Question 1
0 out of 1 points

Which of the following is different from a CRAT and CRUT?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correctc.
Additional contributions of property may be made into the trust

Question 2
0 out of 1 points

Jen meets with Robert, a CFP ® Professional, to discuss her estate planning objectives. Jen wishes to give $500,000 to charity either during her lifetime or at her death. Which of the following charitable planning techniques should not be recommended to Jen?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
Jen should sell all of the assets in her investment management account while she is living and gift the cash to the charity.

Response Feedback:
Jen should not sell all of the assets in her investment management account because they are subject to a capital gains tax that she would not need to pay if she transferred assets in her account to a charity.


Question 3
0 out of 1 points

Ralph would like to make a charitable gift. He would like to receive the income from the trust during his lifetime and the remainder to pass to a charity. What charitable vehicle would you recommend?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correctb.
CRUT

 Correctc.
CRAT

Question 4
0 out of 1 points

Sam is an attorney. His rate is $150 per hour. Sam is helping his church review contracts and other legal documents. He spends about 20 hours over the course of the year helping the church with legal issues. How much can Sam deduct as a charitable contribution?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Zero

Question 5
0 out of 1 points

Jordan is an attorney and has won a large case. She will have income of $500,000 this year. Jordan wishes to make a gift of $50,000 to the American Red Cross. Which of the following assets should she gift during her lifetime?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Google stock that she purchased 2 years ago for $10,000 now worth $50,000.

Response Feedback:
Google stock that she purchased 2 years ago for $10,000 now worth $50,000. This will remove the stock’s future appreciation from her gross estate.


Question 6
0 out of 1 points

Which of the following assets would not be recommended as a gift to charity?

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

Question 7
0 out of 1 points

Which of the following statements is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
A fixed annuity will be paid to the beneficiary in a CRUT.

Question 8
0 out of 1 points

Which of the following is not correct in regards to charitable income tax deductions?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Ordinary income assets gifted to private charities can be deducted up to 50% of AGI limited to basis.

Response Feedback:
Ordinary income assets gifted to private charities can be deducted up to 50% of AGI limited to basis. The correct answer is that ordinary income assets gifted to private charities can be deducted up to 30% of AGI limited to basis.


Question 9
0 out of 1 points

Which of the following statements is incorrect?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
A tax in a direct skip is tax inclusive.

Question 10
0 out of 1 points

Karen has an estate worth $11 million. In order to remove future appreciation of assets out of her estate, she completed the gifts below. Over which of the following gifts should Karen apply her GST exemption?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correctb.
$1 million of stock to an irrevocable trust she created for the benefit of her grandchildren.

Response Feedback:
Options A and C are not indicative of generation-skipping transfers and D is below the GSTT annual exclusion amount.

Question 11
0 out of 1 points

Which of the following statements is correct in regards to GST tax?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Gifts made to non-related individuals who are greater than 37 ½ years younger than the transferor are subject to a GST tax.

Question 12
0 out of 1 points

Natalie established a trust for her son, Dan, and her grandson, Ryan, with $5 million. Dan will receive the income for life and Ryan will receive the corpus at his father's death. Natalie did not have any remaining GST exemption available to allocate to this trust. Which of the following statements is correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
Natalie could not take an annual exclusion to reduce the gift tax and the GST tax for the gift to Ryan when the trust was established.

Response Feedback:
Natalie could not take an annual exclusion to reduce the gift tax and the GST tax for the gift to Ryan when the trust was established. Ryan has a future interest in this indirect skip trust. Therefore, Natalie cannot reduce the gift tax or the GST tax by annual exclusions.


Question 13
0 out of 1 points

Judith has a portfolio comprised of stocks 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 gifts. Which statement is correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
If Judith established a trust for her grandchildren funded with $100,000 of stock, she cannot use annual exclusions to reduce the GST taxable gifts.

Response Feedback:
If Judith established a trust for her grandchildren funded with $100,000 of stock, she cannot use annual exclusions to reduce the GST taxable gifts. When a trust has multiple skip-beneficiaries, GST annual exclusions are not available to the transferor to reduce the amount of the taxable gift transferred to the trust.


Question 14
0 out of 1 points

CFP Board released December 1996 and updated.

Which statement(s) is/are correct regarding generation skipping transfer tax (GSTT)?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
GSTT is a flat tax.

 Correctb.
Each person is permitted a $11,180,000 exemption against generation skipping transfers.

 Correctd.
The GSTT was designed to prevent taxpayers from avoiding estate taxes as wealth transfers generation to generation.

Question 15
0 out of 1 points

(CFP question released November 1994) Jack and Jill Jones, age 65, have decided that, in order to best pay their $3,000,000 federal estate tax bill, they will purchase a second-to-die life insurance policy. In order to keep the proceeds out of their estate, they were advised to create a life insurance trust. Jack and Jill applied for the insurance and the policy was issued to them. An irrevocable trust was drafted. The policy was transferred into the irrevocable trust, and 90 days later both Jack and Jill were killed in a place crash. The Internal Revenue Service wants to include the insurance in the estate for tax purposes. Which statement(s) is/are correct?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correctc.
The insurance will be included in the estate because the insureds transferred the policy within three years of death.

Question 16
0 out of 1 points

(CFP Released Question December 1996.) A correct statement regarding the use of a Grantor Retained Annuity Trust (GRAT) as an estate-planning technique is that such a strategy:

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
saves estate taxes only if the grantor lives beyond the trust term.

Question 17
0 out of 1 points

A qualified terminable interest that qualifies for a marital deduction is one that satisfies all of the following except:

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
The surviving spouse must be entitled to all income and principal for life.

Response Feedback:
The surviving spouse must be entitled to all income  for life- not principal.



Question 18
0 out of 1 points

The Grantor, age 70, is interested in removing an income-producing asset with significant appreciation potential from her estate. However, in addition to removing the asset from her estate for estate tax purposes, she wants to retain payments from this asset for a specific period of time and is concerned with inflation eroding her payments. Given these two objectives, which of the following estate planning strategies would best allow her to accomplish both objectives?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
10 year GRUT

Response Feedback:
This is an example of a client who wants to make a gift of property for estate tax purposes, yet wants to retain payments from the asset. A QPRT is an inappropriate vehicle since a residence is not being transferred. The ILIT is designed to own life insurance, and therefore is an inappropriate strategy to satisfy her two objectives. Between the GRAT and the GRUT, the GRUT is more appropriate given the potential for asset appreciation. As the asset appreciates in value, the Grantor’s payment stream will increase as well. The 10-year period was selected since it falls within her reasonable life expectancy.


Question 19
0 out of 1 points

(CFP Released Question December 1999.) What is an appropriate standard estate planning strategy for married couples to minimize taxes over two deaths?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Bequeath the applicable exclusion amount to a bypass trust to take advantage of the unified credit at the first death.

Question 20
0 out of 1 points

(CFP Released Question December 1996.) A testator-selected survival clause inserted in a will is better than reliance on a state's Uniform Simultaneous Death Act (USDA) because?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
the USDA presumption will not apply if the order of deaths can be determined, even if one person outlived the other by a microsecond.

Question 21
0 out of 1 points

Which of the following statements is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
The grantor must file a gift tax return when funding a revocable trust.

Response Feedback:
The grantor must file a gift tax return when funding a revocable trust. Only applies to funding irrevocable trusts.


Question 22
0 out of 1 points

Which of the following statements is not correct in regards to the income taxation of estates?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
An executor has the duty to only file one income tax return for a decedent- the decedent s last income tax return.

Response Feedback:
An executor has the duty to only file one income tax returns for a decedent- the decedent’s last income tax return. The executor must also file the estate’s income tax return.


Question 23
0 out of 1 points

Joan is the sole beneficiary of a trust. The trust earned $55,000 of income for the year. The trustees decided to accumulate the income as is allowed under their discretion. During the same year, Joan received a distribution of principal of $60,000 to purchase a new car. Which of the following statements is correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Joan will be taxed on $55,000.

Response Feedback:
Joan will be taxed on $55,000. Joan will have been deemed to receive the income if the distribution takes place.


Question 24
0 out of 1 points

Which of the following statements are correct?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
The personal exemption is $300 for a simple trust

 Correctb.
A trust is not allowed a standard deduction.

 Correctc.
The personal exemption is $100 for a complex trust

 Correctd.
The tax brackets for trusts and estate are more progressive than for individuals

Question 25
0 out of 1 points

(CFP Board Released Question December 2004) Ronald has established a trust that pays out $1,000 each month to his mother, Martha. The trust department of Actual Bank acts as trustee. Ronald retains the right to revoke the trust and is the sole heir of his mother s estate and the remainder beneficiary of the trust. Which of the following must pay the income tax on the $15,000 earned by the trust?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
Ronald pays on $15,000.

Question 26
0 out of 1 points

Which of the following statements is not correct in regards to items of IRD?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The decedent's estate receives a step-up in basis for IRD assets.

Question 27
0 out of 1 points

Mario is the sole beneficiary of a trust. The trust earns $20,000 in income. Mario receives a distribution of $30,000 for the year. Which of the following is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Mario would be taxed on $30,000.

Response Feedback:
Mario would be taxed on $20,000 and $10,000 would be a tax-free distribution of corpus.


Question 28
0 out of 1 points

Which of the following is not a tax consequence associated with a defective grantor trust?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
The income tax is shared by the trust and the trust beneficiaries.

Question 29
0 out of 1 points

CFP Board Released Question 1999 Sam, age 95, transferred $600,000 of common stock to an irrevocable trust. Sam provides that the income from the trust is payable to himself for life, and upon his death, the trust corpus will pass to his sister. The trust prohibits Sam from changing the trust beneficiaries. If Sam dies 1 year from now when the value of the trust assets 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 30
0 out of 1 points

Which of the following are appropriate discounts an individual can take who owns a closely held business?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
Lack of marketability

 Correctb.
Minority Interest

 Correctc.
Key Person Discount

 Correctd.
Blockage Discount

 Correcte.
Lock-in Discounts

Question 31
0 out of 1 points

If each business associate purchased life insurance and/or disability insurance on the other key business associate, what is that planning technique?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Cross purchase agreement

Question 32
0 out of 1 points

SCIN and Private annuities share which of the following similarities?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
Both spread out the payment of the income tax liability on the sale of property.

Question 33
0 out of 1 points

Which of the following is not a method of reducing an individual's estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
Wills

Question 34
0 out of 1 points

What should be considered when deciding which estate planning strategies would be best?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correcta.
Value of the Gross Estate and Probate Estate

 Correctb.
Amount of estate and gift tax liability

 Correctc.
Competency of the client's beneficiaries

 Correctd.
Financial needs of the client during life

 Correcte.
How assets are currently titled

Question 35
0 out of 1 points

All of the following estate planning techniques may reduce the value of a gross estate except:

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
A marital deduction

Response Feedback:
A marital deduction is subtracted from the adjusted gross estate.


Question 36
0 out of 1 points

John and Mary have been together for 15 years but they have no intention of getting married. John was recently diagnosed with a terminal illness. He wants to make sure that Mary has complete control over all aspects of his life if he were to become incapacitated. Which documents are important for John to execute while he is competent?

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

Question 37
0 out of 1 points

An adopted child may be entitled to receive inheritance from all of the following people except?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
The biological parents

Question 38
0 out of 1 points

Which of the following is/are not correct in regards to a will?

Selected Answers:
Incorrect [None Given]
Correct Answers:
Correctb.
A will determines the disposition of checking accounts held in individual name and IRAs with named beneficiaries.

 Correcte.
Funeral and burial instructions should be addressed in a will.

Question 39
0 out of 1 points

CFP Board Released Question December 1996

Which one of the following goals can be accomplished using a "pour over" provision in a will?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
transfer of assets from an estate into a trust created prior to the "pour over" provision

Question 40
0 out of 1 points

Which of the following is not a requirement for a tax-qualified disclaimer?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The refusal must be no later than 180 days after the day of which the transfer creating the interest is made

Question 41
0 out of 1 points

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

Case Study: Dan and Sadie

Dan realized that he has a concentration of ABC stock and would like to use the stock to gift to his children. If Dan thinks the stock is going to grow in the next 5 years, what would be the best gifting strategy?

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

Question 42
0 out of 1 points

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

Case Study: Dan and Sadie

Dan and Sadie are very concerned about paying the estate tax that will be owed on their estate. They do not want the children to feel like they will need to sell the farm in order to pay the estate tax. Which type of trust would help with liquidity in their estate?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
Irrevocable Life Insurance Trust

Question 43
0 out of 1 points

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

Case Study: Dan and Sadie

Sadie would like for a majority of her assets to ultimately pass to the MSPCA. She would like for her children to benefit during their lifetime with a steady flow of income but upon their passing she would like the assets to pass to the MSPCA. What type of trust would be a good solution for Sadie?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
CRAT

Question 44
0 out of 1 points

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

Case Study: Dan and Sadie

Dan and Sadie's youngest child has Down syndrome. They would like to set up a trust for her benefit that won't interfere with her government benefits. Which of the following trusts would best suit their needs?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
Special Needs Trust

Question 45
0 out of 1 points

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

Case Study: Dan and Sadie

Dan sets up an inter vivos revocable trust. Dan is the grantor, beneficiary and trustee. How is the trust income taxed?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correcta.
Dan is taxed on all of the taxable income received by the trust.

Response Feedback:
The trust is a revocable trust, therefore it is taxed under Grantor Trust Rules. A grantor trust is either a simple or a complex trust in which the trust is disregarded as a taxable entity. Therefore, the grantor is taxed on all trust income, regardless of whether the income is actually received.

Question 46
0 out of 1 points

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

Case Study: Emily

What is the calculated percentage for the 50% test?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctc.
58%

Response Feedback:
58%. Emily’s gross estate for purposes of qualifying for IRC § 2032A is calculated as follows: Personal property, orchard real estate and business property equal $1,250,000. The gift to Hayden ($100,000) is added because it was made two years before her death. The value of Emily’s property is adjusted for the mortgage ($150,000) which equals $1,200,000.


The 50% test is calculated as follows:

$600,000 orchard real estate minus the mortgage ($150,000) = $450,000
Add in the closely held business property ($150,000) plus the gift made to Hayden ($100,000) = $700,000.
$700,000 / $1.2 million = 58%

Question 47
0 out of 1 points

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

Case Study: Emily

What is the calculated percentage for the 25% test?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
46%

Response Feedback:
46%. The 25% test is calculated as follows:


Orchard real estate minus mortgage = $450,000
Add gift to Hayden = $550,000
$550,000 / $1.2 million = 46%

Question 48
0 out of 1 points

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

Case Study: Emily

Does Emily's estate qualify for special use valuation?

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

Response Feedback:
Yes. Emily’s estate qualifies for special use valuation because both the 50% test and the 25% test are met, and her estate met all four initial qualifications.


Question 49
0 out of 1 points

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

Case Study: Emily

If Emily had gifted the assets to Hayden 7 years prior to her death, what is the calculated percentage for the 50% test?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
54.40%

Response Feedback:
54.4% Emily’s gross estate for purposes of qualifying for IRC § 2032A is calculated as follows: Personal property, orchard real estate and business property equal $1,250,000. The value of Emily’s property is adjusted for the mortgage ($150,000) which equals $1,100,000.


The 50% test is calculated as follows:

$600,000 orchard real estate minus the mortgage ($150,000) = $450,000
Add in the closely held business property ($150,000) = $600,000.
$600,000 / $1.1 million = 54.4%

Question 50
0 out of 1 points

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

Case Study: Emily

If Emily had gifted the assets to Hayden 7 years prior to her death, what is the calculated percentage for the 25% test?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
41%

Response Feedback:
41%. The 25% test is calculated as follows:


Orchard real estate minus mortgage = $450,000
$450,000 / $1.1 million = 41%

Question 51
0 out of 1 points

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

Case Study: Susan and Tyra

Which of the following estate planning documents are important for both Susan and Tyra to have in order to ensure that assets will pass as they would desire?

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

Question 52
0 out of 1 points

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

Case Study: Susan and Tyra

Susan owned the couple's primary residence and a cottage near the beach. Susan paid $400,000 for the home and she re-titled it to a JTWROS with Tyra when the FMV of the home was $500,000. The FMV of the home is $600,000 today. Susan retitled the beach cottage last year worth $360,000 to a tenancy in common with Tyra so that they could share equal ownership. The FMV of the cottage is $400,000 today. Susan does not have a will. Which statement does not correctly describe the consequences of these gifts to Tyra ?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
If Susan dies today, Tyra will acquire sole ownership of the cottage.

Response Feedback:
If Susan dies without a will, her one-half interest in the beach cottage will go through intestacy. Tyra will not inherit the property because she is not related to Susan.

Question 53
0 out of 1 points

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

Case Study: Susan and Tyra

If Susan wanted Tyra to be Lilly's guardian, which document would decide guardianship over Lilly?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctb.
The will would need to name Tyra as the guardian.

Question 54
0 out of 1 points

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

Case Study: Susan and Tyra

If Susan wanted to ensure that all of her assets would pass to Tyra and Lilly, and she did not want her family to know how her estate would be distributed, what type of estate planning technique would you recommend?

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

Question 55
0 out of 1 points

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

Case Study: Susan and Tyra

Susan set up a payable on death savings account with Tyra as the beneficiary. Which of the following is not correct?

Selected Answer:
Incorrect [None Given]
Correct Answer:
Correctd.
The payable on death account will pass through probate.