American College American College Certifications HS330 Questions & Answers

• Question 301:

  Which of the following transfers will be successful in removing property from a grantor's gross estate?

  1.

  A grantor's transfer of property to a revocable trust if the grantor lives three years after the transfer.

  2.

  A grantor's transfer of a personal residence to a qualified personal residence trust if the grantor survives the retained interest term.

  A. Neither 1 nor 2

  B. 1 only

  C. 2 only

  D. Both 1 and 2

  Correct Answer: C

• Question 302:

  Important factors in assessing liquidity needs in estate planning include which of the following?

  1.

  The types of assets that comprise the estate

  2.

  The date of drafting the will

  A. 1 only

  B. Both 1 and 2

  C. 2 only

  D. Neither 1 nor 2

  Correct Answer: A

• Question 303:

  Which of the following statements concerning state death taxes is correct?

  A. A state inheritance tax is imposed on the right of the deceased to leave property to heirs.

  B. A state estate tax is imposed on the right of heirs to receive property from the deceased.

  C. State estate and inheritance taxes are generally imposed at the same rate regardless of the relationship of the deceased to the beneficiary.

  D. A deduction for the full amount of state death taxes paid by a decedent estate is allowed on a decedent federal estate tax return.

  Correct Answer: D

• Question 304:

  Which of the following statements concerning charitable remainder annuity trusts is correct?

  A. It provides a fixed annuity income interest to a qualified charity.

  B. The donor receives an estate tax charitable deduction for the value of the remainder interest.

  C. The term of charitable remainder annuity arrangements is limited to 10 years.

  D. The interest paid to the charity must be paid at least quarterly.

  Correct Answer: B

• Question 305:

  John plans to transfer his life insurance policy to an irrevocable trust for the benefit of his 19-year- old daughter, Jane. Which of the following conditions will enable the gift to qualify for the annual exclusion?

  1.

  Jane is the irrevocable beneficiary of the life insurance trust but cannot withdraw from the trust until the death benefits are paid.

  2.

  Jane is given "Crummey" demand powers permitting the withdrawal at her discretion of the annual additions to the trust.

  A. 1 only

  B. Neither 1 nor 2

  C. Both 1 and 2

  D. 2 only

  Correct Answer: D

• Question 306:

  Limited interests in property include all the following EXCEPT

  A. life estates

  B. remainder interests

  C. fee simple estates

  D. reversionary interests

  Correct Answer: C

• Question 307:

  Ignoring the annual per-donee exclusion, which of the following transfers is a gift for federal gift tax purposes?

  A. A father promises to buy his daughter a condominium when she finishes college.

  B. An individual gratuitously performs valuable services for the benefit of a close friend.

  C. A grandmother pays her grandson's $30,000 tuition at an Ivy League university.

  D. A creditor cancels the promissory note of a recently unemployed friend as a charitable gesture.

  Correct Answer: D

• Question 308:

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

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

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

  Correct Answer: B

• Question 309:

  All the following statements concerning property ownership by a married couple residing in a community-property state are correct EXCEPT:

  A. All property that is not separate property is community property.

  B. Property inherited during the marriage is the separate property of the spouse who inherited it.

  C. Community property loses its identity when a community-property couple moves to a common- law state.

  D. Income earned by one spouse becomes community property.

  Correct Answer: C

• Question 310:

  The executor of an estate has a choice of waiving the executor's fee. Factors that should be considered by the executor in making this choice include all the following EXCEPT

  A. the estate tax bracket of the estate

  B. the income tax brackets of the other beneficiaries

  C. whether the executor is otherwise a beneficiary of the estate

  D. the income tax bracket of the executor

  Correct Answer: B