Cannon CTFA Prep
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1. Jean and John Simmons are married and own their B. $175,000 - or one-half
own home as tenants by entirety. When John dies the value
the home is valued at $350,000. How much will be
counted in his gross taxable estate?
A. None, as it passes directly to his spouse, Jean.
B. $175,000 - or one-half of the value
C. $225,000 - or the full amount minus the $125,000
one-time exclusion for capital gains on a person resi-
dence.
D. $350,000 - the full amount is includable.
2. Once a will is properly drafted it is valid: B. for the state for which it
was prepared.
A. in all states.
B. for the state for which it was prepared.
C. in all states for a period of 5 years.
D. for the state for which it was prepared for a period
of 5 years.
3. In managing personal trust assets, a trustee should C. reasonable income and
seek which of the following? preservation of capital in-
cluding purchasing power
A. maximum income
B. preservation of capital
C. reasonable income and preservation of capital, in-
cluding purchasing power
D. maximum income and reasonable preservation of
capital
4. A decedent's estate being settled by your bank con- C. Explain that he may not
tains an antique automobile. One of the directors of purchase the car from the
your bank indicates that he would like to buy it. You estate.
, Cannon CTFA Prep
Study online at https://quizlet.com/_6sa4j3
should do which of the following?
A. Sell it to him at a bargain price and befriend him.
B. Have a qualified appraisal done and offer it to him
at that value.
C. Explain that he may not purchase the car from the
estate.
D. Arrange for a public auction at which he may buy it
if he is the highest bidder.
5. If you hold a rental property in an irrevocable trust, A. Never
when is it all right to rent to an employee of your trust
department?
A. Never
B. When the employee pays fair rent.
C. When the employee has been with you at least 5
years and can be trusted.
D. When the employee has no connection with the
account or beneficiaries.
6. Which of the following generally may NOT hold real B. Uniform Gifts to Minors
property? Account
A. Revocable Living Trusts trusteed by a corporate
fiduciary.
B. Uniform Gift to Minors Account
C. 2503(c) Minors Trust
D. Uniform Transfer to Minors Account
7. H's will provides that upon his death, $1 million will be C. Yes, the entire $1 million
held in a trust for the benefit of his wife, W. This trust will qualify for the estate
provides that W will receive all of the trust income and tax marital deduction.
, Cannon CTFA Prep
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will receive distributions of principal int he form of an
annuity for her lifetime. At W's death, the remaining
trust assets will be distributed to a designated charity.
H's executor intends to make a "QTIP" election for this
trust. Will the legacy to the trust, or any part thereof,
be deductible by H's estate, or if so, why?
A. Yes, the entire $1 million will qualify for the estate
tax marital and charitable deductions.
B. No, none of the $1 million will qualify for the estate
tax marital and charitable deductions.
C. Yes, the entire $1 million will qualify for the estate
tax marital deduction.
D. Yes, the value of W's income interest will qualify for
the marital deduction; the remainder will not qualify
for any deduction.
8. H makes a gift of property to a trust for the benefit of A. H's power to make dis-
his children. If H serves as a trustee, what limitations, tributions should be limit-
if any, should be placed on his distribution powers ed by ascertainable stan-
in order to avoid adverse gift and estate tax conse- dards such as health, sup-
quences? port and education.
A. H's power to make distributions should be limited
by ascertainable standards such as health, support
and education.
B. No limitations are required.
C. H should be prohibited from participating in mak-
ing any distributions.
D. H's power to make distributions should be limited
to those required to discharge his legal obligation to
support his children.
, Cannon CTFA Prep
Study online at https://quizlet.com/_6sa4j3
9. Which of the following statements about a QTIP trust C. The grantor-spouse's
is false? GST exemption cannot be
allocated to trust property.
A. An executor has the ability to elect, partially elect,
or not elect to qualify for QTIP treatment any part of
the marital trust property.
B. The spouse-beneficiary need not have the ability to
control the ultimate disposition of the trust property.
C. The grantor-spouse's GST exemption cannot be al-
located to trust property.
D. To have a valid QTIP interest, the spouse must be
entitled to all of the net income from the trust proper-
ty.
10. Which of the following is an advantage of a QTIP trust B. The decent spouse can
over the life estate/general power of appointment control the ultimate dispo-
trust? sition of the trust property.
A. The surviving spouse will not be entitled to all of the
income from the trust.
B. The decedent spouse can control the ultimate dis-
position of the trust property.
C. The decedent's estate will receive a marital deduc-
tion for the property transferred to the trust.
D. The surviving spouse can withdraw trust property
during her life to make gifts to descendants.
11. Payments made directly to an educational institution D. not taxable gifts and
for tuition on behalf of grandchildren are: are not subject to genera-
tion-skipping tax.
A. subject to gift tax to the extent they exceed the
annual exclusion.
Study online at https://quizlet.com/_6sa4j3
1. Jean and John Simmons are married and own their B. $175,000 - or one-half
own home as tenants by entirety. When John dies the value
the home is valued at $350,000. How much will be
counted in his gross taxable estate?
A. None, as it passes directly to his spouse, Jean.
B. $175,000 - or one-half of the value
C. $225,000 - or the full amount minus the $125,000
one-time exclusion for capital gains on a person resi-
dence.
D. $350,000 - the full amount is includable.
2. Once a will is properly drafted it is valid: B. for the state for which it
was prepared.
A. in all states.
B. for the state for which it was prepared.
C. in all states for a period of 5 years.
D. for the state for which it was prepared for a period
of 5 years.
3. In managing personal trust assets, a trustee should C. reasonable income and
seek which of the following? preservation of capital in-
cluding purchasing power
A. maximum income
B. preservation of capital
C. reasonable income and preservation of capital, in-
cluding purchasing power
D. maximum income and reasonable preservation of
capital
4. A decedent's estate being settled by your bank con- C. Explain that he may not
tains an antique automobile. One of the directors of purchase the car from the
your bank indicates that he would like to buy it. You estate.
, Cannon CTFA Prep
Study online at https://quizlet.com/_6sa4j3
should do which of the following?
A. Sell it to him at a bargain price and befriend him.
B. Have a qualified appraisal done and offer it to him
at that value.
C. Explain that he may not purchase the car from the
estate.
D. Arrange for a public auction at which he may buy it
if he is the highest bidder.
5. If you hold a rental property in an irrevocable trust, A. Never
when is it all right to rent to an employee of your trust
department?
A. Never
B. When the employee pays fair rent.
C. When the employee has been with you at least 5
years and can be trusted.
D. When the employee has no connection with the
account or beneficiaries.
6. Which of the following generally may NOT hold real B. Uniform Gifts to Minors
property? Account
A. Revocable Living Trusts trusteed by a corporate
fiduciary.
B. Uniform Gift to Minors Account
C. 2503(c) Minors Trust
D. Uniform Transfer to Minors Account
7. H's will provides that upon his death, $1 million will be C. Yes, the entire $1 million
held in a trust for the benefit of his wife, W. This trust will qualify for the estate
provides that W will receive all of the trust income and tax marital deduction.
, Cannon CTFA Prep
Study online at https://quizlet.com/_6sa4j3
will receive distributions of principal int he form of an
annuity for her lifetime. At W's death, the remaining
trust assets will be distributed to a designated charity.
H's executor intends to make a "QTIP" election for this
trust. Will the legacy to the trust, or any part thereof,
be deductible by H's estate, or if so, why?
A. Yes, the entire $1 million will qualify for the estate
tax marital and charitable deductions.
B. No, none of the $1 million will qualify for the estate
tax marital and charitable deductions.
C. Yes, the entire $1 million will qualify for the estate
tax marital deduction.
D. Yes, the value of W's income interest will qualify for
the marital deduction; the remainder will not qualify
for any deduction.
8. H makes a gift of property to a trust for the benefit of A. H's power to make dis-
his children. If H serves as a trustee, what limitations, tributions should be limit-
if any, should be placed on his distribution powers ed by ascertainable stan-
in order to avoid adverse gift and estate tax conse- dards such as health, sup-
quences? port and education.
A. H's power to make distributions should be limited
by ascertainable standards such as health, support
and education.
B. No limitations are required.
C. H should be prohibited from participating in mak-
ing any distributions.
D. H's power to make distributions should be limited
to those required to discharge his legal obligation to
support his children.
, Cannon CTFA Prep
Study online at https://quizlet.com/_6sa4j3
9. Which of the following statements about a QTIP trust C. The grantor-spouse's
is false? GST exemption cannot be
allocated to trust property.
A. An executor has the ability to elect, partially elect,
or not elect to qualify for QTIP treatment any part of
the marital trust property.
B. The spouse-beneficiary need not have the ability to
control the ultimate disposition of the trust property.
C. The grantor-spouse's GST exemption cannot be al-
located to trust property.
D. To have a valid QTIP interest, the spouse must be
entitled to all of the net income from the trust proper-
ty.
10. Which of the following is an advantage of a QTIP trust B. The decent spouse can
over the life estate/general power of appointment control the ultimate dispo-
trust? sition of the trust property.
A. The surviving spouse will not be entitled to all of the
income from the trust.
B. The decedent spouse can control the ultimate dis-
position of the trust property.
C. The decedent's estate will receive a marital deduc-
tion for the property transferred to the trust.
D. The surviving spouse can withdraw trust property
during her life to make gifts to descendants.
11. Payments made directly to an educational institution D. not taxable gifts and
for tuition on behalf of grandchildren are: are not subject to genera-
tion-skipping tax.
A. subject to gift tax to the extent they exceed the
annual exclusion.
