Question 1

Which of the following is true concerning Crummey powers.

1. Allows a gift to qualify for the annual exclusion.
2. Typically found within revocable trusts.
3. Is a provision found within an irrevocable life insurance trust.

Question 1 options:

A - I and II

B - II only

C - I and III

D - III only

Question 2

Which of the following is not true with respect to a net gift?

A - The gross amount of the gift is reduced by the amount of the gift tax which the donee agrees to pay

B - A net gift may be treated as a part sale/part gift for income tax purposes

C - In computing the donee's gift tax liability, the unified credit of the donor cannot be used

D - For estate tax purposes, only the amount of the net gift is treated as an adjusted taxable gift.

Question 3

What is the similarity between an UGMA/UTMA accounts?

A - Both are regulated by federal law

B - Neither allow for annual exclusion transfers

C - Neither are regulated by state law

D - Both are custodial accounts

Question 4

Mark creates a custodial account for his daughter, Patty, under the Uniform Transfers to Minors Act. Under all but which of the following circumstances would the custodial property be included in Mark's estate for estate tax purposes?

A - Mark appoints himself custodian and dies while custodian

B - Mark becomes custodian after his sister, Ellen, ceases to be custodian, and Mark dies while custodian

C - The custodial property can be used to satisfy Mark's obligation to support Patty

D - Mark appoints his wife, Monica, as custodian and Mark dies while Monica is custodian

Question 5

Which statement best describes the difference between the QTIP trust and the power of appointment trust?

A - Both qualify for the marital deduction

B - Only the QTIP trust qualifies for the marital deduction; the power of appointment trust may not

C - The surviving spouse receives all income from the QTIP trust; the surviving spouse may only receive principal distributions from a power of appointment trust

D - The surviving spouse does not direct the ultimate distribution of assets from a QTIP; the surviving spouse does direct the ultimate distribution of assets from a power of appointment trust

Question 6

Under what circumstances is it appropriate to limit the application of the marital deduction?

1. Property has significant appreciation potential.
2. Decedent is angry with spouse.
3. Maximize the utilization of the unified credit.

A - II only

B - II and III

C - I and III

D - I, II and III

Question 7

Under what circumstances would a donor initiate a 2503(b) trust?

1. Utilization of annual exclusion.
2. Income tax shifting from a high tax bracket to a lower tax bracket.
3. Remove appreciating assets from estate.

A - I and II

B - II and III

C - I and III

D - I, II, and III

Question 8

When should the use of a QSST be considered?

A - Whenever a trust is created

B - Whenever a gift of publicly-traded company stock is made into a trust

C - Whenever a gift of S corporation stock is made into a trust

D - Whenever a trust is required to make a distribution to more than 1 beneficiary

Question 9

Which of the following is not an example of a grantor retained interest trust?

A - GRAT

B - QPRT

C - ILIT

D - GRUT

Question 10

For gift tax purposes, upon the creation of a grantor retained interest trust, the interest retained by the grantor must be a qualified interest. A qualified interest reduces the value of the taxable gift made to the remainder beneficiaries of such a trust. All of the following are qualified interests except:

A - Annuity Interest

B - Unitrust Interest

C - QTIP Interest

D - Remainder Interest