QUESTION 1

A decedents GST exemption can be allocated to a bypass trust when the trust has skip person beneficiaries.

True

False

10 points

QUESTION 2

A surviving spouse can use the decedent spouses unused GST exemption to make future gifts or bequests to skip persons.

True

False

10 points

QUESTION 3

Mildred has a stock portfolio worth $1 million and an estate worth $4 million. She intends to transfer the stock to her four grandchildren this year and has not made any previous taxable gifts. Which statement is correct?

If Mildred gifts each grandchild $20,000 worth of securities this year, she can reduce the taxable portion of the gifts by gift tax annual exclusions, but not by GST annual exclusions.

If Mildred establishes a trust for her grandchildren funded with $100,000 of securities she cannot use annual exclusions to reduce the GST taxable gifts.

If Mildred bequeaths the stocks to her grandchildren in her will in equal shares, her estate will pay an estate tax and a GST tax on the transfer.

If Mildred transfers her portfolio to a trust for her grandchildren and allocates $1 million of her GST exemption., any distributions made to the grandchildren are subject to a GST tax.

10 points

QUESTION 4

All of the statements regarding a dynasty trust are correct, except:

Distributions of trust assets are postponed as long as possible.to avoid payment of estate taxes.

A transferor can allocate a portion of a GST exemption to each premium payment made to an ILIT to offset GST tax when there are skip-person beneficiaries.

A GST exemption applied to annual premiums in an ILIT protects the trust corpus from GST tax.

Dynasty trusts can be established in all states.

10 points

QUESTION 5

A power of appointment is very useful because a holder can make informed decisions regarding the future disposition of a donors property.

True

False

10 points

QUESTION 6

. Franklin established an irrevocable trust with $60,000. He named his daughter Lucinda the beneficiary of the trust and gave her a noncumulative right to withdraw the greater of $5,000 or 5% of trust corpus each year. What is the gift tax consequence if Lucinda does not withdraw money from the trust this year?

An annual exclusion is not available to Franklin to offset this taxable gift

Franklin has an annual exclusion of $13,000 available to offset this taxable gift.

Lucinda will not make a taxable gift if she lets her withdrawal right lapse

Lucinda must use her unified credit to offset the gift tax on the lapsed portion of the gift.

10 points

QUESTION 7

Jude and Kyra have a withdrawal right in trust that allows them to withdraw one-half of the assets transferred to the trust each year within a 30 day period. This year, their mother transferred $80,000 to the trust and neither child withdrew any money. What is the gift tax consequence of this lapse?

Jude and Kyra have made taxable gifts to each other of $27,000.

Jude and Kyra have made taxable gifts to each other of $35,000.

Jude.and Kyra have made taxable gifts to each other of $40,000.

Jude and Kyra have not made taxable gifts because they have been given Crummey powers.

10 points

QUESTION 8

Which of the following statements regarding a Crummey lapse is not correct?

A Crummey lapse is a release of a general power of appointment.

A Crummey lapse is a future-interest gift to the other beneficiaries in trust.

The amount of a lapse that exceeds the greater of $5,000 or 5% of trust corpus is a taxable gift.

A Crummey beneficiarys unified credit cannot be used to offset a tax attributed to a Crummey lapse.

10 points

QUESTION 9

Which of the following statements regarding a Crummey power is not correct?

A Crummey power permits a beneficiary to demand payment of existing trust corpus or income.

A Crummey power is a right to withdraw money that has been recently transferred to a trust.

A trustee must notify minors in writing that they have an immediate right to withdraw funds within a certain time frame.

A Crummey power converts a future interest in trust to a present interest so that a grantor can take annual exclusions against taxable transfers to a trust.

10 points

QUESTION 10

. Nora died in 2012 and bequeathed $3 million to her great niece Margo. Nora had $2 million of GST exemption remaining at her death. What was the amount of the GST tax attributed to this bequest?

$0

350,000

666,667

1,000,000

10 points

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