Cannon Trust School II Practice Exam
Questions with Accurate Answers |
Guarantee Pass <Brand New Version>
1. Bonds that can be traded for stock are known as - ANSWER Convertible
Bonds
2. A company most likely will call bonds (assuming bonds are callable) it had
previously issued if what occurs? - ANSWER Interest Rates Fall
3. The LOWESTS&P's rating that would qualify as investment grade is what? -
ANSWER BBB-
4. A treasury bill is taxable by which of the following entities? - ANSWER
Higher liquidity and higher marketability
5. In 2023, the annual gift tax exclusion is: - ANSWER $17,000
6. What are the requirements to make QTIP election? - ANSWER Only to
spouse, income to spouse at least annually
7. Why is QTIP includable in surviving spouse's Estate? - ANSWER Because
election was made.
8. To maximize both spouses use of the generation skipping exemption in an
optimal marital deduction plan, what type of marital bequest must be used? -
ANSWER Qualified terminable interest property trust
,9. A grandparent establishes an irrevocable trust with income to her child for
his life and then to his children. She funds the trust with assets valued at
$4,000,000 and allocates $1,000,000 of her lifetime GST exemption. The
inclusion ratio for this trust is - ANSWER 75%
10.Which is the best definition of the "applicable rate" for GSTT? - ANSWER
Inclusion Ratio X Maximum Estate Tax Rate
11.What is the maximum amount that an individual can shelter from federal
estate tax (other than the marital or charitable deductions)? - ANSWER
$10,000,000 as indexed for inflation.
12.The purpose of the valuation discount in an FLP or LLC is for: - ANSWER
Federal gift and estate tax purposes.
13.In order to establish the Deceased Spouse's Unused Exemption Amount
(DSUEA) for the surviving spouse, which of the following must be true at
the first spouse's death? - ANSWER A timely filed estate tax return was
filed.
14.Pecuniary Formulas - ANSWER formula Defines
15.What is the primary fiduciary duty of a trustee under the Uniform Trust
Code (UTC)?
To maximize trust income
To act in the best interests of the beneficiaries
To invest solely in conservative assets
, To distribute all trust assets annually - ANSWER To act in the best interests of
the beneficiaries
16.Which IRS form is used to report income from a revocable living trust?
Form 1041
Form 1040
Form 706
Form 709 - ANSWER Form 1040
17.Under the Prudent Investor Rule, what must a trustee consider when making
investment decisions?
Only the income needs of the current beneficiary
Risk, return, and the needs of all beneficiaries
The grantor's personal investment preferences
Maximizing short-term gains - ANSWER Risk, return, and the needs of all
beneficiaries
18.What is the purpose of a Crummey power in a trust?
To allow discretionary distributions
To qualify contributions for the gift tax exclusion
To revoke the trust
To appoint a successor trustee - ANSWER To qualify contributions for the gift
tax exclusion
19.What is the federal estate tax exemption amount for 2026?
$5.45 million
$13.61 million
Questions with Accurate Answers |
Guarantee Pass <Brand New Version>
1. Bonds that can be traded for stock are known as - ANSWER Convertible
Bonds
2. A company most likely will call bonds (assuming bonds are callable) it had
previously issued if what occurs? - ANSWER Interest Rates Fall
3. The LOWESTS&P's rating that would qualify as investment grade is what? -
ANSWER BBB-
4. A treasury bill is taxable by which of the following entities? - ANSWER
Higher liquidity and higher marketability
5. In 2023, the annual gift tax exclusion is: - ANSWER $17,000
6. What are the requirements to make QTIP election? - ANSWER Only to
spouse, income to spouse at least annually
7. Why is QTIP includable in surviving spouse's Estate? - ANSWER Because
election was made.
8. To maximize both spouses use of the generation skipping exemption in an
optimal marital deduction plan, what type of marital bequest must be used? -
ANSWER Qualified terminable interest property trust
,9. A grandparent establishes an irrevocable trust with income to her child for
his life and then to his children. She funds the trust with assets valued at
$4,000,000 and allocates $1,000,000 of her lifetime GST exemption. The
inclusion ratio for this trust is - ANSWER 75%
10.Which is the best definition of the "applicable rate" for GSTT? - ANSWER
Inclusion Ratio X Maximum Estate Tax Rate
11.What is the maximum amount that an individual can shelter from federal
estate tax (other than the marital or charitable deductions)? - ANSWER
$10,000,000 as indexed for inflation.
12.The purpose of the valuation discount in an FLP or LLC is for: - ANSWER
Federal gift and estate tax purposes.
13.In order to establish the Deceased Spouse's Unused Exemption Amount
(DSUEA) for the surviving spouse, which of the following must be true at
the first spouse's death? - ANSWER A timely filed estate tax return was
filed.
14.Pecuniary Formulas - ANSWER formula Defines
15.What is the primary fiduciary duty of a trustee under the Uniform Trust
Code (UTC)?
To maximize trust income
To act in the best interests of the beneficiaries
To invest solely in conservative assets
, To distribute all trust assets annually - ANSWER To act in the best interests of
the beneficiaries
16.Which IRS form is used to report income from a revocable living trust?
Form 1041
Form 1040
Form 706
Form 709 - ANSWER Form 1040
17.Under the Prudent Investor Rule, what must a trustee consider when making
investment decisions?
Only the income needs of the current beneficiary
Risk, return, and the needs of all beneficiaries
The grantor's personal investment preferences
Maximizing short-term gains - ANSWER Risk, return, and the needs of all
beneficiaries
18.What is the purpose of a Crummey power in a trust?
To allow discretionary distributions
To qualify contributions for the gift tax exclusion
To revoke the trust
To appoint a successor trustee - ANSWER To qualify contributions for the gift
tax exclusion
19.What is the federal estate tax exemption amount for 2026?
$5.45 million
$13.61 million
