American College American College Certifications HS330 Questions & Answers

• Question 331:

  Which of the following are ways of passing property from a deceased spouse to a surviving spouse so that the property will qualify for the federal estate tax marital deduction?

  1.

  When the surviving spouse receives the property by electing to take against the deceased spouse's will

  2.

  When the surviving spouse receives the property as a consequence of the qualified disclaimer of another beneficiary

  A. Both 1 and 2

  B. Neither 1 nor 2

  C. 1 only

  D. 2 only

  Correct Answer: A

• Question 332:

  All the following statements concerning guardians for minors are correct EXCEPT:

  A. A guardian has equitable title to the property he administers for the minor.

  B. A guardian named in a deceased parent's will is not necessarily binding on the court.

  C. A guardian of the person of a minor may not necessarily be the guardian of the minor's property.

  D. A special guardian can be appointed by the court to protect a minor's rights in a legal proceeding.

  Correct Answer: A

• Question 333:

  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

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

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

  C. the power to direct the trustee to distribute trust corpus to her

  D. the testamentary power to direct the trustee to pay trust assets to her estate

  Correct Answer: A

• Question 334:

  All the following assets owned by a decedent pass by operation of law or by contract EXCEPT

  A. death benefits of a pension plan payable to a named beneficiary

  B. life insurance payable to a named beneficiary

  C. probate assets passing under the terms of a valid will

  D. jointly owned real estate passing to the surviving joint tenant

  Correct Answer: C

• Question 335:

  Which of the following statements concerning the taxation of estates and trusts is (are) correct?

  1.

  They are taxed similarly to partnership entities.

  2.

  They are taxed on distributable net income (DNI) that is retained.

  A. 1 only

  B. Both 1 and 2

  C. Neither 1 nor 2

  D. 2 only

  Correct Answer: D

• Question 336:

  A married man has two adult sons. His entire estate is in excess of $1,500,000 and consists entirely of probate assets. He wants to make certain that if he predeceases his wife she will receive all estate income as long as she lives, and the assets remaining at her death will pass equally to their two sons. He wants to pass all assets to this wife and sons as free of federal estate taxes as possible. To best accomplish these objectives, the man should include which of the following estate plans in his will?

  A. Establish a marital deduction trust with a general power of appointment for half his estate and place the remainder in a QTIP trust

  B. Establish a QTIP trust for half his estate and bequeath the remainder to his wife

  C. Establish a QTIP trust for his entire estate

  D. Establish a bypass trust equal to the applicable exclusion amount and place the remainder of his estate in a QTIP trust

  Correct Answer: D

• Question 337:

  All the following statements concerning an entity-purchase buy-sell agreement for a partnership are correct EXCEPT:

  A. The partnership, in effect, liquidates the interest held by the decedent-partner's estate.

  B. The partnership makes payments to the decedent-partner's estate to liquidate the partnership interest held by the estate.

  C. It is the surviving partners who purchase the decedent's business interest so that the partnership can afford to pay the decedent's estate.

  D. Both the partners and the partnership are parties to the agreement that provides for business continuation.

  Correct Answer: C

• Question 338:

  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

• Question 339:

  A father wants to accumulate funds for his 12-year-old son's college education. On the advice of his attorney, the father establishes an IRC Section 2503(c) trust and funds it with annual gifts. All the following statements concerning this arrangement are correct EXCEPT:

  A. In the event of the son's death prior to age 21, trust assets must either be payable to the son's estate or be subject to a general power of appointment held by the son.

  B. The father's annual gift tax exclusion must be reduced by any amount used to pay college tuition costs.

  C. The trust must be irrevocable.

  D. Any accumulated income and all trust principal must be available for distribution to the son when he attains age 21.

  Correct Answer: B

• Question 340:

  Ignoring the annual per-donee exclusion, all the following transfers are gifts for federal gift tax purposes EXCEPT:

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

  B. A grandmother reimburses her grandson for his college tuition costs.

  C. A creditor cancels the promissory note of a friend who recently became unemployed.

  D. A father lends his daughter a large sum of money interest free for a period of 2 years.

  Correct Answer: A