Cannon Trust School 1 Exam Study
Questions with Already Graded A+
Answers | Latest Edition
1. Sole Ownership - ANSWER Titled in the name of one person, full rights to
property in life and death; transfers under decedent's will or intestate estate;
subject to probate.
- If individual becomes incapacitated - look for DPOA - if no DPOA,
State will appoint a guardian.
- If individual dies - look for Will - if no Will, State will determine
Intestate Succession
2. Joint Tenancy with Rights of Survivorship - ANSWER Ownership by
multiple individuals who have an undivided interest and survivorship rights;
decedent's share passes to the surviving tenant(s) by operation of law of any
will or trust; avoids probate.
3. Life Estate - ANSWER When a fee simple owner grants ownership of the
property to another person for the duration of that persons life, and becomes
the "Life Tenant"
- Entitled to rents, or profits the property yields
4. Access to the property
- Cannot dictate how the property will be distributed upon the life
tenants death
- Cannot destroy or waste the property because such actions after the
rights of those who will own the property after him.
,5. Estate for Years - ANSWER When a fee simple owner grants ownership of
his property to another person for a specific period of time
- Terminable Interest
- Entitled to rents, or profits the property yields.
- Access to the property.
- Can dictate how the remaining interest in the Estate for Years - will be
distributed upon his death.
- Cannot destroy or waste the property because such actions after the
rights of those who will own the property after him.
6. Defeasible Estates - ANSWER A fee simple can grant ownership of
property to another person and place limitation or condition on the use of
that property.
7. Fee Simple Determinable - ANSWER property automatically reverts back
to the grantor upon the happening of a given event.
8. Fee Simple Subject to Condition Subsequent - ANSWER Grantor retains
the power to terminate the grantee's estate.
9. Fee Simple Subject to an Executory Interest - ANSWER Property
automatically reverts back to a 3rd party upon the happening of a given
event.
10.Future Interests - ANSWER Created when a grantee that is capable of
possessing a present interest upon the expiration of a prior present interest
11.Reversionary Interests (Interests in Grantor) - ANSWER Interest where the
property will or may be returned to its original owner.
,12.Remainder Interest - ANSWER Is an interest where the property will or
may be passed to successive owner(s) at a given time or at the occurrence of
an event.
13.Income Beneficiaries - ANSWER duty to maintain the property in the
condition is was received (repairs, maintenance, property taxes)
14.Remainder (Principal) Beneficiaries - ANSWER Pay for capital
improvements (any modifications to home).
15.Income - ANSWER The return received on the use or investment or
principal
16.Principal - ANSWER Corpus of trust that is to ultimately pass to the
remainder
17.Gift Tax Annual Exclusion Amount - ANSWER $18K (2024) per person,
per year
18.Valuation of a Gift - ANSWER Valued at Fair Market Value (FMV) on the
date of transfer (Date of Gift or Date of Death)
19.FMV (Fair Market Value) - ANSWER FMV is the price at which the
property would change hands between a willing buyer and a willing seller,
when neither one is under an compulsion to buy or to sell, and when both
have reasonable knowledge of all relevant facts.
, 20.Gift Splitting - ANSWER For spouses to lower overall tax bracket, use both
annual exclusion amounts
21.Gift Tax Exclusions and Deductions - ANSWER No tax is due or filing is
required
- Qualified Transfers (Medical or Tuition)
- Gift Tax Annual Exclusion ($18K for 2024)
- Marital & Charitable (Unlimited)
22.Applicable Exclusion Amount - ANSWER $13,610,000 (2024)
Even when a "taxable gift" is made, and a return is filed, no gift tax is actually
due until the taxpayer has exhausted the Applicable Amount
23.Present Interest Examples - ANSWER Outright
Revocable Trust
Simple Trust (All Income required to be disributed)
Minors Trust (UTMA etc.)
Crummey Power
24.Tenancy by the Entirety - ANSWER Form of Joint Tenancy held only
between spouses; ownership is held in the entirety so that the interest may
not be partitioned without the consent of both parties, lending some creditor
protection; avoids probate.
- Not recognized in all states
- Some states only allow the ownership in real property, not personal
Questions with Already Graded A+
Answers | Latest Edition
1. Sole Ownership - ANSWER Titled in the name of one person, full rights to
property in life and death; transfers under decedent's will or intestate estate;
subject to probate.
- If individual becomes incapacitated - look for DPOA - if no DPOA,
State will appoint a guardian.
- If individual dies - look for Will - if no Will, State will determine
Intestate Succession
2. Joint Tenancy with Rights of Survivorship - ANSWER Ownership by
multiple individuals who have an undivided interest and survivorship rights;
decedent's share passes to the surviving tenant(s) by operation of law of any
will or trust; avoids probate.
3. Life Estate - ANSWER When a fee simple owner grants ownership of the
property to another person for the duration of that persons life, and becomes
the "Life Tenant"
- Entitled to rents, or profits the property yields
4. Access to the property
- Cannot dictate how the property will be distributed upon the life
tenants death
- Cannot destroy or waste the property because such actions after the
rights of those who will own the property after him.
,5. Estate for Years - ANSWER When a fee simple owner grants ownership of
his property to another person for a specific period of time
- Terminable Interest
- Entitled to rents, or profits the property yields.
- Access to the property.
- Can dictate how the remaining interest in the Estate for Years - will be
distributed upon his death.
- Cannot destroy or waste the property because such actions after the
rights of those who will own the property after him.
6. Defeasible Estates - ANSWER A fee simple can grant ownership of
property to another person and place limitation or condition on the use of
that property.
7. Fee Simple Determinable - ANSWER property automatically reverts back
to the grantor upon the happening of a given event.
8. Fee Simple Subject to Condition Subsequent - ANSWER Grantor retains
the power to terminate the grantee's estate.
9. Fee Simple Subject to an Executory Interest - ANSWER Property
automatically reverts back to a 3rd party upon the happening of a given
event.
10.Future Interests - ANSWER Created when a grantee that is capable of
possessing a present interest upon the expiration of a prior present interest
11.Reversionary Interests (Interests in Grantor) - ANSWER Interest where the
property will or may be returned to its original owner.
,12.Remainder Interest - ANSWER Is an interest where the property will or
may be passed to successive owner(s) at a given time or at the occurrence of
an event.
13.Income Beneficiaries - ANSWER duty to maintain the property in the
condition is was received (repairs, maintenance, property taxes)
14.Remainder (Principal) Beneficiaries - ANSWER Pay for capital
improvements (any modifications to home).
15.Income - ANSWER The return received on the use or investment or
principal
16.Principal - ANSWER Corpus of trust that is to ultimately pass to the
remainder
17.Gift Tax Annual Exclusion Amount - ANSWER $18K (2024) per person,
per year
18.Valuation of a Gift - ANSWER Valued at Fair Market Value (FMV) on the
date of transfer (Date of Gift or Date of Death)
19.FMV (Fair Market Value) - ANSWER FMV is the price at which the
property would change hands between a willing buyer and a willing seller,
when neither one is under an compulsion to buy or to sell, and when both
have reasonable knowledge of all relevant facts.
, 20.Gift Splitting - ANSWER For spouses to lower overall tax bracket, use both
annual exclusion amounts
21.Gift Tax Exclusions and Deductions - ANSWER No tax is due or filing is
required
- Qualified Transfers (Medical or Tuition)
- Gift Tax Annual Exclusion ($18K for 2024)
- Marital & Charitable (Unlimited)
22.Applicable Exclusion Amount - ANSWER $13,610,000 (2024)
Even when a "taxable gift" is made, and a return is filed, no gift tax is actually
due until the taxpayer has exhausted the Applicable Amount
23.Present Interest Examples - ANSWER Outright
Revocable Trust
Simple Trust (All Income required to be disributed)
Minors Trust (UTMA etc.)
Crummey Power
24.Tenancy by the Entirety - ANSWER Form of Joint Tenancy held only
between spouses; ownership is held in the entirety so that the interest may
not be partitioned without the consent of both parties, lending some creditor
protection; avoids probate.
- Not recognized in all states
- Some states only allow the ownership in real property, not personal
