American College HS330 Exam Practice Test Instant Access

Question 1

A woman is the income beneficiary of an irrevocable trust. All the following powers held by her will cause all the assets in the trust to be includible in her gross estate for federal estate tax purposes EXCEPT:

Athe testamentary power to direct the trustee to use trust assets to pay her estate taxes

Bthe power to direct the trustee to distribute trust corpus to her

Cthe testamentary special or limited power to direct the trustee to distribute trust assets to her children

Dthe testamentary power to direct the trustee to pay trust assets to her estate

Answer : C

Question 2

All the following statements concerning qualification of property for the federal estate tax marital deduction are correct EXCEPT:

AThe property interest passing to the surviving spouse must be includible in the decedent's gross estate.

BThe property interest must be includible in the surviving spouse's estate at death unless consumed or given away.

CThe property received by a surviving spouse after a successful will contest fails to qualify.

DThe surviving spouse must receive the property as the beneficial owner rather than as a trustee for someone else.

Answer : C

Question 3

All the following statements concerning ownership of property in the form of a joint tenancy with right of survivorship are correct EXCEPT:

AAll joint tenants must have equal interests in the property.

BJoint tenants need not be related either by blood or marriage.

CEither real property or personal property may be the subject of this type of ownership.

DUpon the death of a joint tenant, his interest in the property passes to his estate or heirs.

Answer : D

Question 4

Alan, a widower, is a retired executive with substantial assets. He wishes to provide for the financial security of his two grandchildren since their father, Alan's son, has always managed money poorly. This year Alan would like each grandchild to receive a substantial gift. Which of the following statements concerning the generation-skipping transfer tax (GSTT) on these gifts is (are) correct?

1. Federal estate or gift tax will not be imposed if the gift is otherwise subject to the GSTT.

2. Assuming no prior gifts, Alan can gift a cumulative total of (not including the annual exclusion) $1.5 million to his grandchildren without the imposition of the GSTT.

Al only

BII only

CBoth l and lI

DNeither I nor II

Answer : B

Question 5

Which of the following statements concerning federal gift, estate, and income taxes is (are) correct?

l. A taxable gift of income-producing property to a donee automatically transfers income tax liability on the gifted property to the donee.

II. Once part or all of a taxable gift is made to a trust, the property can no longer be includible in the donor gross estate.

Al only

BII only

CBoth l and ll

DNeither l nor ll

Answer : D

Question 6

Income earned but unpaid at the time of a decedent's death is deemed to be income in respect of a decedent (IRD). Which of the following statements concerning IRD is (are) correct?

l. The income is taxable to the person or entity receiving it.

II. The present value of the income is includible in the decedents gross estate.

Al only

BII only

CBoth l and lI

DNeither I nor II

Answer : C

Question 7

A man is planning to establish and fund an irrevocable trust for the benefit of his two sons, ages 19 and 22, and plans to give the trustee power to sprinkle trust income. From the standpoint or providing federal income, gift, and estate tax savings, which or the following would be a suitable trustee?

l. The grantor of the trust

II. The grantor's 22-year-old son

Al only

BII only

CBoth l and ll

DNeither I nor II

Answer : D

American College HS330 Fundamentals of Estate Planning test Exam Practice Test