CANNON TRUST 1 EXAM QUESTIONS
AND ANSWERS 100% PASS.
Which of the following transfers are includable in the gross estate of the donor if made within 3
years of death?
A. Gift of $8,000 cash value life insurance policy to son.
B. Gift of $9,800 cash to daughter.
C. Gift of $10,000 cash to friend.
D. Gift of $5,000 stock in a closely held company to parent. - ANS Gift of $8,000 cash value
life insurance policy to son.
A simple trust earned $27,000 in dividends. It paid $4,000 in trustee fees, one-half from income
and one-half from principal. Trust accounting income is which of the following?
$0
$23.000
$25.000
$27,000 - ANS $25,000
If the Trust Document is silent with respect to a certain cash transaction, the Trust Administrator
should first look to which of the following for guidance?
A. Court of Jurisdiction
B Principal and Income Law of the State
C. Grantor
D. OCC - ANS Principal and Income Law of the State
2026 STUDY MATERIAL @COPYRIGHT RESERVED 1
,When determining a long-term sustainable rate of return for a unitrust payout, which of the
following best represents the range of high confidence payout percentages?
A. 1-2%
B. 2-3%
C. 3-5%
D 120% of the federal midterm rate - ANS 3-5%
Which of the following is an example of tangible personal property?
A. Gold bar
B. Common stock certificate
C. Patent
D. Vacant land - ANS Gold Bar
Which of the following is an example of tangible personal property?
A. Family residence
B. IBM stock
C. Jewelry
D. Rental house - ANS Jewelry
A to B for life, then to C. Following this transfer, which of the following is true?
A. A has a fee simple interest.
B. B has a reversionary interest.
C. C has a remainder interest.
D. C has a life estate. - ANS C has a remainder interest
Under joint tenants with rights of survivorship, when one tenant dies which of the following
best describes the result?
A. Her share passes through her will to her heirs.
2026 STUDY MATERIAL @COPYRIGHT RESERVED 2
,B. Her share passes by law to her heirs, not through her will.
C. Her share passes to the surviving joint tenant regardless of what her will says.
D. The asset must be sold and the estate gets 1/2 of the proceeds. - ANS Her share passes to
the surviving joint rebrand regardless of what her will says
A decedent owns $400,000 in his own name, a $200,000 home in joint tenancy with his
spouse and a $100,000 life insurance policy with the children as beneficiaries. Which
of the following is the amount passing through probate?
A. 0
B. $400,000.
C. $500.000.
D. $700,000. - ANS $400,000
In cutting down a tree, which of the following occurs?
A. Real property is converted to personal property
B. Personal property is converted to real property.
C. Real property is converted to a fixture.
D. There is no conversion, the tree remains real property. - ANS Real property is converted to
personal property
Which of the following transfers are includable in the gross estate of the donor if made within 3
years of death?
A. Gift of $8,000 cash value life insurance policy to son.
B. Gift of $9,800 cash to daughter.
C. Gift of $10,000 cash to friend.
D. Gift of $5,000 stock in a closely held company to parent. - ANS Gift of $8,000 cash value
life insurance policy to son
Which of the following can be deducted either on the decedent's final 1040 income tax return
or on the Form 706 Estate Tax return?
2026 STUDY MATERIAL @COPYRIGHT RESERVED 3
, A. Funeral expenses
B. Medical expenses relating to the decedent's last.
C. Court costs in probating the estate.
D. Executor's administration expenses. - ANS Medical expenses relating to the decedents last
illness
A client made lifetime taxable gifts of $800,000 ten years prior to her death. She had an estate
worth $3,000,000 at death. The value of the property gifted during her lifetime is worth
$1,600,000 at her death. On which of the following is her tentative tax figured prior to applying
the applicable exclusion amount?
A. $800,000
B. $3.000.000
C. $3,800,000
D. $4,600,000 - ANS $3,800,000
A United States citizen living in Canada, died and was survived by a spouse, who is a citizen of
Canada. The estate valued at $18 million after expenses, passed to the surviving spouse
outright. How much of the surviving spouse's interest qualifies for the marital deduction?
A. None. There is no marital deduction for assets passing to a non-citizen spouse.
B. $100,000 as indexed.
C. The basic exclusion amount as indexed
D. Unlimited since the decedent is a U.S. citizen. - ANS None
How are death benefits from a life insurance policy, in which the decedent held incidents of
ownership, regarded for tax purposes?
A. Not subject to federal income tax.
B. Not subject to federal estate tax.
C. Subject to both federal income and estate tax.
D. Not subject to either the federal income or estate tax. - ANS Not subject to federal income
tax
2026 STUDY MATERIAL @COPYRIGHT RESERVED 4
AND ANSWERS 100% PASS.
Which of the following transfers are includable in the gross estate of the donor if made within 3
years of death?
A. Gift of $8,000 cash value life insurance policy to son.
B. Gift of $9,800 cash to daughter.
C. Gift of $10,000 cash to friend.
D. Gift of $5,000 stock in a closely held company to parent. - ANS Gift of $8,000 cash value
life insurance policy to son.
A simple trust earned $27,000 in dividends. It paid $4,000 in trustee fees, one-half from income
and one-half from principal. Trust accounting income is which of the following?
$0
$23.000
$25.000
$27,000 - ANS $25,000
If the Trust Document is silent with respect to a certain cash transaction, the Trust Administrator
should first look to which of the following for guidance?
A. Court of Jurisdiction
B Principal and Income Law of the State
C. Grantor
D. OCC - ANS Principal and Income Law of the State
2026 STUDY MATERIAL @COPYRIGHT RESERVED 1
,When determining a long-term sustainable rate of return for a unitrust payout, which of the
following best represents the range of high confidence payout percentages?
A. 1-2%
B. 2-3%
C. 3-5%
D 120% of the federal midterm rate - ANS 3-5%
Which of the following is an example of tangible personal property?
A. Gold bar
B. Common stock certificate
C. Patent
D. Vacant land - ANS Gold Bar
Which of the following is an example of tangible personal property?
A. Family residence
B. IBM stock
C. Jewelry
D. Rental house - ANS Jewelry
A to B for life, then to C. Following this transfer, which of the following is true?
A. A has a fee simple interest.
B. B has a reversionary interest.
C. C has a remainder interest.
D. C has a life estate. - ANS C has a remainder interest
Under joint tenants with rights of survivorship, when one tenant dies which of the following
best describes the result?
A. Her share passes through her will to her heirs.
2026 STUDY MATERIAL @COPYRIGHT RESERVED 2
,B. Her share passes by law to her heirs, not through her will.
C. Her share passes to the surviving joint tenant regardless of what her will says.
D. The asset must be sold and the estate gets 1/2 of the proceeds. - ANS Her share passes to
the surviving joint rebrand regardless of what her will says
A decedent owns $400,000 in his own name, a $200,000 home in joint tenancy with his
spouse and a $100,000 life insurance policy with the children as beneficiaries. Which
of the following is the amount passing through probate?
A. 0
B. $400,000.
C. $500.000.
D. $700,000. - ANS $400,000
In cutting down a tree, which of the following occurs?
A. Real property is converted to personal property
B. Personal property is converted to real property.
C. Real property is converted to a fixture.
D. There is no conversion, the tree remains real property. - ANS Real property is converted to
personal property
Which of the following transfers are includable in the gross estate of the donor if made within 3
years of death?
A. Gift of $8,000 cash value life insurance policy to son.
B. Gift of $9,800 cash to daughter.
C. Gift of $10,000 cash to friend.
D. Gift of $5,000 stock in a closely held company to parent. - ANS Gift of $8,000 cash value
life insurance policy to son
Which of the following can be deducted either on the decedent's final 1040 income tax return
or on the Form 706 Estate Tax return?
2026 STUDY MATERIAL @COPYRIGHT RESERVED 3
, A. Funeral expenses
B. Medical expenses relating to the decedent's last.
C. Court costs in probating the estate.
D. Executor's administration expenses. - ANS Medical expenses relating to the decedents last
illness
A client made lifetime taxable gifts of $800,000 ten years prior to her death. She had an estate
worth $3,000,000 at death. The value of the property gifted during her lifetime is worth
$1,600,000 at her death. On which of the following is her tentative tax figured prior to applying
the applicable exclusion amount?
A. $800,000
B. $3.000.000
C. $3,800,000
D. $4,600,000 - ANS $3,800,000
A United States citizen living in Canada, died and was survived by a spouse, who is a citizen of
Canada. The estate valued at $18 million after expenses, passed to the surviving spouse
outright. How much of the surviving spouse's interest qualifies for the marital deduction?
A. None. There is no marital deduction for assets passing to a non-citizen spouse.
B. $100,000 as indexed.
C. The basic exclusion amount as indexed
D. Unlimited since the decedent is a U.S. citizen. - ANS None
How are death benefits from a life insurance policy, in which the decedent held incidents of
ownership, regarded for tax purposes?
A. Not subject to federal income tax.
B. Not subject to federal estate tax.
C. Subject to both federal income and estate tax.
D. Not subject to either the federal income or estate tax. - ANS Not subject to federal income
tax
2026 STUDY MATERIAL @COPYRIGHT RESERVED 4
