CANNON TRUST FUNDAMENTALS
EXAM QUESTIONS AND ANSWERS 100%
PASS.
Does an Irrevocable Trust move out of the gross estate of the Grantor? - ANS Yes
What is the current Basic Exclusion Amount (BEA)? - ANS $12.06 million
Gross estate includes... (3 things) - ANS Everything that the decedent owned, controlled,
retained
Joint interests owned by spouses (only) are presumed to be what percentage during the first
estate to dies gross estate? - ANS 50%/50% assumption
All other joint interests that do not include spouses are presumed to be what percentage during
the first estate to dies gross estate? - ANS 100% includable in the first estate
What is the step up in basis for common law states with tenants in common? - ANS 1/2 step
What is the step up in basis for community property states? - ANS 1 full step
Which two types of gifts/deductions are unlimited? - ANS Charitable and marital
2026 STUDY MATERIAL @COPYRIGHT RESERVED 1
,When must the PR/Trustee elect for an alternate valuation date? - ANS 6 months after DOD
(or before)
DSUE = ? - ANS Deceased Spouse Unused Exclusion
An estate tax return form (Form 706) must be filed... - ANS within 9 months of DOD
What does filing an estate tax return (within 9 months) of the DOD of the first spouse? -
ANS Allows portability of DSUE to SS
Gift splits apply to...? - ANS Spouses only
applicable exclusion amount (AEA) - ANS BEA + DSUE = AEA of surviving spouse
*could be up to 24.12 million right now
Form 709 must be filed when... - ANS Anyone makes a gift over $16K that year
*File on April 15th with your Form 1040
Trust that requires mandatory distribution of all income to beneficiary on annual basis, either
outright, or to custodial account - ANS Simple Trust
A power of attorney that ONLT becomes effective at the time of incapacity - ANS Spring DPOA
Bob and Sue are married and live in a common law state. They put in $100 in joint names with
survivorship rights. When Sue dies, before Bob, it has grown to $150. How much is includable in
Sue's gross estate? - ANS $75 (50%/50% assumption of asset with spouses)
Testamentary Trusts at funding can have all of the following EXCEPT which one of the following?
- ANS A. Revocable (Right answer)
B. More flexible in protecting children than a court established guardianship
2026 STUDY MATERIAL @COPYRIGHT RESERVED 2
, C. Sometimes tax advantaged and an asset protection devices
D. Set up under the terms of the decedant's will
Which of the following is the most contractual, least fiduciary relationship?
A. Guardianship
B. Trustee
C. Agency
D. Executorship - ANS C. Agency
In the transfer A to B, B has what kind of interest following the transfer?
A. Simple Trust
B. Fee Simple
C. Reversionary
D. Remainder - ANS B. Fee Simple
Under JTWROS, when one tenant dies which of the following best describes the result?
A. His/her share passes through her will to their heirs
B. His/her share passes by law to their heirs, not through their will
C. His/her share passes to the surviving tenant, regardless of what their will says
D. the asset must be sold and the estate gets 1/2 the proceeds - ANS C. His/her share passes
to the surviving tenant, regardless of what their will says
Value of Qualified Interests determined under IRC 7530 - ANS 120% of the federal midterm
rate
Appreciated assets donated to a private foundation may be deducted from income up to what
percentage? - ANS 20% of AGI
2026 STUDY MATERIAL @COPYRIGHT RESERVED 3
EXAM QUESTIONS AND ANSWERS 100%
PASS.
Does an Irrevocable Trust move out of the gross estate of the Grantor? - ANS Yes
What is the current Basic Exclusion Amount (BEA)? - ANS $12.06 million
Gross estate includes... (3 things) - ANS Everything that the decedent owned, controlled,
retained
Joint interests owned by spouses (only) are presumed to be what percentage during the first
estate to dies gross estate? - ANS 50%/50% assumption
All other joint interests that do not include spouses are presumed to be what percentage during
the first estate to dies gross estate? - ANS 100% includable in the first estate
What is the step up in basis for common law states with tenants in common? - ANS 1/2 step
What is the step up in basis for community property states? - ANS 1 full step
Which two types of gifts/deductions are unlimited? - ANS Charitable and marital
2026 STUDY MATERIAL @COPYRIGHT RESERVED 1
,When must the PR/Trustee elect for an alternate valuation date? - ANS 6 months after DOD
(or before)
DSUE = ? - ANS Deceased Spouse Unused Exclusion
An estate tax return form (Form 706) must be filed... - ANS within 9 months of DOD
What does filing an estate tax return (within 9 months) of the DOD of the first spouse? -
ANS Allows portability of DSUE to SS
Gift splits apply to...? - ANS Spouses only
applicable exclusion amount (AEA) - ANS BEA + DSUE = AEA of surviving spouse
*could be up to 24.12 million right now
Form 709 must be filed when... - ANS Anyone makes a gift over $16K that year
*File on April 15th with your Form 1040
Trust that requires mandatory distribution of all income to beneficiary on annual basis, either
outright, or to custodial account - ANS Simple Trust
A power of attorney that ONLT becomes effective at the time of incapacity - ANS Spring DPOA
Bob and Sue are married and live in a common law state. They put in $100 in joint names with
survivorship rights. When Sue dies, before Bob, it has grown to $150. How much is includable in
Sue's gross estate? - ANS $75 (50%/50% assumption of asset with spouses)
Testamentary Trusts at funding can have all of the following EXCEPT which one of the following?
- ANS A. Revocable (Right answer)
B. More flexible in protecting children than a court established guardianship
2026 STUDY MATERIAL @COPYRIGHT RESERVED 2
, C. Sometimes tax advantaged and an asset protection devices
D. Set up under the terms of the decedant's will
Which of the following is the most contractual, least fiduciary relationship?
A. Guardianship
B. Trustee
C. Agency
D. Executorship - ANS C. Agency
In the transfer A to B, B has what kind of interest following the transfer?
A. Simple Trust
B. Fee Simple
C. Reversionary
D. Remainder - ANS B. Fee Simple
Under JTWROS, when one tenant dies which of the following best describes the result?
A. His/her share passes through her will to their heirs
B. His/her share passes by law to their heirs, not through their will
C. His/her share passes to the surviving tenant, regardless of what their will says
D. the asset must be sold and the estate gets 1/2 the proceeds - ANS C. His/her share passes
to the surviving tenant, regardless of what their will says
Value of Qualified Interests determined under IRC 7530 - ANS 120% of the federal midterm
rate
Appreciated assets donated to a private foundation may be deducted from income up to what
percentage? - ANS 20% of AGI
2026 STUDY MATERIAL @COPYRIGHT RESERVED 3
