American College American College Certifications HS-330 Questions & Answers

• Question 71:

  Which of the following statements concerning charitable guaranteed annuity interests is (are) correct?

  1.

  To qualify for an estate tax charitable deduction, guaranteed annuity interests must be made in trust.

  2.

  These interests refer to the charity right to receive a determinable income amount at least annually for a specific term or life (lives) or one or more noncharitable beneficiaries.

  A. 2 only

  B. Neither 1 nor 2

  C. Both 1 and 2

  D. 1 only

  Correct Answer: A

• Question 72:

  All the following statements concerning irrevocable trusts are correct EXCEPT:

  A. An irrevocable trust is treated as a completed gift for estate, gift, and income tax purposes.

  B. An irrevocable trust is one which the grantor cannot terminate and reclaim the trust property.

  C. Property transferred to an irrevocable trust will not be included in the grantor's probate property.

  D. A transfer of property to an irrevocable trust will be ineffective for the purpose of reducing the grantor's gross estate.

  Correct Answer: D

• Question 73:

  Mr. Allen died early this year survived by his spouse Mrs. Allen. Among the items of family property are:

  1.A $300,000 life insurance policy on Mr. Allen's life with Mrs. Allen designated as beneficiary. Mrs. Allen has been the owner of the policy ever since it was issued 4 years ago. 2.The family residence with a fair market value of $400,000. Mr. and Mrs. Allen own the residence jointly with the right of survivorship even though Mr. Allen purchased it with his separate funds.

  3.A $40,000 bank account. Mr. and Mrs. Allen own the account jointly with the right of survivorship even though Mrs. Allen made all the deposits.

  What amount of the family property will be included in Mr. Allen's gross estate for federal estate tax purposes?

  A. $500,000

  B. $520,000

  C. $220,000

  D. $400,000

  Correct Answer: C

• Question 74:

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

  1.

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

  2.

  The value of gifts made within 3 years of death cannot be brought back into the donor's gross estate.

  A. Neither 1 nor 2

  B. 1 only

  C. 2 only

  D. Both 1 and 2

  Correct Answer: A

• Question 75:

  Which of the following statements concerning charitable remainder unitrusts is correct?

  A. The remainder interest is paid to the qualified charity after a term of years not greater than 15 years.

  B. A fixed percentage of not less than 10 percent of the net fair market value of the trust assets is paid to the noncharitable beneficiaries.

  C. No further contributions may be made to a unitrust after the initial payment.

  D. The net fair market value of the trust assets are revalued annually.

  Correct Answer: D

• Question 76:

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

  1.

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

  2.

  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.

  A. Neither 1 nor 2

  B. 2 only

  C. 1 only

  D. Both 1 and 2

  Correct Answer: A

• Question 77:

  All the following statements concerning revocable trusts are correct EXCEPT:

  A. A transfer to a revocable trust is treated as an incomplete gift for gift tax purposes.

  B. A transfer to a revocable trust changes the income tax picture of the grantor.

  C. Property transferred to a revocable trust typically avoids being included in the probate estate of the grantor.

  D. Revocable trusts are created and operate before the death of the settlor.

  Correct Answer: B

• Question 78:

  Which of the following members of the estate planning team is responsible for assuring that the client's intentions are expressed in documents that will carry out the final plan?

  A. The trust officer

  B. The lawyer

  C. The investment counselor

  D. The life underwriter

  Correct Answer: B

• Question 79:

  All the following powers held by the grantor of an irrevocable trust will cause the trust assets to be brought back into the estate of the grantor EXCEPT the power to

  A. designate who shall enjoy the trust income

  B. add principal to the trust

  C. change the trust remainderpersons

  D. terminate the trust

  Correct Answer: B

• Question 80:

  Which of the following provisions is (are) generally common to all buy-sell agreements?

  1.

  Provisions for modification of the agreement.

  2.

  Provisions for lifetime business interest transfer restrictions.

  A. Both 1 and 2

  B. 1 only

  C. 2 only

  D. Neither 1 nor 2

  Correct Answer: A