funded. - CORRECT ANSWER -Donor (or donor's estate) at t he
time the trust is funded.
The generation skipping transfer tax rules apply only to which of the following?
A. Property left in trusts that exceed the rule against perpetuity.
,B. Property passing two or more generations below the grantor.
C. Family members of the decedent.
D> All persons 37 1/2 years younger than the grantor. - CORRECT ANSWER -Property passing
two or more generations below the grantor.
Which of the following BEST describes the rate at which the generation skipping transfer tax is
applied?
A. At varying, progressive rates according to the unified
transfer tax rate schedule applicable at the time.
B. Only at the lowest estate tax rate applicable at the time.
C. Only at the highest estate tax rate applicable at the time.
D. Based on the size and nature of the transfer. - CORRECT ANSWER -Only at the highest estate
tax rate applicable at the time.
Which of the following is TRUE of the GSTT Exemption?
A. The GSTT Exemption is not indexed for inflation.
B. The GSTT Exemption is more than the Applicable Exclusion Amount.
C. The GSTT Exemption is indexed for inflation.
D. The GSTT Exemption is less than the Applicable Exclusion Amount. - CORRECT ANSWER -The
GSTT Exemption is indexed for inflation.
A client is looking to establish an irrevocable trust that provides income to his spouse for life,
then income to his children for life, with the remainder interest passing to his grandchildren.
This is an example of which of the following?
A. Crummey trust
B. Generation-skipping trust
C. Power of appointment marital deduction trust
D. Grantor retained annuity trust - CORRECT ANSWER -Generation-skipping trust
, Grandparents establish a trust for the benefit of children, children's spouses, and grandchildren.
If the trustee pays $50,000 directly to Princeton University for a grandchild's tuition, this
payment should be characterized as a $50,000:
A. Direct Skip.
B. Taxable Distribution.
C. Unlimited Exclusion Payment.
D. Taxable Termination - CORRECT ANSWER -Unlimited Exclusion Payment.
Under the Generation-Skipping Transfer (GST) tax rules, who is responsible for paying the GST
tax on a taxable distribution?
A. The transferor
B. The trustee of the GST trust
C. The skip person receiving the distribution
D. The IRS - CORRECT ANSWER -The skip person receiving the distribution
A transferor funds a trust for benefit of her grandchildren. This is an example of which of the
following types of transfers?
A. Taxable Distribution
B. Taxable Termination
C. Indirect Skip
D. Direct Skip - CORRECT ANSWER -Direct Skip
Which of the following statements is TRUE about transfer taxes in 2026?
A. The generation skipping tax exemption is $15,000,000.
B. The applicable exclusion amount for estate tax increased to $7,500,000.
C. The applicable credit amount for gift taxes is $7,500,000.
