Estate planning Exam 2 questions
with correct answers
Which of the following is not a party to a Trust?
Beneficiary(ies)
Settlor
Trustee
Magistrate - correct answer ✔✔ Magistrate
Which of the following parties is/are the legal owner of trust property?
Trust Protector
Beneficiaries
Trustee or Co-Trustees
The Settlor - correct answer ✔✔ Trustee or Co-Trustees
Which party or parties is allowed to use and enjoy trust assets?
A spendthrift relative
The beneficiary(ies)
The Trust Protector
The Internal Revenue Service - correct answer ✔✔ The beneficiary(ies)
Your client, Josephine, left the $2,000,000 you invested for her (her entire estate) to a trust in
which you were named Trustee. The trust provided that all income was to be paid to Josephine's
55 year-old son, Joseph, for life, and when Joseph passed away, the trust balance would pass to
Joseph's young daughter (Josephine's granddaughter), Emmanuelle. In following the prudent
,investor rule and your fiduciary duties, what's your best choice for investing the $2,000,000
portfolio.
Raw land in the Utah desert
High-yield (junk) bbonds
Cryptocurrency; it made Sam Bankman-Fried a billionaire!
A balance portfolio of blue-chip stock and bonds - correct answer ✔✔ A balance portfolio of
blue-chip stock and bonds
A "Gift Trust," or one in which the Settlor has parted with dominion and control of the assets,
and created for the benefit of another is usually: Irrevocable
Redeemable
Irredeemable
Revocable - correct answer ✔✔ Irrevocable
Heather, a widow with a $2,000,000 gross estate, created a $1,000,000 trust for her son, Henry,
with strict conditions on distributions due to Henry's gambling addiction, and penchant for
making large losing parlay bets on the Browns and Bears. What can you infer about the major
reason for Heather to create this trust?
To avoid community property laws when she dies
To reduce Heather's federal estate taxes
To provide creditor protection for Henry and to protect him from squandering his inheritance
To enable Henry to inherit under his state's statute of decedent and distribution - correct
answer ✔✔ To provide creditor protection for Henry and to protect him from squandering his
inheritance
Frank, a single taxpayer, dies in 2023 with a $5,000,000 gross estate after gifting away
$4,000,000 (total) in 2020 into 2 equal trusts for his children, Francesca, and Freddy. What are
the transfer (gift, estate and GST) tax results for Frank?
$0 of gift taxes; and $3,600,000 of estate taxes
, $0 of gift taxes; and $2,000,000 of estate taxes
$1,600,000 of gift taxes and $2,000,000 of estate taxes
$0 of gift and estate taxes - correct answer ✔✔ $0 of gift and estate taxes
The gift tax "annual exclusion" (the gift amount below which can be ignored and not counted as
'taxable gifts') was $10,000 per donor, per donee, per year between 1987-2001. But since 1997,
it's been indexed for inflation. What's its value today (2023)?
$17,000
$15,000
$12,920,000
$10,000 - correct answer ✔✔ $17,000
When a separate trust (one that avoids probate) is the beneficiary or legatee of any assets
passing under the will, (including any previously forgotten assets still titled solely in decedent's
name), the trust is called a/an:
Pourover Trust
Generation Skipping Trust
Marital Trust
Probate Trust - correct answer ✔✔ Pourover Trust
What type of trust is contained within the 'four corners' of a Last Will and Testament, and is
subject to the supervision of the probate court?
Probate Trust
Power of Attorney Trust
Testamentary Trust
Spendthrift Trust - correct answer ✔✔ Testamentary Trust
Which of the following is a fiduciary position in a trust agreement or arrangement?
with correct answers
Which of the following is not a party to a Trust?
Beneficiary(ies)
Settlor
Trustee
Magistrate - correct answer ✔✔ Magistrate
Which of the following parties is/are the legal owner of trust property?
Trust Protector
Beneficiaries
Trustee or Co-Trustees
The Settlor - correct answer ✔✔ Trustee or Co-Trustees
Which party or parties is allowed to use and enjoy trust assets?
A spendthrift relative
The beneficiary(ies)
The Trust Protector
The Internal Revenue Service - correct answer ✔✔ The beneficiary(ies)
Your client, Josephine, left the $2,000,000 you invested for her (her entire estate) to a trust in
which you were named Trustee. The trust provided that all income was to be paid to Josephine's
55 year-old son, Joseph, for life, and when Joseph passed away, the trust balance would pass to
Joseph's young daughter (Josephine's granddaughter), Emmanuelle. In following the prudent
,investor rule and your fiduciary duties, what's your best choice for investing the $2,000,000
portfolio.
Raw land in the Utah desert
High-yield (junk) bbonds
Cryptocurrency; it made Sam Bankman-Fried a billionaire!
A balance portfolio of blue-chip stock and bonds - correct answer ✔✔ A balance portfolio of
blue-chip stock and bonds
A "Gift Trust," or one in which the Settlor has parted with dominion and control of the assets,
and created for the benefit of another is usually: Irrevocable
Redeemable
Irredeemable
Revocable - correct answer ✔✔ Irrevocable
Heather, a widow with a $2,000,000 gross estate, created a $1,000,000 trust for her son, Henry,
with strict conditions on distributions due to Henry's gambling addiction, and penchant for
making large losing parlay bets on the Browns and Bears. What can you infer about the major
reason for Heather to create this trust?
To avoid community property laws when she dies
To reduce Heather's federal estate taxes
To provide creditor protection for Henry and to protect him from squandering his inheritance
To enable Henry to inherit under his state's statute of decedent and distribution - correct
answer ✔✔ To provide creditor protection for Henry and to protect him from squandering his
inheritance
Frank, a single taxpayer, dies in 2023 with a $5,000,000 gross estate after gifting away
$4,000,000 (total) in 2020 into 2 equal trusts for his children, Francesca, and Freddy. What are
the transfer (gift, estate and GST) tax results for Frank?
$0 of gift taxes; and $3,600,000 of estate taxes
, $0 of gift taxes; and $2,000,000 of estate taxes
$1,600,000 of gift taxes and $2,000,000 of estate taxes
$0 of gift and estate taxes - correct answer ✔✔ $0 of gift and estate taxes
The gift tax "annual exclusion" (the gift amount below which can be ignored and not counted as
'taxable gifts') was $10,000 per donor, per donee, per year between 1987-2001. But since 1997,
it's been indexed for inflation. What's its value today (2023)?
$17,000
$15,000
$12,920,000
$10,000 - correct answer ✔✔ $17,000
When a separate trust (one that avoids probate) is the beneficiary or legatee of any assets
passing under the will, (including any previously forgotten assets still titled solely in decedent's
name), the trust is called a/an:
Pourover Trust
Generation Skipping Trust
Marital Trust
Probate Trust - correct answer ✔✔ Pourover Trust
What type of trust is contained within the 'four corners' of a Last Will and Testament, and is
subject to the supervision of the probate court?
Probate Trust
Power of Attorney Trust
Testamentary Trust
Spendthrift Trust - correct answer ✔✔ Testamentary Trust
Which of the following is a fiduciary position in a trust agreement or arrangement?
