American College American College Certifications HS-330 Questions & Answers

• Question 361:

  All the following trust provisions avoid causing the inclusion of an irrevocable life insurance trust in an insured's gross estate EXCEPT

  A. a trust beneficiary's power to withdraw contributions to the trust

  B. a trustee's power to loan assets to the estate at the trustee's discretion

  C. a trustee's power to pay estate expenses

  D. a trustee's power to purchase assets from the estate at the trustee's discretion

  Correct Answer: C

• Question 362:

  All the following are proper actions on the part of a trustee EXCEPT

  A. placing cash from the sale of securities in a non-interest bearing checking account for an extended period of time

  B. investing trust assets in speculative securities in accordance with the provisions of the trust instrument

  C. purchasing securities in good faith from a third party just prior to a sharp decrease in their value

  D. purchasing assets for personal use from the trust at their fair market value with the approval of all beneficiaries

  Correct Answer: A

• Question 363:

  The failure of an individual to have a will can result in all the following EXCEPT:

  A. A surviving spouse receives only his or her elective share.

  B. Unnecessary death taxes may be imposed.

  C. Testamentary gifts to charity cannot be made.

  D. The decedent's state of domicile might receive the property left by the decedent.

  Correct Answer: A

• Question 364:

  A father is considering giving his daughter a gift. For tax planning purposes, the father should give his daughter which of the following?

  A. Raw land that cost him $10,000, its present fair market value, but which has a substantial potential for appreciation

  B. Real estate that cost him $40,000 and is now worth $120,000, subject to a $110,000 mortgage

  C. Stock that cost him $10,000 and which now has a fair market value of $20,000

  D. A bond that cost him $15,000 and is now worth $10,000

  Correct Answer: A

• Question 365:

  A father deeded a house as a gift to his daughter in 1990 but retained the right to live in it until his death. He died this year while still living in the house. The following are relevant facts:

  The father bought the property in 1980 for $130,000. The fair market value of the property when the gift was made in 1990 was $150,000. The father filed a timely gift tax return but paid no gift tax because of the applicable credit amount. The fair market value of the property at the father's death was $220,000. The daughter sold the property 3 months after her father's death for $220,000. She had a gain of?

  A. $140,000

  B. $220,000

  C. $120,000

  D. 0

  Correct Answer: D

• Question 366:

  All the following statements concerning a power of appointment are correct EXCEPT:

  A. The donee of a power of appointment might be restricted with respect to the time the power can be exercised.

  B. The appointee of a power of appointment is the party who exercises the power.

  C. Failure to exercise a power of appointment is known as a lapse of the power.

  D. The possible recipients of property after the exercise of a power of appointment depend on the terms of the power.

  Correct Answer: B

• Question 367:

  Which of the following statements concerning pooled-income funds is (are) correct?

  -A pooled income fund is similar to a mutual fund maintained by a qualified charity.

  -

  It is an irrevocable arrangement in which the remainder interest passes to charity.

  A.

  Neither 1 nor 2

  B.

  Both 1 and 2

  C.

  1 only

  D.

  2 only

  Correct Answer: B

• Question 368:

  All the following statements concerning an estate for a term of years are correct EXCEPT:

  A. An interest may extend beyond the lifetime of the grantor.

  B. The tenant may transfer the property at the end of the term of his interest.

  C. It is an interest in property established for a specific duration.

  D. The tenant has the right to possess the property during the term of his interest.

  Correct Answer: B

• Question 369:

  In addition to substantial probate assets, a married man with two minor children has a $1,000,000 ordinary life insurance policy payable to his estate. He wants to make certain that if he predeceases his wife the death proceeds will be available to provide income for his wife during her lifetime and to provide for their two children after her death. He would like the policy and/or its death proceeds to be as free of federal gift and estate taxes as possible with respect to both him and his wife. Which of the following courses of action would best accomplish these objectives?

  A. Designate his wife as beneficiary and she will establish a testamentary trust in her will to receive the proceeds at her subsequent death

  B. Assign the policy to an irrevocable inter vivos trust with five and five powers and designate the trustee to receive the death proceeds

  C. Establish a revocable inter vivos trust and designate the trustee to receive death proceeds

  D. Assign the policy to his wife who will establish a revocable inter vivos trust to receive the death proceeds

  Correct Answer: B

• Question 370:

  Which of the following statements concerning a power of appointment is (are) correct?

  -

  A power of appointment can be designed to restrict the donee's right to appoint the property in favor of a specific class of recipients.

  -

  A power of appointment can be designed to restrict the time period during which the donee may exercise the power.

  A.

  Neither 1 nor 2

  B.

  2 only

  C.

  Both 1 and 2

  D.

  1 only

  Correct Answer: C