CANNON TRUST FUNDAMENTALS EXAM QUESTIONS
AND VERIFIED ANSWERS (GRADED A+)
A client with highly appreciated property desires to sell that property with
minimal tax consequences and convert it to income producing assets. As
an appropriate alternative, you should recommend which of the following?
A) Charitable remainder trust
B) Grantor retained income trust
C) Charitable lead trust
D) Revocable living trust - VERIFIED ANSWER - A) Charitable remainder
trust
Appreciated assets donated to a public charity may be deducted from
income up to which of the following amounts?
A) 30% of adjusted gross income
B) 60% of adjusted gross income
C) 30% of value of assets donated
D) 60% of value of assets donated - VERIFIED ANSWER - A) 30% of
adjusted gross income
,Your elderly client who regularly gives to his church desires to gift assets
to his children and wants to make the gift at the lowest gift tax value
possible. Due to his age, you are concerned about a trust where he must
outlive the term to obtain tax benefits. You should suggest which of the
following?
A) Charitable lead annuity trust
B) Grantor retained annuity trust
C) Revocable living trust
D) Charitable remainder annuity trust - VERIFIED ANSWER - A) Charitable
lead annuity trust
A qualified personal residence trust has which of the following results?
A) The grantor may continue to live in the residence for the trust term
B) If the grantor survives the term of the trust, gift tax is due at
termination
C) The shorter the term of the trust, the greater the discount for gift tax
purposes
D) At termination, the property reverts back to the grantor - VERIFIED
ANSWER - A) The grantor may continue to live in the residence for the
trust term
,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 - VERIFIED ANSWER - B) Principal and income law of the state
If the posting of a transaction which satisfies the Principal and Income
Law but conflicts with tax law, the trustee must do which of the following?
A) Satisfy both principal and income law and tax law
B) Ignore the tax law
C) Ignore the principal & income law
D) Request OCC direction - VERIFIED ANSWER - A) Satisfy both principal
and income law and tax law
Income earned and not distributed during a period of probate belongs to
which of the following?
A) Estate
B) Recipient of the pecuniary bequest
, C) Income beneficiary of the trust to whom the estate assets, or share
thereof, is being allocated
D) Surviving spouse - VERIFIED ANSWER - A) Estate
a client dies this year and leaves everything to their surviving spouse who
is a US citizen. the executor files a timely estate tax return and elects
portability. What amount of deceased spousal unused exclusion will the
surviving spouse have the right to use?
A. $0
B. the Basic Exclusion Amount of the first spouse to die
C. up to the value of the first spouse to die's estate
D. unlimited - VERIFIED ANSWER - B. the Basic Exclusion Amount of the
first spouse to die
a power of attorney which remains valid even when the Principal becomes
incapacitated is which of the following?
A. general power of attorney
B. limited power of attorney
C. durable power of attorney
AND VERIFIED ANSWERS (GRADED A+)
A client with highly appreciated property desires to sell that property with
minimal tax consequences and convert it to income producing assets. As
an appropriate alternative, you should recommend which of the following?
A) Charitable remainder trust
B) Grantor retained income trust
C) Charitable lead trust
D) Revocable living trust - VERIFIED ANSWER - A) Charitable remainder
trust
Appreciated assets donated to a public charity may be deducted from
income up to which of the following amounts?
A) 30% of adjusted gross income
B) 60% of adjusted gross income
C) 30% of value of assets donated
D) 60% of value of assets donated - VERIFIED ANSWER - A) 30% of
adjusted gross income
,Your elderly client who regularly gives to his church desires to gift assets
to his children and wants to make the gift at the lowest gift tax value
possible. Due to his age, you are concerned about a trust where he must
outlive the term to obtain tax benefits. You should suggest which of the
following?
A) Charitable lead annuity trust
B) Grantor retained annuity trust
C) Revocable living trust
D) Charitable remainder annuity trust - VERIFIED ANSWER - A) Charitable
lead annuity trust
A qualified personal residence trust has which of the following results?
A) The grantor may continue to live in the residence for the trust term
B) If the grantor survives the term of the trust, gift tax is due at
termination
C) The shorter the term of the trust, the greater the discount for gift tax
purposes
D) At termination, the property reverts back to the grantor - VERIFIED
ANSWER - A) The grantor may continue to live in the residence for the
trust term
,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 - VERIFIED ANSWER - B) Principal and income law of the state
If the posting of a transaction which satisfies the Principal and Income
Law but conflicts with tax law, the trustee must do which of the following?
A) Satisfy both principal and income law and tax law
B) Ignore the tax law
C) Ignore the principal & income law
D) Request OCC direction - VERIFIED ANSWER - A) Satisfy both principal
and income law and tax law
Income earned and not distributed during a period of probate belongs to
which of the following?
A) Estate
B) Recipient of the pecuniary bequest
, C) Income beneficiary of the trust to whom the estate assets, or share
thereof, is being allocated
D) Surviving spouse - VERIFIED ANSWER - A) Estate
a client dies this year and leaves everything to their surviving spouse who
is a US citizen. the executor files a timely estate tax return and elects
portability. What amount of deceased spousal unused exclusion will the
surviving spouse have the right to use?
A. $0
B. the Basic Exclusion Amount of the first spouse to die
C. up to the value of the first spouse to die's estate
D. unlimited - VERIFIED ANSWER - B. the Basic Exclusion Amount of the
first spouse to die
a power of attorney which remains valid even when the Principal becomes
incapacitated is which of the following?
A. general power of attorney
B. limited power of attorney
C. durable power of attorney
