CANNON TRUST FUNDAMENTALS EXAM
QUESTIONS AND ANSWERS
Does an Irrevocable Trust move out of the gross estate of the Grantor?
......ANSWER......Yes
What is the current Basic Exclusion Amount (BEA)?
......ANSWER......$12.06 million
Gross estate includes... (3 things) ......ANSWER......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?
......ANSWER......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?
......ANSWER......100% includable in the first estate
What is the step up in basis for common law states with tenants in
common? ......ANSWER......1/2 step
pg. 1
,What is the step up in basis for community property states?
......ANSWER......1 full step
Which two types of gifts/deductions are unlimited?
......ANSWER......Charitable and marital
When must the PR/Trustee elect for an alternate valuation date?
......ANSWER......6 months after DOD (or before)
DSUE = ? ......ANSWER......Deceased Spouse Unused Exclusion
An estate tax return form (Form 706) must be filed...
......ANSWER......within 9 months of DOD
What does filing an estate tax return (within 9 months) of the DOD of
the first spouse? ......ANSWER......Allows portability of DSUE to SS
Gift splits apply to...? ......ANSWER......Spouses only
applicable exclusion amount (AEA) ......ANSWER......BEA + DSUE = AEA of
surviving spouse
*could be up to 24.12 million right now
pg. 2
, Form 709 must be filed when... ......ANSWER......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
......ANSWER......Simple Trust
A power of attorney that ONLT becomes effective at the time of
incapacity ......ANSWER......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? ......ANSWER......$75 (50%/50% assumption of asset with
spouses)
Testamentary Trusts at funding can have all of the following EXCEPT
which one of the following? ......ANSWER......A. Revocable (Right
answer)
B. More flexible in protecting children than a court established
guardianship
C. Sometimes tax advantaged and an asset protection devices
D. Set up under the terms of the decedant's will
pg. 3
QUESTIONS AND ANSWERS
Does an Irrevocable Trust move out of the gross estate of the Grantor?
......ANSWER......Yes
What is the current Basic Exclusion Amount (BEA)?
......ANSWER......$12.06 million
Gross estate includes... (3 things) ......ANSWER......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?
......ANSWER......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?
......ANSWER......100% includable in the first estate
What is the step up in basis for common law states with tenants in
common? ......ANSWER......1/2 step
pg. 1
,What is the step up in basis for community property states?
......ANSWER......1 full step
Which two types of gifts/deductions are unlimited?
......ANSWER......Charitable and marital
When must the PR/Trustee elect for an alternate valuation date?
......ANSWER......6 months after DOD (or before)
DSUE = ? ......ANSWER......Deceased Spouse Unused Exclusion
An estate tax return form (Form 706) must be filed...
......ANSWER......within 9 months of DOD
What does filing an estate tax return (within 9 months) of the DOD of
the first spouse? ......ANSWER......Allows portability of DSUE to SS
Gift splits apply to...? ......ANSWER......Spouses only
applicable exclusion amount (AEA) ......ANSWER......BEA + DSUE = AEA of
surviving spouse
*could be up to 24.12 million right now
pg. 2
, Form 709 must be filed when... ......ANSWER......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
......ANSWER......Simple Trust
A power of attorney that ONLT becomes effective at the time of
incapacity ......ANSWER......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? ......ANSWER......$75 (50%/50% assumption of asset with
spouses)
Testamentary Trusts at funding can have all of the following EXCEPT
which one of the following? ......ANSWER......A. Revocable (Right
answer)
B. More flexible in protecting children than a court established
guardianship
C. Sometimes tax advantaged and an asset protection devices
D. Set up under the terms of the decedant's will
pg. 3
