Question 1
0 out of 1 points

Which of the following statements correctly describes federal transfer taxes?

Select all that apply

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
The federal gift and estate tax are separate transfer taxes that are unified and interrelated under a federal transfer tax system.

 Correctb.
It is mandatory that the unified credit be used to offset the tax on all taxable gifts, whether taxable gifts are made to individuals or taxable transfers are made to trusts.

 Correctc.
Lifetime gifts and testamentary transfers are subject to the same gift and estate tax rate schedule.

 Correctd.
Each taxpayer has a unified credit that is available to offset gift and/or estate taxes up to the exemption equivalent amount.

Response Feedback:
All of the above statements are correct.

Question 2
0 out of 1 points

Which phase in the lifetime planning cycle do clients look at the assets they have and determine how the assets they have accumulated will provide for themselves and/or their spouses during their lifetimes?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
Wealth Preservation

Question 3
0 out of 1 points

Which of the following is not a reason to have an estate plan?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
To allow your family to decide how your assets will be divided upon one s death

Question 4
0 out of 1 points

Which of the following is correct about community property?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
At the death of the first spouse, all assets held as community property receives a full step-up in cost basis.

Question 5
0 out of 1 points

Ron and his neighbor, Terry, own a lot together that is adjacent to their properties. The property is held as tenancy in common. Which of the following statements is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
All the property is included in the probate estate of the first co-owner to die

Question 6
0 out of 1 points

A tenancy by the entirety may be terminated in which of the following ways?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
death, whereby the survivor takes the entire estate

 Correctb.
mutual agreement

 Correctc.
divorce, which converts the estate into a tenancy in common or a joint tenancy

Question 7
0 out of 1 points

All of the following are advantages of the probate process except:

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Privacy of decedent s will

Question 8
0 out of 1 points

Which of the following techniques can be used to avoid the ancillary probate of a home owned in a state other than the state of residence?

Selected Answer:
Incorrect [None Given]
Correct Answer:
CorrectC.
Transfer ownership of the home to a revocable trust

Question 9
0 out of 1 points

Which of the following does not pass through the probate process?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Life estate

Response Feedback:
Life estates, either created by an owner in property for the benefit of the owner or gifted to a beneficiary in trust, do not go through the probate process.

Question 10
0 out of 1 points

A pre-marital agreement should not be considered by individuals contemplating marriage in which one of the following situations?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
when one or both parties are unwilling to make a full disclosure of all their income and assets to the other party

Question 11
0 out of 1 points

Mr. Pierce is 93 years old and incapacitated. Mrs. Pierce is 88. She wants some kind of plan in place if she becomes incapacitated or dies, but she does not want to lose control of their assets until that time. What would you suggest?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
Revocable Trust

Question 12
0 out of 1 points

A trust established and funded while the grantor is living is known as:

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
Either A or B

Question 13
0 out of 1 points

If a client's primary goal in making lifetime gifts to his children is to lower his estate taxes, he should make gifts of property that

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
are expected to appreciate significantly in the future.

Question 14
0 out of 1 points

Larry decided that he would start to gift assets to his family members to reduce the amount of his overall estate. Below is a list of gifts that Larry made in 2018. How much of his lifetime exclusion did he use?

$14,000 to his niece Nicole
$54,000 to Boston University for his nephew’s tuition
$100,000 for a down payment for his daughter
$85,000 to Mass General Hospital for his mother’s medical expenses
$96,000 to his daughter, Grace, to reimburse her for medical expenses
Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
$166,000

Response Feedback:
$166,000 which is made up of:

$100,000 -$15,000 = $85,000
$96,000 - $15,000 =$81,000
The gift to Nicole is less than the annual exclusion amount, the $54,000 was paid directly to the university as well as the $85,000 to the hospital; therefore, these gifts did not reduce Larry’s lifetime exemption amount.

Question 15
0 out of 1 points

What techniques represent some tax-oriented advantages of gifting?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
All of the above

Question 16
0 out of 1 points

Janine made the following transfers this year. Which transfer is an incomplete gift?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
$75,000 that Janine transferred to her revocable trust

Question 17
0 out of 1 points

What is the importance of a Crummey Power?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
Both B and C

Question 18
0 out of 1 points

Which of the following gifts would constitute a taxable gift?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
$25,000 to the donor's adult child

 Correctc.
$35,000 paid to a friend for medical expenses

Response Feedback:
$25,000 to the donor's adult child and $35,000 paid to a friend for medical expenses.  Had the individual paid the medical expenses directly to the medical provider, it would not have been a taxable gift.

Question 19
0 out of 1 points

Assume a married individual in a common-law state gives their son, Bob, a gift worth $28,000 and their daughter, Anna, a gift of $20,000. The requisite gift splitting election is made for purposes of the gift tax computation. How much is that individual considered to have given?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
$24,000

Question 20
0 out of 1 points

Which of the following statements regarding the alternate valuation date is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
An estate passing to a surviving spouse by a marital deduction qualifies for an alternate valuation date election.

Question 21
0 out of 1 points

Ali was one of several beneficiaries of an irrevocable trust created by his grandmother. Ali was given the right to withdraw the greater of $5,000 or 5% of the trust corpus each year. Ali withdrew $100,000 from the trust the day before he died. The value of the trust was $2 million. What amount subject to the withdrawal was included in Ali s gross estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The $100,000 that Ali had withdrawn from the trust but had not yet spent is included in his gross estate.

Response Feedback:
Ali withdrew 5% of the trust assets ($100,000) the day before he died. Because he withdrew the maximum amount from the trust in the year of death, nothing subject to the 5-and-5 power is included in his gross estate. However, the total value of property he owned is included in his gross estate. Therefore the $100,000 he withdrew from the trust but did not spend is also included.

Question 22
0 out of 1 points

Wally purchased a private annuity two years ago that would pay him $30,000 for life. At his death, the annuity will pay his wife, Deana, $15,000 per year for life. Wally died last week and his executor must determine the value of his gross estate. Deana is age 64 and the § 7520 rate is 6%. What amount of the annuity is included in Wally s gross estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The PV of Deana s future income stream of $152,477

Question 23
0 out of 1 points

Why are adjusted taxable gifts from 1976 added to the taxable estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
To increase the estate tax because the tax rate is progressive

Response Feedback:
Adjusted taxable gifts are added to the taxable estate to increase the estate tax, which is progressive and cumulative, ranging from 18% to 40%.

Question 24
0 out of 1 points

Identify the situation in which an estate tax marital deduction cannot be taken.

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
A husband gave his non-citizen wife $2 million.

Question 25
0 out of 1 points

Wesley established an irrevocable trust six years ago which he funded with dividend-paying securities worth $3 million. His partner, Owen, was the remainder beneficiary of the trust and Wesley was the income beneficiary. Wesley filed IRS Form 709 for the remainder interest gift of $850,000 in the year the gift was made. Wesley died last week when the trust was valued at $3.7 million. Which statement correctly identifies the consequences of this transfer?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
The $3.7 million trust is added to Wesley s gross estate.

Response Feedback:
Wesley created a life estate in the trust therefore the FMV of the trust is included in his gross estate at death. The remainder interest gift he made to Owen is not added to his estate tax return as an adjusted taxable gift. Wesley did not pay a gift tax on the remainder interest gift so it is not subject to the gross-up rule. The full unified credit is restored on his IRS Form 706.

Question 26
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Jesse and Jane

Jane is named as Jesse's executor. Which of the following is not a step that Jane will have to take with respect to settling Jesse's estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Making Jesse's funeral arrangements

Question 27
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Jesse and Jane

What is the value of Jesse's probate estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
$500,000

Question 28
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Jesse and Jane

Will the Maine home be subject to ancillary probate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
CorrectB.
No

Question 29
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Jesse and Jane

What is the value of Jesse's gross estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
$2,105,000

Response Feedback:
Bank account- $5,000
Stock- $500,000
Jesse’s IRA- $750,000
Primary home- $150,000
Mutual fund in trust- $450,000
Jesse’s vacation home- $250,000

Question 30
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Jesse and Jane

If Jane wanted to disclaim any of the assets Jesse left her, which of the following is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
Jane may refuse or reject the benefits be a verbal disclaimer.

Question 31
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Sam

If Sam dies 1 year from now when the value of Irrevocable Trust A is $650,000, how much of the trust will be included in Sam's gross estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
$650,000; because Sam has the right to the trust's income for life

Question 32
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Sam

Linda sends out the Crummey notices each time the annual premium is transferred into the ILIT from Sam. Why does she need to send out the Crummey notice?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
The Crummey notice allows the gift of the premium to be a present interest gift

Question 33
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Sam

Sam wants to gift funds to his grandchildren. He does not want them to access the funds unless they are used for their college education. Which of the following gifting techniques would you not recommend?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcte.
Both B and C

Question 34
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Sam

While reviewing Sam’s estate plan, he tells you that the farm is already structured by form of ownership to pass 100% to Alice at his death. What responses correctly describe his situation?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcte.
Both A and D

Response Feedback:
The way Sam has it currently structured, the farm will not pass to Alice without a will and it will be subject to probate. If he wants Alice to automatically receive his share of the property, and avoid probate, he should change the ownership to joint tenants with right of survivorship. The contribution rule does not apply to a tenancy in common.

Question 35
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Sam

Sam became very ill quickly at the beginning of this year. He was not sure if he had much longer to live. He had not gifted to his children or grandchildren yet this year. He wrote each of them a check for $15,000 for their annual exclusion gift. The checks are mailed but not cashed prior to Sam passing away. Which of the following is true?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The checks have to be cashed in order to qualify for the annual exclusion prior to death

Question 36
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Mr. and Mrs. Sullivan

Mrs. Sullivan dies unexpectedly, leaving her husband and two children as her sole heirs. Which of the following statements is true?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The children will inherit two-thirds of Mrs. Sullivan's interest in the CD and no interest in the farm.

Question 37
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Mr. and Mrs. Sullivan

Two weeks after Mrs. Sullivan's death, Mr. Sullivan dies, and his will provides that, "I hereby give all my real property to my brother James, and I give all my personal property to my children, share and share alike." Which one of the following statements is true?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The children will inherit Mr. Sullivan's CDs and none of his interest in the farm.

Question 38
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Mr. and Mrs. Sullivan

Assume the farm was owned jointly and equally between Mr. Sullivan and Mrs. Sullivan as tenants in common. Upon Mrs. Sullivan s death, who would own the farm?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Each child would own 16.66% and Mr. Sullivan would own 66.67%

Response Feedback:
Since the property is owned tenants in common, Mrs. Sullivan's interest in the farm would pass according to her will. Mr. Sullivan owns 50% of the farm and would add one-third of Mrs. Sullivan's interest to his to own 66.67% of the farm. The two children would each own one-third of Mrs. Sullivan's 50% interest or 16.66% of the farm.

Question 39
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Mr. and Mrs. Sullivan

If Mrs. Sullivan is not a U.S. citizen, can she pass all her assets to Mr. Sullivan, who is a U.S. citizen, through her marital deduction and not have an estate tax?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
Yes

Response Feedback:
Yes. Mrs. Sullivan can pass everything to Mr. Sullivan through her unlimited marital deduction because Mr. Sullivan is a U.S. citizen.

Question 40
0 out of 1 points

Answering the following case study requires reading the information in this link:

Case Study: Mr. and Mrs. Sullivan

What is the value of Mrs. Sullivan probate estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
$250,000